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For every $1 invested in fossil fuels, $2.9 should go to clean energy supplies – BloombergNEF

For the world to stay on track to achieving net zero goals, $1 invested in fossil fuels should attract $2.9 investment in clean energy supplies. This is the position presented in the 2022 Bloomberg New Energy Finance (BloombergNEF) Outlook.

  • The outlook stated: “For every dollar invested in fossil-energy supplies between now and 2030, $2.9 should be invested in clean energy supplies, such as renewable energy, clean hydrogen, and carbon capture, rising to nearly $10 after 2040. These ratios can provide a guide for financial institutions wishing to align their investing and lending activities to a net-zero trajectory.”

Investments in figures: The outlook says the BloombergNEF net-zero scenario (NZS) implies an investment opportunity of $194 trillion between now and 2050, which implies annual investment from $5.5 trillion a year in the remainder of this decade to $7.4 trillion a year in the 2040s. These totals include investment in both fossil and clean energy supply projects, as well as clean demand-side areas such as electric vehicles and heat pumps. Electric vehicles alone draw 47% of all tracked investment to 2050 in the NZS. The outlook stated:

  • “The ratio of investment in clean-energy supply to fossil sources (excluding demand areas) must average 2.9 in this decade, and then rise to 4.9 in the 2030s and 9.7 in the 2040s.”

Meanwhile, low-carbon power takes up $45.8 trillion, or 24% of the total, and the power grid attracts $21 trillion in investment by 2050, or 11% of the total. According to the outlook, these investments fund a substantial expansion of the global electricity system to connect new supply points and serve growing demands, driven by electrification and the growth of renewables – as well as ensuring the safe, ongoing operations of the existing grid, through refurbishment and replacement of aging assets.

Increased adoption of clean energy supplies: Although the world has adopted clean energy to some levels, the outlook suggests that to meet net zero goals, electric vehicle sales will need to increase five-fold from under 11 million to 55 million per year, in order to satisfy net-zero targets and meet sector carbon budgets. The outlook also says that solar installations will need to more than triple and wind installations will need to increase six-fold from current levels.

Ramp-up of clean energy technologies: According to the outlook, the global net zero transition is still in its infancy as less than 10% of the necessary technologies of total wind and solar have been installed, and none of the needed technologies for heat pumps, hydrogen electrolyzers, or carbon capture and storage (CCS) capacity have been installed as well. However, the outlook says that more than 40% of the nuclear power capacity needed in 2050 already exists.

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