Global spending on clean energy technologies and infrastructure on track to reach $2 trillion in 2024, even as higher financing costs hamper new projects, especially in developing and emerging economies
Despite pressures on financing, global investment in clean energy will nearly double that of fossil fuels by 2024, helped by improved supply chains and lower costs for clean technologies, according to a report by new of the IEA.
Total energy investment worldwide is expected to exceed $3 trillion in 2024 for the first time, with around $2 trillion set to go towards clean technologies – including renewables, electric vehicles, nuclear power, grids, storage , low emission fuels, efficiency and heating improvements. pumps – according to the latest edition of the IEA’s annual report on World Energy Investments. The remainder, just over $1 trillion, will go to coal, gas and oil. In 2023, combined investment in renewable energy and grids surpassed the amount spent on fossil fuels for the first time.
The new report warns, however, that there are still large imbalances and shortfalls in energy investment flows in many parts of the world. It highlights the low level of clean energy spending in developing and emerging economies (outside China), which will pass $300 billion for the first time – led by India and Brazil. However, this accounts for only about 15% of global clean energy investment, far short of what is required to meet the growing energy demand in many of these countries, where the high cost of capital is hindering the development of new projects. .
“Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum of the new global energy economy. For every dollar that goes into fossil fuels today, almost two dollars are invested in clean energy,” said the IEA Executive Director. Fatih Birol. “The increase in clean energy spending is supported by a strong economy, continued cost reductions and energy security considerations. But there is also a strong element of industrial policy, as major economies compete for advantages in new clean energy supply chains. More must be done to ensure that investment reaches the places where it is needed most, especially in developing economies where access to affordable, sustainable and secure energy is sorely lacking today.”
When the Paris Agreement was reached in 2015, the combined investment in renewables and nuclear power generation was double the amount going into fossil fuel power. By 2024, this is set to increase tenfold, the report points out, with solar PV leading the transformation of the energy sector. More money is now going into solar PV than all other electricity generation technologies combined. By 2024, investment in solar PV will increase to $500 billion as falling module prices spur new investment.
China will account for the largest share of clean energy investment in 2024, reaching about $675 billion. This results from strong domestic demand in three industries in particular – solar, lithium batteries and electric vehicles. Europe and the United States follow, with clean energy investments of $370 billion and $315 billion, respectively. These three major economies alone account for more than two-thirds of global clean energy investment, highlighting disparities in international energy capital flows.
Global investment in upstream oil and gas is expected to grow by 7% in 2024 to reach $570 billion, following a similar increase in 2023. The increase in spending in 2023 and 2024 is mainly from national oil companies in the East Middle East and Asia. The report finds that oil and gas investment in 2024 is broadly in line with demand levels implied in 2030 by today’s policy parameters, but much higher than projected in scenarios that hit national or global climate targets. According to the report, clean energy investments by oil and gas companies reached $30 billion in 2023, accounting for just 4% of the industry’s overall capital expenditures. Meanwhile, coal investment continues to grow, with more than 50 gigawatts of uninterrupted coal-fired power approved by 2023, the highest since 2015.
In addition to economic challenges, grids and electricity storage have been a significant constraint in the clean energy transition. But spending on networks is growing and is set to reach $400 billion in 2024, having stagnated at around $300 billion annually between 2015 and 2021. The increase is largely due to new policy and funding initiatives in Europe, The United States, China and some countries in Latin America. Meanwhile, investment in battery storage is growing and will reach $54 billion in 2024 as costs fall further. Again, these costs are highly concentrated. For every dollar invested in battery storage in advanced economies and China, only one cent is invested in other emerging and developing economies.
