Global investment in renewable energy is expected to reach $2 trillion (€1.84 trillion) this year. This growth according to the International Energy Agency (IEA) will be twice the amount invested in fossil fuels.
The findings are part of the latest edition of World Energy Investment report released on Thursday. The annual publication provides insights into the latest investment trends across the global energy landscape.
IEA Executive Director Fatih Birol said for every dollar going to fossil fuels today, almost two dollars are invested in clean energy.
He said clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy.
“The rise in clean energy spending is underpinned by strong economics, by continued cost reductions, and by considerations of energy security,” According to Birol, there is a strong element of industrial policy as major economies compete for advantage in new clean energy supply chains.
“More must be done to ensure that investment reaches the places where it is needed most, in particular the developing economies where access to affordable, sustainable and secure energy is severely lacking today.”
The report finds that despite pressures on financing, global investment in clean energy is set to reach almost double the amount going to fossil fuels in 2024, helped by improving supply chains and lower costs for clean technologies.
This year, total energy investment worldwide is expected to top $3 trillion for the first time. Some $2 trillion is expected to flow towards clean technologies such as renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps. The remainder – slightly over $1 trillion – is set to go to coal, gas and oil.
However, even as spending on clean energy breaks records, there are still major imbalances and shortfalls in energy investment in many parts of the world. The report highlights these discrepancies and the barriers they present to building a more secure, sustainable and just energy system.
For the first time ever, combined investment in renewables and grids overtook the amount spent on fossil fuels in 2023.
In particular, solar PV is attracting huge levels of spending (see chart below for more). China, which is seeing strong domestic demand for solar, lithium batteries and electric vehicles, is set to account for the largest share of clean energy investment this year, reaching an estimated $675 billion.
Europe and the United States follow, with clean energy investments of $370 billion and $315 billion, respectively.
These three major economies alone make up more than two-thirds of global clean energy investment. In emerging and developing economies outside China, clean energy investment in 2024 is set to surpass $300 billion for the first time, led by Brazil and India.
Still, the report finds that this level of spending – which accounts for only about 15% of the global total – is far below what is required to meet growing energy demand in many of these countries, where the high cost of capital is holding back the development of new projects. Global upstream oil and gas investment is expected to increase by 7% in 2024 to reach $570 billion, following a similar rise in 2023.
This is broadly aligned with the demand levels implied in 2030 by today’s policy settings, according to the report – but it is far higher than projected in scenarios that hit national or global climate goals.
Notably, clean energy investments by oil and gas companies accounted for only 4% of the industry’s overall capital spending in 2023. Spending on grids – key to enabling faster clean energy transitions – is set to reach $400 billion in 2024, having been stuck at around $300 billion annually between 2015 and 2021. Investments in battery storage are also taking off and are poised to reach $54 billion in 2024. However, this spending also remains highly geographically concentrated.
When the Paris Agreement was reached in 2015, the combined investment in renewables and nuclear for electricity generation was twice the amount going to fossil fuel-fired power. In 2024, this is set to rise to ten times as much, the report highlights, with solar PV leading the transformation of the power sector.
Global upstream oil and gas investment is expected to increase by 7% in 2024 to reach $570 billion, following a similar rise in 2023. The growth in spending in 2023 and 2024 is predominantly by national oil companies in the Middle East and Asia.
The report finds that oil and gas investment in 2024 is broadly aligned with the demand levels implied in 2030 by today’s policy settings, but far higher than projected in scenarios that hit national or global climate goals. Clean energy investment by oil and gas companies reached $30 billion in 2023, accounting for only 4% of the industry’s overall capital spending, according to the report. Meanwhile, coal investment continues to rise, with more than 50 gigawatts of unabated coal-fired power approved in 2023, the highest since 2015.
In addition to economic challenges, grids and electricity storage have been a significant constraint on clean energy transitions. But spending on grids is rising and is set to reach $400 billion in 2024, having been stuck at around $300 billion annually between 2015 and 2021.
The increase is largely due to new policy initiatives and funding in Europe, the United States, China and some countries in Latin America. Meanwhile, investments in battery storage are taking off and set to reach $54 billion in 2024 as costs fall further. Yet again, this spending is highly concentrated.
For every dollar invested in battery storage in advanced economies and China, only one cent was invested in other emerging and developing economies.
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