Yahoo Finance Opinion: Massive spending on clean energy has garnered only meagre gains
By Robert Lyman
COP28, the 28th “Conference of the Parties to the Framework Convention on Climate Change,” which just concluded in Dubai, had as one of its central themes the need to promote the energy transition by spending more on renewable energy. But what have been the results of such spending up to now?
The International Energy Agency, in its reports on energy financing, breaks down global energy investment into investment in fossil fuels, on the one hand, and in “clean energy,” on the other. In 2023, estimated investment in “clean energy” will be close to $2.2 trillion (in C$). That is an almost unimaginable amount of money, made only slightly less daunting when portrayed as $6 billion per day.
The $2.2 trillion consists of investment in: renewable power (electricity generated by wind, solar and biomass energy sources) of about $857 billion, energy grids ($430 billion), energy efficiency ($438 billion), electric vehicles and battery storage ($216 billion combined) and nuclear energy ($82 billion).
The International Renewable Energy Agency (IRENA) uses a different definition of renewable energy. It includes wind, solar, biomass, energy efficiency, “electrified transport,” “electrified heat,” energy storage, hydrogen and carbon capture and storage, but excludes nuclear energy. According to IRENA’s most recent report, investment in these “transition-related technologies” totalled $8.9 trillion over the years 2015-2022. Last year, expenditures were $1.7 trillion — a cool $4.7 billion per day.
The IEA and IRENA estimates differ because of their different definitions of what constitutes both “clean energy” and “renewable energy.” But they both indicate that global expenditures on non-traditional energy production have been growing for decades and are very high indeed. Still other sources publish different estimates, but they all indicate that this type of investment, largely funded by government subsidies, has been going on since the 1980’s and grew most in the period 2000-2011.
Both the IEA and IRENA report that over 90 per cent of global expenditures on clean energy have been in China, the United States, western Europe and other OECD countries. On the other hand, those 35 countries generate less than half of global GHG emissions. Which means the world’s other 160 countries produce more than half of global GHG emissions but account for only 10 per cent of clean energy investment.
What has been the result of these gargantuan expenditures? The effects of current investments in electrical energy infrastructure won’t be fully apparent for some time, but we should be able to see the effects of spending that has been rising for more than 20 years. To find out, I consulted the authoritative Statistical Review of World Energy 2023, published by the Energy Institute, the successor to British Petroleum as the producer of the Statistical Review. It works closely with KPMG to produce the report.
The share of the world’s primary energy consumption produced by renewable energy has essentially doubled since 2015, from about 3.5 to seven per cent of the world total. Yet, fossil fuels (oil, natural gas and coal), which accounted for 85 per cent of primary energy consumption in 2015, still accounted for 82 per cent in 2022. At that rate of reduction — three percentage points every seven years — we will not get to full decarbonization (i.e., zero use of fossil fuels) until well into the next century.
After rising steadily in the two decades up to 2019, both energy consumption and energy-related greenhouse gas emissions did decline sharply — by about nine per cent —during the pandemic. But they then rose again in 2021 and 2022. In 2022, GHG emissions reached an all-time high of 34.4 billion tonnes. The regional shares of this total had changed, however. In 2022, energy-related emissions in the OECD countries were seven per cent below their 2015 level, while in the non-OECD countries they were 12 per cent higher than in 2015 — and almost double current OECD emissions, continuing what is now a long-standing trend.
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In summary, since 2014 the world has spent about $11 trillion on “clean energy” or “the energy transition” yet global GHG emissions are higher than ever. True, they may be lower than they would have been without this prodigious effort but still: they are higher than ever. This is mainly due to the growth in energy consumption in the non-OECD countries, which view consumption of secure and affordable energy sources as essential to raising the living standards of their populations. The reason the energy “transition” is not happening is that people’s needs are taking precedence over claims of impending climate catastrophe. When will leaders in the OECD countries finally take notice of that?
Robert Lyman is a retired energy economist.
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