Long approval processes for wind farms, inadequate grid expansion, slow electric mobility, difficult transition to hydrogen, and last but not least, significant holes in the federal budget and sluggish economic growth: As you have probably noticed, the energy transition in Germany has recently run into trouble. Achieving the ambitious political climate goals seems to be moving further and further away, according to many critics.

Energy transition: But what about the rest of the world? While Germany is struggling, the development on a global level seems to be much more positive, according to a new report by research organization BloombergNEF (BNEF). According to the report, global spending on the energy transition increased by a strong 17% last year. The volume amounted to a remarkable $1.8 trillion, according to experts.

This amount includes investments in the installation of renewable energies, sales of electric cars, and the construction of hydrogen production systems, among others. In the chart published by BNEF, you can see the development of clean energy spending since 2004:

Source: BloombergNEF (https://www.bloomberg.com/news/articles/2024-01-30/china-leads-global-clean-energy-spending-which-record-1-8-trillion-in-2023)

Clean energy: BNEF calls for even more speed The growth is certainly remarkable, but according to experts, it is still not sufficient to achieve the Paris climate goals on a global level. BNEF Chief Analyst Albert Cheung called on both political and economic actors to do much more for the energy transition.

According to BNEF, more than $4.8 trillion will need to be spent on clean energy between 2024 and 2030 worldwide – per year. This is the only way to put the world on a net-zero path. The investments would therefore need to increase by (hard to imagine) almost 170% compared to 2023.

China continues to dominate the energy transition Interestingly, when looking at countries and regions, China was by far the most important player in 2023 as well. According to BNEF, the country pumped $676 billion into the energy transition last year. China installed more solar panels in 2023 than the US has in its entire history, according to the China Electricity Council (CEC). And according to the CEC, the capacities for wind and solar power could exceed those of coal-fired power for the first time ever this year.

The EU follows far behind China with a total of $341 billion, while the US ranks third as an individual state with $303 billion. Behind them are the United Kingdom ($74 billion), Brazil ($35 billion), Japan ($32 billion), and India ($31 billion).

Electric mobility overtakes renewable energy for the first time The largest sector in 2023 was electric mobility for the first time. Global investments in this sector increased by a whopping 36% to $634 billion. This surpassed investments in renewable energies, which amounted to $623 billion (+8%). According to BNEF, the third largest market was power grids, which are essential for providing ecological energy. Investments in this sector amounted to $310 billion.

Also interesting: Although the capital market has repeatedly devalued the hydrogen sector in recent months and years, this important energy source for the climate change is clearly on a growth path. In 2023, spending on hydrogen amounted to $10.4 billion, tripling compared to 2022.

My conclusion for you For investors, the new study offers interesting insights, especially in the raw materials sector. Although the prices of some important energy transition raw materials fell significantly last year due to macroeconomic challenges, the numbers from BNEF now show that the transformation is still being driven by gigantic sums of money. This results in strong demand prospects for metals such as copper (wind turbines, solar panels, electric cars, power grids, etc.), silver (wind turbines, solar panels, electric cars), lithium (electric cars), nickel (electric cars), cobalt (electric cars), germanium (solar panels), gallium (solar panels), indium (solar panels), iridium (hydrogen production), and rare earths (wind turbines, electric cars). Of course, not all of these raw materials are equally attractive for investors. There are substitution risks for some materials – for example, for nickel and cobalt. Both raw materials could be less important for the production of rechargeable batteries for electric cars in the future than originally expected.

If you want to minimize your risk as an investor, you can invest in copper. The metal is the all-rounder of the energy transition. Thanks to its excellent electrical conductivity, copper plays an irreplaceable role in all areas of the energy transition. After all, the transformation of the energy sector is based on a significant expansion of electricity. No wonder, then, that copper is now considered the most strategic of all commodities by many experts.