According to the International Energy Agency (IEA), two-thirds of global energy investment this year will be directed towards clean technologies.
In its latest annual World Energy Investment report, the IEA said total global energy investment will exceed $3 trillion for the first time, with almost $2 trillion allocated to renewables, electric vehicles, nuclear, electricity grids, storage, low-emission fuels, efficiency improvements and clean technologies such as heat pumps.
The IEA noted that clean energy investment has accelerated since 2020, with spending on renewables, grids and storage now exceeding spending on oil, gas and coal combined, attributing the increase to improving supply chains and falling costs.
About $1 trillion of global energy investment goes to fossil fuels. Global upstream oil and gas investment is expected to see a similar increase in 2023, followed by a 7% increase in 2024 to reach $570 billion, according to the report. The increased spending in 2023 and 2024 is mainly driven by national oil companies in the Middle East and Asia.
The report said oil and gas investment in 2024 was “broadly in line with demand levels implied for 2030 by current policy settings, but much higher than projected in scenarios that achieve national or global climate goals.”
Clean energy investments by oil and gas companies will reach $30 billion in 2023, but will account for just 4% of the industry’s total capital spending. Investments in sustainable aviation fuels (SAF) will reach $1 billion, and direct air capture (DAC) projects will receive $800 million, up 140% from 2023. Nearly 20 commercial-scale carbon capture, utilization and storage (CCUS) projects in seven countries reached final investment decision (FID) last year, and the agency estimates that 110 capture facility, transportation and storage projects could also reach FID status in 2024.
Additionally, the report said newly approved liquefied natural gas (LNG) projects led by the United States and Qatar could bring a new wave of investment that could increase global LNG export capacity by 50%. “The concentration of projects aiming to start operations in the second half of the decade is likely to increase competition and drive up costs for the sector’s limited number of specialist contractors,” it said.
The report highlights that there remain “significant imbalances and shortfalls in energy investment flows” in many parts of the world, highlighting low levels of clean energy spending in emerging and developing countries outside China as high capital costs hinder the development of new projects.
“Clean energy investments are setting new records even in tough economic times, highlighting the momentum of the new global energy economy. Nearly two dollars are now invested in clean energy for every dollar spent on fossil fuels,” said IEA Executive Director Fatih Birol. “Increased clean energy spending is underpinned by robust economies, continuing cost reductions and energy security considerations. But there is also a strong industrial policy component as major economies race to gain advantage in new clean energy supply chains. More needs to be done to ensure that investment gets to where it is most needed, especially developing countries, which currently suffer from significant lack of access to affordable, sustainable and secure energy.”
China will account for the largest share of clean energy investment in 2024, reaching an estimated $675 billion. The IEA attributes this to robust domestic demand, particularly in three industries: solar, lithium batteries, and electric vehicles. Europe and the United States will follow, with $370 billion and $315 billion in clean energy investment, respectively. These three largest economies alone account for more than two-thirds of global clean energy investment, “highlighting disparities in international capital flows into energy,” the IEA said.
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