China tops investment in energy transition

Technicians check solar panels in Zhenjiang, Jiangsu province. [Photo by Song Wei/For China Daily]

Transition: Country invests more than others in building its clean energy supply chain

China led the world in energy transition investment with $546 billion, nearly half of the global total, as the world saw such investment reach a new record in 2022, according to a report published by research and analysis firm BloombergNEF.

The United States was a distant second with $141 billion, the report said, adding that the European Union would have been second, with $180 billion, if treated as a single bloc.

According to the report, the global investment in low-carbon energy transition totaled $1.1 trillion last year — a new record and a huge acceleration from the year before — as the energy crisis and policy action drove faster deployment of clean energy technologies.

BloombergNEF also noted that China contributed to a significant increase in clean energy factory investment, which the report refers to as investment in manufacturing facilities for clean energy technologies.

Such investment grew to $78.7 billion in 2022, up from $52.6 billion in 2021, BloombergNEF said. Manufacturing facilities for batteries and related components formed the largest share of this investment at $45.4 billion, while solar factories attracted $23.9 billion.

Last year, China accounted for 91 percent of such manufacturing investment despite efforts of other countries to capture more of the global clean energy opportunity, the report said.

Manufacturing capacity for clean energy technologies is unlikely to be a major bottleneck in achieving net-zero carbon emissions, Antoine Vagneur-Jones, BloombergNEF's head of trade and supply chains research, was quoted as saying in a news release from the research firm on Jan 26.

"However, from a supply chain diversification point of view, the picture has not changed much. China is investing by far the most in building its clean energy supply chain, and it remains to be seen if other regions can capture a significant market share," he said.

BloombergNEF estimated that global fossil fuel investments stood at $1.1 trillion in 2022.

This is the first time that global investment in energy transition has matched that in fossil fuel despite the growth in fossil fuel investments triggered by last year's energy crisis, the report said.

"Our findings put to bed any debate about how the energy crisis will impact clean energy deployment," said Albert Cheung, head of the research firm's global analysis wing.

Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute their transition plans. Investment in clean energy technologies is on the brink of overtaking fossil fuel investments, he emphasized.

"These investments will drive short-term job creation and help address medium-term energy security objectives," Cheung said. "But more investment is needed to get on track for net zero in the long term."