Two thirds of all energy spending around the world — an amount totaling roughly $2 trillion — will be going to clean energy and infrastructure projects.
The new projection from the International Energy Agency shows how momentum has shifted to renewable projects — and also how much more money needs to be diverted to zero emission projects. A 2014 estimate from the IEA targeted $48 trillion in spending by 2035, which means far more money needs to pour in to the industry.
Improving supply chains and consistent declines in prices for clean energy and energy storage are driving new investments, according to the IEA. All this despite the high interest rate environment, which is impacting development in low income countries.
Image Credit: International Energy Agency
Renewable power, electric vehicles, new nuclear developments, energy grids, energy storage, low emission fuels, and energy efficiency improvements are all buckeed into the latest IEA assessment. Meanwhile oil, coal, and gas are set to receive $1 trillion in financing this year. Meanwhile, a report in the journal Science indicates that the world already has enough fossil fuel projects under development to meet power needs through the rest of the energy transition.
Despite the flow of new funds into clean energy, there are still major “imbalances and shortfalls in energy investment” that need to be addressed, according to the IEA. Emerfging and developing economies will exceed $300 billion in clean energy financing for the first time — thanks to India and Brazil. But at 15% of total investment, far more work needs to be done to move these growing economies off of fossil fuels.
Overall, China is set to invest the most in clean energy throughout the year, with estimates from the IEA reaching $675 billion in new funding — across solar, lithium batteries and electric vehicles. The US and Europe will combine to invest another $685 billion together in new technologies.
When the Paris Agreement was reached in 2015, the combined investment in renewables and nuclear for electricity generation was twice the amount going to fossil fuel-fired power. In 2024, this is set to rise to ten times as much, the report highlights, with solar PV leading the transformation of the power sector. More money is now going into solar PV than all other electricity generation technologies combined. In 2024, investment in solar PV is set to grow to $500 billion as falling module prices spur new investments.
Indications that nations are beginning to spend more on their electric grids should unlock even more investment opportunities, the IEA said. Infrastructure spending on energy storage, repowering and new transmission and distribution infrastructure should reach $454 billion by the end of the year. Roughly $54 billion of that figure will be devoted to energy storage.
The boom times for renewables are only just beginning as over $3 trillion per year will need to be invested in clean energy to hit the world’s targets.
