Global spending on clean energy technologies and infrastructure on track to hit $2 trillion in 2024 even as higher financing costs hinder new projects, notably in emerging and developing economies
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 annualWorld Energy Investmentreport. 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.
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.
“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 is set to account for the largest share of clean energy investment in 2024, reaching an estimated $675billion. 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.
Global upstream oil and gas investment is expected to increase by 7% in 2024 to reach $570billion, 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.
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.
FAQs
The News. Investment in clean energy sources will double that of fossil fuels in 2024, the International Energy Agency said. Globally, it will surpass $3 trillion this year, with over $2 trillion going toward clean energy, according to the IEA.
What is the clean energy investment in 2024? ›
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 ...
How much has the US invested in clean energy? ›
The United States has also focused heavily on small-scale solar as well as utility-scale renewable technologies. Investments in clean energy totaled 495 billion U.S. dollars in 2022. China, Europe, and the United States are the. Solar and wind technologies are the most heavily invested in worldwide.
What is the EROI energy return on investment? ›
Energy return on investment (EROI) is a ratio that measures the amount of usable energy delivered from an energy source versus the amount of energy used to get that energy resource. In other words, the EROI function compares the cost of an energy plant to the revenues gained from selling said energy.
Is the IEA giving subsidies for fossil fuels? ›
In 2022, global subsidies for fossil fuel consumption exceeded USD 1 trillion for the first time, marking a significant increase. This surge was a result of disruptions in energy markets that led to international fuel prices surpassing the actual costs paid by many consumers.
Is clean energy still a good investment? ›
Undeniably, the renewable energy sector has vast potential, and it's expected to keep growing. Overall, solar and wind power generation have expanded more rapidly than natural gas-fired generation in the U.S. The use of coal continues to decline, and nuclear energy development has stayed fairly even.
Does Bill Gates invest in clean energy? ›
Bill Gates' Breakthrough Energy is raising another big fund for clean energy and climate investing. Breakthrough Energy Ventures, the climate-focused initiative launched by Microsoft co-founder Bill Gates, is raising its third fund. A new SEC filing reveals a $839 million fund.
Who is the biggest investor in clean energy? ›
Amazon invested in more than 100 new solar and wind energy projects in 2023, becoming the world's largest corporate purchaser of renewable energy for the fourth year in a row.
What is the clean energy investments Inflation Reduction Act? ›
The Inflation Reduction Act provides at least $4 billion from the Advanced Energy Project Credit – an allocated credit of up to 30% for advanced energy manufacturing investments – to projects in areas that have seen the closure of a coal mine or retirement of a coal-fired electric generating unit.
How much of the US is clean energy? ›
Renewable energy generates over 20% of all U.S. electricity , and that percentage continues to grow. The following graphic breaks down the shares of total electricity production in 2022 among the types of renewable power: In 2022, annual U.S. renewable energy generation surpassed coal for the first time in history.
During FY 2016–22, nearly half (46%) of federal energy subsidies were associated with renewable energy, and 35% were associated with energy end uses. Federal support for renewable energy of all types more than doubled, from $7.4 billion in FY 2016 to $15.6 billion in FY 2022.
Which US state has the most clean energy? ›
States With the Most Clean Electricity
| Rank | State | Combined clean summer capacity |
|---|
| 1 | Washington | 26,143 |
| 2 | Oregon | 13,158 |
| 3 | Idaho | 4,013 |
| 4 | Vermont | 621 |
16 more rowsJan 3, 2024
At the forefront of the 100% renewable energy countries list are Albania, Bhutan, Ethiopia, Iceland, Nepal, Paraguay, and the Democratic Republic of Congo (DRC). These nations, geographically diverse and with varying economic landscapes, serve as testaments to the diverse pathways toward a renewable future.
Which fossil fuel has the highest EROI? ›
Natural gas has a higher EROI than oil, with estimates ranging from 20 to 40. Higher EROI value indicates a more energy-efficient method, while lower value suggests that more energy is being invested in the energy-production process than is ultimately gained from the produced energy.
What is the return on renewable energy investments? ›
Financial Gain: Make some green while investing in green
Over 10 years, renewable energy outperformed fossil fuel, generating returns of 192.3% compared to 97.2%. In the past 5 years, the renewable energy investment continued to yield higher returns in addition to being less volatile than the fossil fuel portfolio.
What is the IEA projection for renewable energy? ›
By 2028, the IEA forecasts that renewables will account for 42% of global electricity generation, with wind and solar power making up 25%. Despite showing no growth across this period, hydropower is still expected to be the largest single source of renewable power.
Will renewable energy overtake fossil fuels? ›
Solar PV and wind account for 95% of the expansion, with renewables overtaking coal to become the largest source of global electricity generation by early 2025.
Is green energy more profitable than fossil fuels? ›
Even without a bonanza from oil companies, the International Energy Agency calculates that the world now invests $1.7 trillion per year in clean energy, higher than the $1.1 trillion being invested in fossil fuels. Partly, that's because wind and solar are profitable, albeit not as profitable as oil and gas.
Will renewable energy ever fully replace fossil fuels? ›
Renewables can effectively replace fossil fuels, creating crucial environmental, social and economic benefits. Global dependence on oil, natural gas and coal–and the damage this dependence inflicts–is well documented. But a transition away from fossil fuels is in progress and simply needs to be expedited.
