Global Clean Energy Investment Set to Double Fossil Fuel Spending in 2024: IEA Report

Despite financial pressures, global investment in clean energy is projected to nearly double that of fossil fuels in 2024, driven by improved supply chains and reduced 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 surpass USD 3 trillion in 2024, with around USD 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 USD 1 trillion-plus will be allocated to coal, gas, and oil. Notably, in 2023, investment in renewable power and grids outstripped fossil fuel spending for the first time.

However, the report highlights significant disparities and shortfalls in energy investment across different regions. Particularly concerning is the low level of clean energy spending in emerging and developing economies (excluding China), which is projected to exceed USD 300 billion for the first time, led by India and Brazil. Despite this increase, these investments account for only about 15% of global clean energy funding, far below what is needed to meet the growing energy demands in these regions. High capital costs are a significant barrier to the development of new projects in these countries.

"Clean energy investment is breaking records even under challenging economic conditions, underscoring the momentum behind the new global energy economy. For every dollar invested in fossil fuels today, almost two dollars are going into clean energy," said IEA Executive Director Fatih Birol. "The rise in clean energy spending is driven by strong economics, continuous cost reductions, and energy security considerations. However, there is also a significant element of industrial policy, as major economies compete for a lead in new clean energy supply chains. More must be done to ensure investment reaches the places it is needed most, particularly in developing economies where access to affordable, sustainable, and secure energy is severely lacking."

Since the Paris Agreement in 2015, investment in renewables and nuclear for electricity generation has doubled compared to fossil fuel-fired power. By 2024, this is expected to increase to ten times as much, with solar PV leading the transformation. Investment in solar PV alone is set to grow to USD 500 billion in 2024, spurred by falling module prices.

China is poised to account for the largest share of clean energy investment in 2024, with an estimated USD 675 billion, driven by strong domestic demand in solar, lithium batteries, and electric vehicles. Europe and the United States follow with investments of USD 370 billion and USD 315 billion, respectively. Together, these three economies will make up more than two-thirds of global clean energy investment, highlighting significant disparities in international capital flows.

Global upstream oil and gas investment is expected to increase by 7% in 2024, reaching USD 570 billion, after a similar rise in 2023. This growth is mainly driven by national oil companies in the Middle East and Asia. The report indicates that while oil and gas investment in 2024 aligns with current policy-driven demand levels for 2030, it significantly exceeds what is needed to meet national or global climate goals. Clean energy investment by oil and gas companies reached USD 30 billion in 2023, just 4% of their total capital spending. Meanwhile, coal investment is also rising, with over 50 gigawatts of unabated coal-fired power approved in 2023, the highest since 2015.

Grid and electricity storage investments, previously a bottleneck in clean energy transitions, are seeing substantial increases. Spending on grids is expected to reach $400 billion in 2024, up from around $300 billion annually between 2015 and 2021, driven by new policy initiatives in Europe, the United States, China, and some Latin American countries. Investments in battery storage are also accelerating, set to reach $54 billion in 2024 as costs continue to fall.

However, this spending remains 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.