Global Clean Energy Investments to Hit $2tn in 2024, Double Fossil Fuel Figures

Major imbalances in investments across developing economies outside China persist, the International Energy Agency said on Thursday.

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The world is on track to invest $2 trillion in clean energy technologies and infrastructure, nearly double the amount going to planet-warming fossil fuels, according to a new report.

Lower costs and improved supply chains are fuelling global investments in clean technologies such as renewables, electric vehicles (EVs), nuclear power, grids, storage, and heat pumps, the International Energy Agency (IEA) said in its annual World Energy Investment report published Thursday. Slightly over $1 trillion will be spent on coal, gas, and oil. Global spending on renewables and grids combined overtook fossil fuel investments for the first time last year.

“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.

China leads the way as the world’s largest investor in clean energy this year. The country is expected to spend as much as 3.7 times the amount it is forecast to spend on fossil fuels. Europe comes in second with an estimated $370 billion in clean energy investments, followed by North America with $315 billion. The latter remains the biggest investor in fossil fuels, despite putting 1.2 times the money in clean energy. In the Middle East, Africa and Eurasia, fossil fuel spending is still higher than clean energy spending.

“The rise in clean energy spending is underpinned by strong economics, by continued cost reductions and by considerations of energy security,” said Birol, referring to policy initiatives to accelerate the energy transition adopted by large economies such as the multi-billion US Inflation Reduction Act.

Emerging and developing economies, on the other hand, are lagging behind. In the case of battery storage, for example, for every dollar advanced economies and China invest in the technology, other emerging and developing economies only invest one cent, according to the report.

The Solar photovoltaic (PV) will dominate investments this year, with the world forecast to pour some $500 billion in the technology – more than all other electricity generation technologies combined – as the price of modules continues to fall, according to the report.

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The burning of coal, natural gas, and oil for electricity and heat is the single-largest source of global greenhouse gas (GHG) emissions, the primary drivers of global warming by trapping heat in the atmosphere and raising Earth’s surface temperature. Global fossil fuel consumption has more than doubled in the last 50 years, as countries around the world aim to improve their standards of living and economic output. In 2023, all three of the most potent GHGs – carbon dioxide (CO2), methane, and nitrous oxide – reached record highs.

As the major source of global emissions, the energy sector holds the key to addressing the world’s climate challenge. The IEA has urged countries to halt new gas and oil field projects, arguing that this is the only way to keep the 1.5C-compatible net-zero emissions scenario alive. Last year, the agency forecasted that the global power sector is set for a tipping point on its carbon dioxide emissions in 2025, as renewables and other cleaner sources, including nuclear energy, are on track to cover all of the world’s additional electricity demand over the next three years.

Featured image: Andrew Watson/Climate Visuals Countdown