Global investment flows bounced back to pre-Covid levels in 2021, according to the UN Conference on Trade and Development (UNCTAD), but it expects this growth to be short-lived.

While Covid-19 cases have been declining, the war in Ukraine has upended the global economy, sending markets from food to fuel to finance into turmoil.

Renewables enter this new period of geopolitical uncertainty in a strong position. International projects in renewable energy have boomed in number and value in recent years, becoming the main engine of growth for international project finance. Energy Monitor’s weekly data shows that 2021 was another record-breaking year for green energy, which secured more than $500bn in financing.

At least six renewable energy projects were worth more than $10bn, according to UNCTAD’s World Investment Report 2022, published in June. The largest was InterContinental Energy’s green hydrogen project in Australia, which was valued at $74bn. The company aims to produce 3.5 million tonnes per year of renewable hydrogen by 2030 through approximately 30GW of wind and 20GW of solar power.

Overall, there were 1,193 renewable energy projects announced in 2021, compared with 143 in real estate, 109 in mining, 102 in oil and gas and 59 in petrochemicals.

Despite renewables’ appeal to international investors, fossil fuel projects also made a post-Covid comeback, reports UNCTAD. International project finance in petrochemicals grew by 370% in 2021, while the increase for oil and gas projects was 131%.

The most significant jump in announced fossil fuel investments was in Asia, where they rose from $19bn in 2020 to $62bn in 2021. The single largest new fossil fuel project is the Basra-Aqaba oil pipeline in the Middle East, which is set to extend more than 1,700km from Iraq’s southern city of Basra to the Red Sea port of Aqaba in southern Jordan. The pipeline's cost is estimated at more than $18bn and it should deliver approximately 200,000 barrels of oil per day when completed.

More than 60% of all international finance projects are in developed countries, where over 85% of the financing is purely from the private sector. In contrast, UNCTAD reports that in developing countries public participation is required in more than 50% of projects.

Another worrying trend for developing countries is that while renewable energy projects still dominate greenfield investments in sectors related to the UN Sustainable Development Goals, they were less in value and number than a year earlier. In 2021, the value of 144 renewables projects was estimated at $38m, while in 2019, 241 projects attracted more than $40m of greenfield investment.

This article originally appeared on our sister website Energy Monitor.