Global energy investment to rise to USD 3.3 trillion in 2025: IEA

Global energy investment is set to reach USD 3.3 trillion in 2025, up 2% from 2024, according to a report from the International Energy Agency (IEA), World Energy Investment 2025. Around USD 2.2 trillion will go to clean energy, double the USD 1.1 trillion set for fossil fuels.

China, Europe, the US, and India drove most of the clean energy growth over the past five years. While emissions cuts are a factor, energy security, industrial policy, and tech leadership are key investment drivers.

Electricity is now the focus of global investment. USD 1.5 trillion will go into power generation, grids, and storage in 2025, outpacing fossil fuel supply spending. Solar power alone will attract USD 450 billion—more than any other energy technology. China leads solar exports, with developing countries like Pakistan importing significant capacity.

Battery storage will see USD 66 billion in investment. Nuclear is rebounding, with over USD 70 billion expected in 2025. Gas-fired power approvals are rising, especially in the US and the Middle East.

Coal investment remains strong in China and India. China approved 100 GW of coal power in 2024, the highest level since 2015. India added 15 GW. In contrast, no new coal steam turbine orders were placed in advanced economies.

Grid investment lags demand. Only USD 400 billion is spent annually on grids, while generation attracts nearly USD 1 trillion. Delays are due to permitting issues, weak utility finances, and supply chain constraints.

Oil investment is expected to fall 6% in 2025—its sharpest decline since 2016—due to weak prices. Upstream oil and gas spending will dip to below USD 570 billion. US tight oil spending is set to fall 10%. Refinery investment will hit a decade low.

Liquefied natural gas (LNG) spending remains strong, with capacity expansions in the US, Qatar, and Canada. US projects alone could double LNG export capacity by 2028.

Low-emission fuels will receive under USD 30 billion. Hydrogen and CCUS (carbon capture, utilisation and storage) investments remain dependent on policy support. Some projects were cancelled or delayed.

Demand-side investments—EVs, efficient appliances, industrial electrification—will reach USD 800 billion in 2025. While China’s building slowdown hurts construction, appliance and EV sales remain strong.

Clean technology costs are falling. Solar panel and wind turbine prices from China have dropped by 60% and 50% since 2022. Grid equipment costs, however, are rising, with cables and transformers nearly doubling in price since 2019.

Critical mineral investment slowed in 2024 as prices fell. Global exploration was flat, with the most slowdown in Australia and Latin America.

China remains the top energy investor globally, accounting for nearly one-third of clean energy spending. The US is levelling off as policy support slows. The Middle East’s share of upstream oil and gas investment will reach 20% in 2025.

Africa’s energy investment in 2025 is one-third lower than in 2015. High debt and interest costs are key barriers. Africa will account for only 2% of clean energy investment, despite having 20% of the world’s population.

India and Brazil stand out among emerging economies. India’s solar surge puts it ahead of schedule to reach its 2030 target of 50% non-fossil capacity. Brazil continues offshore oil expansion. Southeast Asia lags in deployment but is gaining ground in solar and battery supply chains.

Mobilising capital for clean energy in developing economies remains a key challenge. International finance accounts for just USD 32 billion per year. COP29’s Baku to Belem Roadmap aims to mobilise USD 1.3 trillion by 2035, but it will need strong policy reforms and targeted public finance to succeed.

Sustainable finance is under pressure. Green bonds remain strong, but overall momentum has slowed. Venture capital is shifting to artificial intelligence (AI), with AI funding tripling clean energy VC levels.

Energy R&D is growing, led by new players. The 2024 top 20 list includes battery makers like CATL and EV firms like Tesla and BYD. Traditional oil firms are losing ground.

However, global investments are not yet aligned with the COP28 targets. Renewable energy investments must double, and energy efficiency spending must triple by 2030 to stay on track.