Renewable Energies Saw A $500 Billion Boom In Government Investment In 2022

Renewable Energies Saw A $500 Billion Boom In Government Investment In 2022

It’s fair to say that Russia’s invasion of Ukraine and the ensuing energy crisis has driven a renewable energy transition craze.

The International Energy Agency reported that global government spending to support clean energy increased by over $500 billion since March and a plethora of policies emerged to cut reliance on fossil fuels.

The government spending is expected to act as a catalyst for mobilising the private investment sector’s resources to increase global clean energy investment to reach over $2 trillion annually in 2030. An impressive sum, but one that still falls short of the $4 trillion of global clean energy investment that needs to be hit annually by 2030 for the world to reach its 2050 net zero goal, according to the IEA.

The $500 billion government spending increase on renewables in 2022 also pales in comparison to the $630 billion spent by governments worldwide to shield households and businesses from rising energy costs since autumn of 2021, says the IEA.

However, despite the government support measures, the energy crisis is causing emerging markets to fall behind on access to affordable energy. Approximately 75 million people who recently gained access to energy services can no longer afford them and the IEA reports that the total number of people worldwide without electricity access has started to rise. The question of how to help emerging markets invest in a transition to net-zero remains a hotly contested issue, and one that made headway in 2022’s U.N. climate agreement where rich nations agreed to pay poor nations a climate crisis loss and damage fund.

Renewable energy sources including hydrogen, solar and nuclear fusion saw a boom in investor interest in 2022. The International Energy Agency (IEA) reported that clean hydrogen is having a heyday, enjoying unprecedented political and business momentum, with the number of hydrogen policies and projects around the world expanding rapidly.

Private investment in hydrogen broke records in 2022. Venture capital and private equity firms deployed more capital into hydrogen startups in 2022 than in any year prior. According to Pitchbook, private equity firms spent $3.1 billion on hydrogen-related companies across 37 deals, and venture firms invested $2.6 billion, in 192 startups – this is triple the number of annual VC hydrogen deals since 2014.

Nuclear fusion also made headlines, particularly as Google and Chevron invested in a nuclear fusion unicorn – TAE Technologies. Fusion is the process that powers stars and the sun, but until recently, has proven extremely difficult to create in a controlled man-made reaction. TAE was founded in 1998 and aims to have a commercial scale fusion reactor delivering energy in the early 2030s.

Nuclear fusion reverses nuclear fission – the way in which conventional nuclear power plants generate energy in which energy is released when a larger atom is split into two smaller atoms. Nuclear fusion produces energy by slamming together two smaller atoms to form one larger atom. It’s gaining traction due to its ability to generate nearly unlimited emission-free energy without the long-lasting radioactive waste that nuclear fission produces.

Solar power investment also grew by leaps and bounds in 2022. The IEA reported that solar PV makes up almost half of new investment in renewable power, with spending divided equally between utility-scale projects and distributed solar PV systems.

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