Global Energy Investments to Exceed $3 Trillion for the First Time

Investments in clean energy technologies are expected to reach $2 trillion this year, nearly double the investments in fossil fuels. Total energy investments have surpassed $3 trillion.

According to the annual World Energy Investments report by the International Energy Agency (IEA), global energy sector investments will exceed $3 trillion for the first time this year.

Despite rising financing costs worldwide, $2 trillion of these investments are expected to go towards clean energy technologies, including renewable energy, electric vehicles, nuclear energy, grids, batteries, low-emission fuels, energy efficiency solutions, and heat pumps.

The remaining investment, slightly over $1 trillion, is expected to be allocated to fossil fuels such as coal, oil, and gas.

Among clean energy technologies, investments in renewable energy, grids, and batteries are anticipated to surpass those in coal, oil, and gas.

Solar Energy Leads Investment in Power Generation

Solar energy investments are expected to exceed $500 billion this year, driven by decreasing costs, making it the largest investment among all power generation sources. Solar energy alone will account for 25% of clean energy technology investments.

Despite the global increase in investments in clean energy technologies, these investments are unevenly distributed across regions.

In developing economies outside of China, investments in clean energy technologies are expected to exceed $300 billion for the first time, led by countries such as India and Brazil. However, this amount represents only 15% of total clean energy investments and falls significantly short of the level required to meet the increasing energy demand in these countries. High capital costs in these regions make it difficult to develop new projects.

Two-Thirds of Clean Energy Investments in China, Europe, and the US

In China, clean energy investments are expected to reach $675 billion this year, making it the largest contributor. Strong domestic demand for solar energy, lithium batteries, and electric vehicles drives these investments.

In Europe and the US, clean energy investments are projected to reach $370 billion and $315 billion, respectively. These three major economies account for more than two-thirds of global clean energy investments, highlighting the inequality in international capital flows.

Oil and Gas Investments to Increase by 7% to $570 Billion

Global investments in oil and gas production are expected to increase by 7% to $570 billion this year, compared to 2023. Last year, these investments rose by 9%, predominantly driven by national oil companies in the Middle East and Asia.

According to the IEA, while oil and gas investments are largely aligned with the demand levels projected by current policies for 2030, they are significantly higher than what is anticipated in scenarios aimed at achieving national and global climate targets.

Investments by oil and gas companies in clean energy reached $30 billion in 2023, representing only 4% of their total capital expenditures last year, while coal investments continue to rise. Over 50 gigawatts of coal-fired power plants were approved last year, the highest level since 2015.

Battery Investment Distribution Remains Uneven

Although investments in grids and electric storage are increasing, they still represent a significant constraint in the clean energy transition. Annual investments in this area hovered around $300 billion from 2015 to 2021, but are expected to reach $400 billion this year. This growth is largely supported by new policy initiatives and funding sources in Europe, the US, China, and some countries in Latin America.

Battery investments are expected to reach $54 billion this year, driven by cost reductions. However, spending in this area remains highly concentrated regionally, with every dollar invested in battery storage in developed economies and China matched by only one cent in other developing economies.

“The New Global Energy Economy is Gaining Momentum”

IEA President Fatih Birol, commenting on the report, stated that clean energy investments continue to break records despite challenging economic conditions, indicating the momentum gained by the new global energy economy. “Today, for every dollar invested in fossil fuels, two dollars are invested in clean energy. The increase in clean energy spending is driven by ongoing cost reductions and concerns about energy security,” he said.

However, Birol noted that major economies are competing with strong industrial policies to gain an advantage in new and clean energy supply chains. He emphasized the need for more efforts to ensure that investments reach regions where they are most needed, particularly developing economies where access to affordable, sustainable, and secure energy is severely lacking.

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