A new report by the IEA reveals that global spending on clean energy technologies and infrastructure is on track to hit $2tn in 2024, driven largely by attractive cost reductions, improving supply chains, energy security, and government policies. This is despite higher financing costs for new projects. The combined investment in renewable power and grids only recently overtook the amount spent on fossil fuels, in 2023. 2024 will see it at double the $1tn going to coal, gas and oil this year. That’s a big jump. And annual investment in grids and storage is at last rising, to cope with the bottleneck they present to growing clean energy generation. The IEA warns, again, that emerging and developing economies (except China) are lagging far behind: a major problem as it’s there that energy demand is rising fastest and is likely to be fulfilled by fossil fuels unless something changes. Here is the IEA’s short summary, looking at different regions and technologies. The full report is available online.
$2tn for clean technologies in 2024
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, according to a new IEA report.
Total energy investment worldwide is expected to exceed $3 trillion in 2024 for the first time, with some $2 trillion set to go toward clean technologies – including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps – according to the latest edition of the IEA’s annual World Energy Investment report. The remainder, slightly over $1 trillion, is going to coal, gas and oil. In 2023, combined investment in renewable power and grids overtook the amount spent on fossil fuels for the first time.
Emerging and developing economies
The new report warns, 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 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.
Drivers: cost reductions, energy security, policies
“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,” said IEA Executive Director Fatih Birol. “The rise in clean energy spending is underpinned by strong economics, by continued cost reductions and by 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.”
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. More money is now going into solar PV 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, Europe, U.S.
China is set to account for the largest share of clean energy investment in 2024, reaching an estimated $675 billion. This results from strong domestic demand across three industries in particular – 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.
Oil, Gas, Coal
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.
Grids, Storage
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.
Explore the full report
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This article is taken from the IEA Newsroom and is published with permission
