A Bloomberg NEF annual report of global investment in low carbon energy transition totalled US$755 billion. The report reviews a range of diverse industries from investment in projects, such as renewables, hydrogen production, nuclear, charging infrastructure, recycling and other projects, such as solar and zero emission vehicles.
According to Bloomberg, the largest sector in 2021 was renewable energy, which gained US$366 billion, up 6.5% from 2020, with US$273 billion invested in the electrified transport sector. But the largest area of investment was the Asia-Pacific, which attracted US$368 billion and recorded 38% growth of investment.
There was also investment from global climate tech equity investment in 2021, worth US$165 billion and overall investment has increased 27% for the period 2020-2021. The majority of investment from equities was focussed mainly on the energy and transport sectors. Companies, governments and households invested in new and renewable energy, which is up 6.5%, with a further US$273 billion spent on electric vehicles and the infrastructure to charge vehicles, which is up 77%.
Global energy transition investment, which is investment in low carbon energies, hit US$755 billion in 2021, with the largest investment being made in renewable US$366 billion and electrified transport, at US$273 billion. Investment from equity financing in climate tech companies reached US$165 billion, which hopefully will lead to the building up of these companies, but overall the total finance in green structured investment is just short of a trillion US dollars.
All the regions hit records for transitioning to other sources of energy, with the Asia Pacific reaching investment totalling US$368 billion, and with growth in this sector of 38%, however Europe, Middle East and Africa saw growth at only 16%, with investment reaching US$236 billion. Asia and the Pacific account for 49% of global investment in the energy sector, with Europe, Middle East and Africa accounting for 31% and the Americas coming third with only 20%.
European countries feature in the top ten nations investing in low carbon spending, with the United Kingdom, Germany, France and Spain spending US$10 billion, and as a whole Europe invested US$219 billion, but in the Asia Pacific it was China that topped the chart in investment spending US$266 billion, which was up 60% from 2020.
The problem is that these figures do not get nations on track to meet global zero, investment according to New Energy Outlook, investment needs to average US$2,063 billion between 2022 & 2025, which is triple the total investment of 2021. Investment in renewables and electrified transport between 2022-2025 must double to US$583 billion and US$667 billion. After 2025, there needs to be another doubling of investment to an average of US$4,189 billion per annum until 2030, with much of the budget concentrated on low carbon technologies. However, the S&P Global Oil Index, outperformed clean energy and electric vehicles sector, in 2021, because of a boost in energy prices caused by the ending of the pandemic.
There is also another movement forcing transition into green energy and that is through the courts. In Britain there is a movement called Transport Action Network, which has taken the United Kingdom government to court to force through legislation for its road investment strategy. They argue that investment in the road infrastructure needs to be reviewed. The National policy statement for national networks, which they claim was twice refused review and ignored the advice of senior officials determined that this would have to be taken to court. On 14th July 2021, the Department for Trade were forced to review the policy, but on 22nd July 2021, the department for Trade refused to suspend the plan, which would continue until the review was completed in 2023, in other words the plan would continue to be implemented until the end of the review. Green peace Germany is taking Volkswagen to court for failing to protect the planet.
In 2022, the IPCC believed that litigation was an “outcome and ambition of global governance”. Since 2015, the number of lawsuits has doubled and according to the Global Trends in Climate Litigation, almost a quarter of the litigation has been filed since 2020. In 2021, more than half of all litigation was filed against defendants in transport, food and agriculture, plastics and finance sectors. Uggo Taddei, at CleanEarth believes that in the past decade, legal challenges against authorities has led to “Air pollution […] falling twice as steeply in cities […] where air quality litigation has been taken, compared with those with no legal intervention”. The view is that litigation empowers communities and leads to a path of restorative justice for communities feeling the force of environmental change.
Tactics are evolving in the way that litigation is taking place, Setzer believes that “instead of suing a company, a case is brought against a CEO. Or against a minister instead of a government. […Because…] Its become a self reinforcing mechanism – which encourages behaviour change”.
A transition into electric vehicles in the UK, is considered central to achieving the UK’s ability to meet NET Zero targets. By 2032, the Climate Change Committee has called for all new light vehicles sold to be fully battery electric vehicles and that HGVs must be fossil free by 2050. The argument is that the largest polluters in the United Kingdom is transport, which accounts for 22% of total Green House Gas emissions. Cars emitted 13% of GHG, Vans 4% and HGVs 4%. In the UK there are currently 18,000 EV charging points for 400,000 EVs. Currently, 80% of all EV households charge at home, while 34% do not have off street parking and need to charge on the street or elsewhere.
Air pollution is the number one environmental risk to human health in the UK, and according to the CCC was responsible in 2016 for 40,000 premature deaths. A full move to EVS by 2050, will have a positive impact particularly in removing impacts to those with asthma, inflammation and other lung problems. But the main aim is to negate climate arguments that have entered the political spectrum and an end to new sales of petrol and diesel vehicles by 2030.
President Biden signed a $750 billion health care, tax and climate bill in law on the 16th August 2022, of this $369 billion has been directed at energy security and climate change. The act aims to work as an incentive to switch to clean energy and help reduce green house emissions by 40% compared to 2005. US car makers have already invested $100 million to comply with the future movement into EVs, but they are also critical of the rules governing tax credits because the material, components and assembly requirements stipulates that only vehicles with final assembly in North America qualify.
According to automotive logistics, “Existing supply chains supporting EVs sold in the US are still international. […] The US does not yet have the required material supply and infrastructure in place […] to meet demand and comply with the new act”. Even though Congress has invested $15.5 billion in incentives to ensure that the supply chain is building a globally competitive battery manufacturing platform.
Camilla Domonoske of NPR, argues that China dominates the battery supply line, Biden’s visit to GM was as Domonoske argued had “a strong whiff of regret’. China controls 75% of the market of the raw materials that go into these batteries. The minerals are found around the world and China built the processing plants to convert the minerals found in batteries. Ten years ago China decided to dominate the market place, most of the worlds batteries have components from China and if geopolitical tensions rise, China has the ability to stop production in the US and other world markets.
We have seen what geopolitical tensions can result in across Europe, with the shutting down of gas pipelines being fed into Europe through Russia, so there is precedent for this action to take place, especially if tensions into Taiwan again are stirred. The industrialisation of the green movement is taking place and at the moment it is China that leads the world in the industrialisation. As Mary Lovely a senior fellow in the Pieterson Institute argues, “if you have got a lot of money, boom you are leading the world”, which is what China has done.
Bibliography
BloombergNEF. ‘Energy Transition Investment Trends 2022’. Accessed 15 September 2022. https://about.bnef.com/energy-transition-investment/.
Haddad, Sam. ‘Is Litigation Aiding the Transition from Fossil Fuels to Green Energy?’ Raconteur (blog), 11 August 2022. https://www.raconteur.net/legal/litigation-transition-fossil-fuels-green-energy/.
‘US Climate Act Disqualifies Most of Current EV Line-up, Say Industry Groups | News | Automotive Logistics’. Accessed 15 September 2022. https://www.automotivelogistics.media/policy-and-regulation/us-climate-act-disqualifies-most-of-current-ev-line-up-say-industry-groups/43425.article.
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