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Investment

Global energy transition investment jumped, despite the pandemic but investors’ attention shifted to developed markets

  • Asset financing – the funding of projects and infrastructure – for renewable energy, electrified transport and electrified heat hit $471 billion in 2020. This was up 11% from 2019. Annual volumes have more than doubled since 2013.

  • Renewables accounted for 60% of the total, but investment into those technologies – wind and solar, mostly – has remained mostly flat for six years. Asset finance for electrified transport reached nearly $140 billion in 2020, or 29% of the total, up from just $65 billion four years earlier. Electrified heat funding topped $50 billion, up from $45 billion in 2019.

  • China, the U.S. and Germany accounted for over half of 2020 investment. China ($144 billion) was nearly a third of the total. The U.S. ($79 billion) followed at 17%, down from $84 billion in 2019. Germany ($27 billion) was 6% of the total.

  • The Covid-19 pandemic disrupted investment into developing nations as investors shifted to lower-risk markets. In 2020, wealthier nations accounted for 57% of asset finance for renewables, electrified transport and electrified heating, or $262 billion, up from 41% in 2017. With $195 billion, emerging markets accounted for 43% of the total, down from 53% in 2019 and a peak of 59% in 2017.

  • Energy transition asset finance plummeted 10% in 2019-2020 in emerging markets, but jumped 34% in developed countries. Richer nations saw asset finance levels nearly double from 2015-2020, from $136 billion to $262 billion.

The energy transition investment gap is growing, despite COP26 pledges

  • Energy transition investment inequality is widening between developed and developing nations, highlighting the need for expanded international support. Developing nations account for two-thirds of the global energy sector emissions, but recent investment levels are far from sufficient to put them on a sufficient decarbonization pathway.

  • In 2020, developed nations recorded over 12 times more investment per MtCO2e emissions from the energy sector than emerging markets, compared to seven times more in 2019. While wealthier nations attracted $53 million for each MtCO2e emissions from the energy sectors, developing markets received just $4.3 million.

Renewable energy investment jumped 24% in rich nations, but plummeted 9% in emerging markets

  • While developed nations saw asset finance for renewable energy projects jump 24%, from $109 billion in 2019 to $136 billion in 2020, emerging markets saw levels fall 9%, from $159 billion to $145 billion. Investment remains 7% higher in developing nations, but the gap is far smaller than in previous years.

  • Wind is the main technology for renewable energy investment in both developed and developing markets, with 51% and 58% of the total, respectively. Solar follows with 44% of the total in developed nations and 37% in emerging markets.

Clean transport investment reached $500 billion in 2016-2020

  • Global asset finance for clean road vehicles and infrastructure totaled $500 billion in 2016-2020. In 2020 alone, the sector attracted $139 billion, up 28% from the previous year and 112% up from 2016.

  • Investment into passenger electric vehicles (EV) accounted for 70% of the total over the past five years and 85% in 2020. This is also the fastest growing segment of clean transport investment, with a four-fold growth in five years and a 43% jump from 2019-2020. Electric bus sales were the second biggest segment for clean road transport investment. However, investment in busses has not risen consistently. Funding totaled $21 billion in 2016 and $11 billion in 2020.

Three countries attracted over half of global electrified heat investment

  • The U.S., Japan and China alone accounted for over half of global investment in electrified heat. Together, these countries attracted 55% of global investment over the past decade, and 53% in 2020 investment. The U.S. is the only major market for electrified heat that has seen investment grow every year over the past decade.

  • Global investment has doubled over the past decade. Capital flows to electrified installations and companies grew at an average rate of 7% per year and jumped 9% from 2019-2020.

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Global energy transition investment jumped, despite the pandemic but investors’ attention shifted to developed markets
The energy transition investment gap is growing, despite COP26 pledges

Climatescope 2021

Energy Transition Factbook

This marks the 10th anniversary of Climatescope, BNEF’s annual assessment of energy transition opportunities. For the first time, the project has expanded its scope to include activity not just in clean power but in the decarbonization of the transportation and buildings sectors.

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