The International Energy Agency (IEA) reports that global spending on clean energy technologies and infrastructure is expected to reach $2 trillion in 2024, even as higher financing costs hinder new projects, especially in emerging and developing economies.
In the latest edition of its annual World Energy Investment report, the IEA notes that despite pressures on financing, global investment in clean energy is set to reach almost double the amount going to fossil fuels in 2024, supported by improving supply chains and lower costs for clean technologies.
Total energy investment worldwide is expected to exceed $3 trillion in 2024 for the first time, with some $2 trillion going towards clean technologies – including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps. Slightly over $1 trillion will go to coal, gas and oil. In 2023, combined investments in renewable power and grids overtook the amount spent on fossil fuels for the first time.
The new report notes, however, that there are still major imbalances and shortfalls in energy investment flows in many parts of the world. It highlights the low level of clean energy spending in emerging and developing economies (outside China), which is set to exceed $300 billion for the first time – led by India and Brazil. Yet, this accounts for only about 15% of global clean energy investment, far below the levels 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.
“Clean energy investment is setting new records even in challenging economic conditions, confirming the momentum behind the new global energy economy. For every dollar going to fossil fuels today, almost two dollars are invested in clean energy,” said IEA Executive Director, Fatih Birol. “The rise in clean energy spending is underpinned by strong economics, continued cost reductions and considerations of energy security. But there is a strong element of industrial policy, too, 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 highlights that in 2024, investment in renewables and nuclear power is set to rise further, with solar PV leading the transformation of the power sector. More money is now going into solar PV power than all other electricity generation technologies combined. In 2024, investment in solar PV is set to grow to $500 billion as falling module prices spur new investments.
China is expected to account for the largest share of clean energy investment in 2024, reaching an estimated $675 billion. This results from strong domestic demand, mainly across three industries – solar, lithium batteries and electric vehicles. Europe and the United States follow, with clean energy investment of $370 billion and $315 billion respectively. These three major economies alone make up more than two-thirds of global clean energy investment, underlining the disparities in international capital flows into energy.
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 notes 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 meet 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. The report also notes that investment in coal-fired power 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. In parallel, investments in battery storage are taking off and are set to reach $54 billion in 2024 as battery 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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