2025 Global Energy Investment to Reach Record $3.3 Trillion, Driven by ‘Clean Technologies’: IEA Report

An increase in spending on clean energy is expected to drive record global energy investment of 3.3 trillion in 2025, with 2.2 trillion of that in “clean-energy technologies,” according to the latest report from the International Energy Agency (IEA).

Despite economic uncertainty and geopolitical tensions, the World Energy Investment 2025 report shows China leads the way as the largest investor in energy.

Clean energy technologies will attract twice the capital of fossil fuels, with more investment being made in solar PV than in any other technology, the report said.

“Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record $3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks,” said Executive Director of the IEA Fatih Birol in a press release from the intergovernmental organization. “The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects.”

Investment in renewables and other clean technologies like nuclear, storage, low-emissions fuels, electrification and efficiency are on track to reach a record $2.2 trillion in 2025. This reflects not just efforts to lower emissions, but the expanding influence of energy security concerns, industrial policy and electricity-based solutions being more cost competitive.

Investment in natural gas, oil and coal is expected to total $1.1 trillion.

The report provides a comprehensive look at the global landscape of current investment across regions, fuels and technologies. It also explores some major changes that have happened over the past decade.

“When the IEA published the first ever edition of its World Energy Investment report nearly ten years ago, it showed energy investment in China in 2015 just edging ahead of that of the United States,” Birol said. “Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union – and almost as much as the EU and United States combined.”

China’s share of clean energy spending worldwide has risen in the past decade from one-quarter to nearly a third, supported by investments in a range of technologies, from solar and wind to hydropower, nuclear, EVs and batteries.

“Today’s investment trends clearly show a new Age of Electricity is drawing nearer. A decade ago, investments in fossil fuels were 30% higher than those in electricity generation, grids and storage. This year, electricity investments are set to be some 50% higher than the total amount being spent bringing oil, natural gas and coal to market,” IEA said.

Spending on the generation of low-emissions power globally has nearly doubled in the past five years, with solar PV leading the way. Investment in both rooftop and utility-scale solar is projected to reach $450 billion this year.

Investment in battery storage is also growing rapidly, and is expected to soar to more than $65 billion in 2025.

However, grid investment, while now $400 billion annually, is failing to keep up with spending on electrification and generation. In order to maintain electricity security, investment in grids would need to climb toward being equal with spending on generation by the early 2030s. But this is being hampered by tight supply chains for cables and transformers, in addition to lengthy permitting procedures.

According to the report, lower demand and prices for oil are poised to result in a decrease in upstream oil investment for the first time since 2020.

“Its short investment cycle makes US tight oil the bellwether for changing market dynamics, with an anticipated fall of almost 10% in spending in 2025. Nonetheless, a recent wave of consolidation and technology improvements have kept costs in check and production is still set to grow in 2025,” the report said.

Meanwhile, liquefied natural gas (LNG) investment is rising, as new projects in Qatar, Canada, the United States and elsewhere are preparing to come online. The global LNG market from next year to 2028 is set for its largest ever surge in capacity.

Spending patterns of nations remain uneven, the report said, with many developing economies — particularly in Africa — struggling to raise capital for energy infrastructure. Africa currently accounts for two percent of global investment in clean energy.

“Despite being home to 20% of the world’s population and rapidly growing energy demand, total investment across the continent has fallen by a third over the past decade due to declining fossil fuel spending and insufficient growth in clean energy,” the press release said. “To close the financing gap in African countries and other emerging and developing economies, international public finance needs to be scaled up and used strategically to bring in larger volumes of private capital.”