Global investment in clean energy technologies is on track to hit $2 trillion in 2024, nearly double the amount allocated to fossil fuels, despite the challenges posed by higher financing costs. This surge in investment is driven by improving supply chains and lower costs for clean technologies, according to a new report from the International Energy Agency (IEA).
For the first time, total energy investment worldwide is expected to exceed $3 trillion in 2024, with approximately $2 trillion dedicated to clean technologies. These include renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps. The remaining investment, slightly over $1 trillion, will go to coal, gas, and oil. Notably, 2023 marked the first year in which combined investment in renewable power and grids surpassed that of fossil fuels.
Despite these promising trends, the report warns of significant imbalances and shortfalls in energy investment across different regions. Emerging and developing economies, excluding China, are set to spend over $300 billion on clean energy for the first time, led by India and Brazil. However, this only represents about 15% of global clean energy investment, insufficient to meet the growing energy demands in these countries. High capital costs are a major obstacle to developing new projects in these regions.
IEA Executive Director Fatih Birol commented on the situation, stating, “Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy. For every dollar going to fossil fuels today, almost two dollars are invested in clean energy.” He emphasized the need for more investment in developing economies, where access to affordable, sustainable, and secure energy is critically lacking.
Since the Paris Agreement in 2015, investment in renewables and nuclear for electricity generation has increased significantly. By 2024, this investment is expected to be ten times the amount spent on fossil fuel-fired power, with solar PV playing a pivotal role in transforming the power sector. Investment in solar PV is projected to grow to $500 billion in 2024, driven by falling module prices.
China is poised to lead in clean energy investment in 2024, with an estimated $675 billion, driven by strong domestic demand in solar, lithium batteries, and electric vehicles. Europe and the United States follow with investments of $370 billion and $315 billion, respectively. Together, these three economies account for over two-thirds of global clean energy investment, highlighting significant disparities in international capital flows into energy.
Upstream oil and gas investment is expected to rise by 7% in 2024, reaching $570 billion, continuing the trend from 2023. This increase is mainly driven by national oil companies in the Middle East and Asia. The report notes that oil and gas investment in 2024 aligns with current policy-driven demand levels for 2030 but far exceeds the levels needed to meet national or global climate goals. In 2023, clean energy investment by oil and gas companies amounted to $30 billion, just 4% of the industry’s overall capital expenditure. Coal investment is also increasing, with approvals for more than 50 gigawatts of unabated coal-fired power in 2023, the highest since 2015.
Economic challenges have also impacted grids and electricity storage, which are crucial for clean energy transitions. However, spending on grids is set to rise to $400 billion in 2024, up from the annual average of $300 billion between 2015 and 2021. This increase is attributed to new policy initiatives and funding in Europe, the United States, China, and parts of Latin America. Investment in battery storage is also accelerating, expected to reach $54 billion in 2024 as costs continue to fall. Yet, this investment remains highly concentrated, with emerging and developing economies receiving only a fraction of the funding directed toward advanced economies and China.
i(x) Net Zero plc (LON:IX) is an investing company which focusses on Energy Transition and Sustainability in the Built Environment, and was founded in 2015 by Trevor Neilson, Pär Lindström and Howard W. Buffett.
