Was $1 Trillion In Global Spending Enough To Fight Climate Change? New Report Says No

Almost $1 trillion was spent in 2021 to support the energy transition worldwide to fight climate change. It sounds like an impressive amount, but a recent report suggests it is not even half of what is needed to address it.

On Thursday, the BloombergNEF released its Energy Transition Investment Trends that found global spending on clean energy technologies set a new record by reaching $920 billion. The report shows that global energy investment for the deployment of clean energy totaled $755 billion last year, up from $595 billion in 2020, while financing for new climate tech came to $165 billion.

Asia was the source of much of this funding with China taking the lead among all the nations in the world in investment. According to a summary of the report, China spent $266 billion in 2021, an amount 60% higher than it was in 2020. India and South Korea also joined the top 10 investors in the energy transition, but Japan saw its place slip two spots from fourth to sixth place.

The U.S. was ranked second on the list with $114 billion invested in renewable and clean energy technology. President Joe Biden has made addressing climate change a centerpiece of his domestic and foreign policies after previously referring to it as the “number one issue facing humanity.”

However, the increased spending pales in comparison to the size of the challenges looming ahead. Last year saw a record amount of focus and investment on transitional energy sources and technologies, but the BloombergNEF said that spending levels need to triple by 2050 if the goal of net-zero global emissions is to be achieved.

The COVID-19 pandemic also has dealt a blow to the shift toward clean energy. Demand for fossil fuels has climbed during the economic recovery worldwide and it left the U.S. and China relying on sources like coal, oil and natural gas last year.

Spending more on investments in the energy transition has also been a difficult sell for the public and private sectors. Financial firms have declined to cease investing in fossil fuel companies to fight climate change, but countries are also cautious about the economic disruption that may accompany the transition.

In the U.S., Biden was dealt a setback when his Democratic Party failed to pass a multi-trillion dollar climate spending bill in 2021. Centrist members of the party were cautious about the impact it would have on jobs connected to the fossil fuel industries in their states, making passage of the bill a long shot in 2022.