Key Impact Points
- Zero-Carbon Milestone: In 2023, more than 40% of global electricity was generated from zero-carbon sources, marking a record high for clean energy.
- Renewables on the Rise: Wind and solar accounted for 17% of electricity generation, while hydro and nuclear made up 24%.
- Investment Crucial for Net Zero: Achieving the net-zero goal by 2050 requires significantly increased investment, with current funding levels falling short of targets.
Overview
A recent report from BloombergNEF (BNEF) revealed that more than 40% of the world’s electricity was generated from zero-carbon sources for the first time in 2023. Renewable energy technologies such as wind and solar contributed 17% to global electricity generation, while hydroelectric and nuclear power made up an additional 24%. Fossil fuels, including coal and natural gas, continued to produce 57% of the world’s electricity.
Meredith Annex, head of clean power at BNEF, noted the steady rise of renewables in the global energy mix: “We’ve consistently seen the penetration of renewables rising every year, and this year we hit quite a few milestones that had felt harder to reach in past years.”
Solar and Wind Lead Global Growth
Solar and wind power represented more than 90% of global energy capacity additions in 2023, a significant increase from the previous year. Global wind capacity also crossed the one-terawatt threshold for the first time. Brazil, leading the G-20 economies in clean energy, achieved 88% renewable power generation last year.
Annex emphasized the significance of these developments: “It just shows the momentum that the space is having. A lot of that does tie into the investment story, where you’ve got rising—skyrocketing, honestly—investment into solar.”
China’s Role in the Clean Energy Transition
China accounted for nearly a third of the world’s renewable energy output in 2023. The country surpassed its 2030 target for wind and solar energy six years ahead of schedule and has since slowed the approval of new coal-fired power plants. Analysts believe that China may reach peak fossil fuel consumption this year, a critical turning point given that China produces almost one-third of global greenhouse gas emissions, according to the International Energy Agency (IEA).
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Current Investment Shortfalls for Net-Zero Goals
Despite the rapid progress in renewable energy, the global effort to limit global warming to 1.5 degrees Celsius—the primary objective of the 2015 Paris Agreement—remains inadequate. The IEA warns that advanced economies need to reduce emissions by 80% by 2035 to meet the goal.
During COP28, a global climate conference held in 2023, participating countries agreed to triple renewable energy capacity by 2030. According to BNEF forecasts, this ambitious goal requires a 1.6-fold increase in investments in renewables from 2024 to 2030. However, current investments are not sufficient to meet this target. In the first half of 2024, global investments in renewables totaled $313 billion, on par with 2023 levels.
Annex cautioned: “We’re expecting steady growth, but steady growth does not get you to net zero.”
Shifts in Investment Patterns
While overall global investment in renewables has been steady, significant shifts have occurred beneath the surface. In the U.S., spending has surged by 63% compared to pre-2022 Inflation Reduction Act (IRA) levels, thanks to the generous subsidies and tax breaks offered by the legislation. In contrast, Chinese investment in renewables has fallen by 4% compared to the same period in 2023, a dip attributed to lower costs for wind and solar equipment, not declining demand.
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Annex identified the second half of 2024 as a critical period for renewable energy investments: “The second half of this year will be a defining moment for the investment landscape. Steady growth is positive, but we need to help expand even faster if we’re going to be in line with net zero.”
Conclusion
While the 2023 milestone of generating over 40% of global electricity from zero-carbon sources is a significant achievement, much work remains. Countries must accelerate investments in clean energy infrastructure to stay on track for net-zero emissions by 2050.
