Story of the month
Global investment in the energy transition reached a record $1,769 billion in 2023, up 17% year-on-year. Electric vehicles and charging infrastructure were the main sources of investment, with $634 billion invested, overtaking renewable energies for the first time. China remained the largest green investment region by volume ($676 billion), although Europe saw the fastest growth in 2023 (+38%).
2023 CONFIRMS STRONG GROWTH MOMENTUM FOR ENERGY TRANSITION
With growth of 17% in 2023, investment in the energy transition remains on a very positive trend. To get a clearer picture, we need to distinguish between the production of decarbonised energy (renewable energies, networks, nuclear power, energy storage, hydrogen, carbon capture and sequestration) and consumption (electric vehicles, industrial decarbonisation, heat pumps). Investments increased by 8% and 23% respectively in 2023.
The main contributor in 2023 was the electric vehicle segment (including charging infrastructure), accounting for $634 billion of investment and up 36% in 2022, reflecting the acceleration of both manufacturers’ product offerings and consumer demand. Next in line are new renewable energy projects (solar, wind, geothermal, biofuels), up by 8% to $623 billion, penalised by the slowdown in wind power compared with the previous year. Among the still emerging technologies, investment in green hydrogen tripled to $10.4 billion, carbon capture doubled to $11.1 billion, and energy storage grew by 76% to $36 billion. Finally, investment in grid infrastructure increased by 5% to $310 billion in 2023, a welcome and necessary acceleration from previous years to keep pace with the commissioning of renewable projects.
Geographically, all regions are growing, with China remaining the leading area for green investment at $676 billion (or 38% of the total), with the electric vehicle segment alone accounting for $285 billion in the Middle Kingdom (60% of global EV sales). The European Union saw $341 billion in green investments (or 19% of the total), showing the fastest growth in 2023 (+38%), driven in equal measure by new renewable energy projects and electric vehicle deployment. It should be noted that European efforts to regulate the most carbon-intensive sectors resulted in a record $22 billion being invested in industrial decarbonisation projects (steel and chemicals in particular). Finally, green investments in the United States rose by 22% to $303 billion in 2023 (17% of the total), boosted by the first effects of the Inflation Reduction Act (IRA), particularly on solar energy and clean hydrogen.
CARBON NEUTRALITY REQUIRES TRIPLING OF ANNUAL INVESTMENT BY 2030
According to estimates by international organisations (IPCC, IEA, OECD), the path to carbon neutrality in 2050 requires annual green investments to triple between now and 2030, to reach an amount of around $5,000 billion. The bulk of the effort should continue to be focused on renewables (x2.1 vs. 2023), power grids (x2.3 vs. 2023), energy storage (x2.6 vs. 2023) and transport electrification (x2.9 vs. 2023).
By geographical region, India looks set to accelerate the most (x9.4 vs 2023), followed by Japan (x6.5 vs 2023), the United States (x3.5 vs 2023), the European Union and China (x2.4 vs 2023), and the United Kingdom (x1.9 vs 2023).
By focusing on clean energy, energy efficiency and sustainable mobility, the investment strategy of the ODDO BHF Green Planet fund aims to exploit this unique medium- and long-term growth opportunity to participate in the global energy and ecological transition.
