Investment in clean energy technologies is significantly outpacing spending on fossil fuels as affordability and security concerns triggered by the global energy crisis strengthen the momentum behind more sustainable options, according to a new report by the International Energy Agency (IEA).

The IEA cited security concerns such as Russia’s invasion of Ukraine.

In a dramatic shift from just eight years ago, more investment will continue to go to clean energy, electric vehicles (EVs) and the grid than to fossil fuels in 2023. And the gap is widening.

About $2.8 trillion is set to be invested in energy globally in 2023, of which more than $1.7 trillion is expected to go to clean technologies – including renewables, EVs, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps – according to the IEA’s latest World Energy Investment report. The remainder, slightly more than $1 trillion, will be invested in coal, natural gas and oil.

Annual clean energy investment is expected to have risen by 24% between 2021 and 2023, driven by renewables and EVs, compared with a 15% rise in fossil fuel investment over the same period. But more than 90% of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions do not pick up elsewhere, sad IEA.

Comparing IEA’s estimates for 2023 with the data for 2021, annual clean energy investment has risen much faster than investment in fossil fuels over this period (24% vs 15%), said the international agency.

For every $1 spent on fossil fuels, $1.70 is now spent on clean energy. Five years ago this ratio was 1:1, said the report. Solar is the star performer and more than $1bn per day is expected to go into solar investments in 2023 ($380bn for the year as a whole), edging this spending above that in upstream oil for the first time.

“Clean energy is moving fast – faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” said IEA’s executive director, Fatih Birol.

“For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy,” he said. “Five years ago, this ratio was one to one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time.”

Led by solar, low-emissions electricity technologies are expected to account for almost 90% of investment in power generation. Consumers are also investing in more electrified end-uses. Global heat pump sales have seen double-digit annual growth since 2021. EV sales are expected to leap by a third this year after already surging in 2022.

Clean energy investments have been boosted by a variety of factors in recent years, including periods of strong economic growth and volatile fossil fuel prices that raised concerns about energy security, especially following Russia’s invasion of Ukraine. Enhanced policy support through major actions like the US Inflation Reduction Act and initiatives in Europe, Japan, China and elsewhere have also played a role, the agency said.

Spending on upstream oil and gas is projected to rise by 7% in 2023, climbing to more than $500bn and taking it back to 2019 levels. The few oil companies that are investing more than before the Covid-19 pandemic are mostly large national oil companies (NOCs) in the Middle East.

Many fossil fuel producers made record profits last year because of higher fuel prices, but the majority of this cash flow has gone to dividends, share buybacks and debt repayment – rather than back into production. Net income from fossil fuel sales more than doubled compared with the average in recent years, with global oil and gas producers receiving around $4 trillion.

Nonetheless, the anticipated rebound in fossil fuel investment means it is set to rise in 2023 to more than double the levels needed in 2030 in the IEA’s Net Zero Emissions by 2050 Scenario. Global coal demand reached an all-time high in 2022, and coal investment this year is on course to reach nearly six times the levels envisaged in 2030 in the IEA’s Net Zero Scenario.

The oil and gas industry’s capital spending on low-emissions alternatives such as clean electricity, clean fuels and carbon capture technologies was less than 5% of its upstream spending in 2022. That level was little changed from last year – though the share is higher for some of the larger European oil and gas companies.

The biggest shortfalls in clean energy investment are in emerging and developing economies. There are some bright spots, such as dynamic investments in solar in India and in renewables in Brazil and parts of the Middle East.

However, investment in many countries is being held back by factors such as higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially strained utilities and a high cost of capital. Much more needs to be done by the international community, especially to drive investment in lower-income economies, where the private sector has been reluctant to venture, stressed the IEA.