Today's Edition
By: Alanood Jasim Alhosani
Global investment in clean renewable energy projects has become a path for everyone, with countries racing to achieve a boom in production that will allow a reliable dependence on these sources to meet energy needs in the near future. The effects of climate change are evident across various regions worldwide, and the global energy market is likely to see recurring disruptions caused by international geopolitical events. The Ukraine war has highlighted plans for investment in diverse energy sectors, especially as European countries have heavily relied on Russian energy supplies.
The world today is facing serious challenges in addressing the climate crisis, which is no longer an issue solely for environmental specialists or an elite concern. People in most parts of the world now understand its effects or witness the dangers of climate change in their own countries. Consequently, investing in renewable and clean energy has become the most reliable solution for securing the future of energy and reducing harmful gas emissions at the same time. Notably, the temperatures on our planet hit record highs in 2023, reaching 1.48 degrees Celsius above average.
It is good news that the International Energy Agency (IEA) expects global investment in clean energy to reach an unprecedented level of about $2 trillion in 2024, which is twice the amount earmarked for fossil fuels like oil, gas, and coal. China remains at the forefront with the largest share of investments, amounting to around $675 billion, followed by Europe with $370 billion and the United States with $315 billion. However, emerging economies seem to lag somewhat behind in their spending on clean energy.
In the Middle East, spending is predominantly focused on fossil fuels, as the region is home to some of the world’s largest oil and gas producers. Nonetheless, the UAE is moving forward with a fair and systematic transition to clean and renewable energy. The country is injecting significant government investments in the clean energy sector, encouraging private sector participation, and building eco-friendly power plants to meet its energy needs in sustainable ways.
The UAE is at the forefront of the region and ranks among the world’s top investors in renewable energy projects. On its soil, world leaders participated in concluding the historic “UAE Agreement” during the COP28 climate conference to map out a smooth and fair transition to renewable and clean energy. Abu Dhabi is also expanding its strategic partnerships to boost clean energy production. This includes the UAE-US agreement to invest $100 billion to produce 100 gigawatts of clean energy by 2035 and invest nearly $16.8 billion in renewable energy projects in 70 countries, including those in Africa. Additionally, the UAE is committing Dh600 billion to various domestic clean energy projects until 2050, in line with the country's strategic initiative to achieve climate neutrality by 2050 and ensure energy security.
The UAE has achieved global leadership by possessing the most cost-effective solar energy production technology. It is the first country in the region to use nuclear energy for electricity generation, while also expanding the production of blue hydrogen to create a diverse array of energy sources. Investments in photovoltaic solar energy technology are projected to exceed $500 billion in 2024, surpassing all other sources of electricity production combined.
Globally, investment in clean energy technologies is still below the level required to achieve zero-emissions by mid-century. To effectively address this issue, countries must increase their annual spending on transitioning the energy system to over $4 trillion by 2030. Despite progress made in this respect, renewable energy technologies, such as wind and solar power, face obstacles, particularly in Africa. While these technologies are mostly less costly than traditional fuels, they require knowledge sharing and technology accessibility to become widely adopted.
Global investment in renewable energy is significantly on the rise, driven by concerns about climate change and a growing awareness of the benefits of clean energy. This rise in investment is fueled by declining costs and supportive global policies promoting the development of renewable energy. With the growing demand for clean energy to reduce greenhouse gas emissions, there is a need to advance development and storage technologies further. This requires substantial investments in infrastructure, transportation, and the distribution of alternative energy. A continuous increase in spending on renewable energy is essential for transitioning toward a sustainable global economy.
*The writer is a researcher at TRENDS Research & Advisory
