Since 2015, global investment in clean energy has seen a significant increase.

Recently, the International Energy Agency (IEA) released its annual report, "World Energy Investment Report 2024," which shows that this year's total global energy investment will exceed $3 trillion for the first time.

Thanks to improved supply chains and reduced costs of clean technologies, global investment in clean energy and infrastructure is expected to reach $2 trillion, which is about twice the investment in traditional fossil fuels such as coal, oil, and natural gas during the same period.

The IEA believes that the acceleration of global investment in clean energy is influenced by many factors, including emission reduction targets, technological advancements, the necessity of energy security, and the strategic layout of new industries by major economies to stimulate the manufacturing of clean energy and seize a stronger market position. However, geographically, the distribution of global investment in clean energy is not uniform. Investment in clean energy by developing economies, excluding China, remains limited.

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IEA Executive Director Fatih Birol emphasized: "Strong economies, continuous cost reductions, and considerations for energy security have supported the growth of clean energy expenditure. Now, it has been proven that the faster the transition to clean energy, the greater the benefits for governments, businesses, and households. The way to make daily energy use more affordable for more people is to accelerate the transition. However, there is still much work to be done to achieve this goal."

New investment trends

IEA data shows that since 2020, global investment in clean energy, mainly in renewable energy, electric vehicles, nuclear power, power grids, energy storage, low-emission fuels, energy efficiency improvements, and heat pumps, has increased significantly. Among them, in 2023, the total global investment in renewable energy and power grids within clean energy slightly exceeded $1.2 trillion, surpassing fossil fuels (about $1.1 trillion) for the first time. The IEA expects this trend to continue in 2024.

A recent report released by the World Trade Organization (WTO) also shows that by 2050, clean energy will account for 90% of the global total electricity generation. With the transition to clean energy, it is expected that nearly 14 million jobs will emerge in the clean energy value chain, mainly in the fields of mining and metal extraction, manufacturing, and services.

Looking at the power generation technology sector, IEA data shows that the current global investment is mainly focused on the solar photovoltaic (PV) sector. "Over the past 2 years, the price of solar modules has decreased by at least 30% compared to the past. Stimulated by the cost reduction, the global investment in the solar photovoltaic sector will grow to $500 billion by the end of 2024, continuing to exceed the total investment in other power generation technologies," the report analyzes. The "Clean Energy Equipment Price Index," which the IEA tracks to measure the proportion of clean energy investment, hit its lowest point in nearly a decade in the fourth quarter of last year.

Affected by low costs, the IEA also emphasizes that although the growth rate of global investment in solar photovoltaics may slightly slow down after 2024, solar photovoltaics remain the core of the energy transition. Nowadays, the energy output for every $1 invested in solar photovoltaics is equivalent to 2.5 times that of 10 years ago.At the same time, global investment in the electric grid and energy storage sectors has also returned to pre-2019 levels and continues to climb. The International Energy Agency (IEA) estimates that these two sectors will attract approximately $440 billion in investments by 2024.

In 2024, China is expected to account for the largest share of global clean energy investments, with a total investment of about $675 billion, followed closely by Europe with approximately $370 billion, and the United States in third place with a total investment of about $315 billion.

The latest data from the China Electricity Council shows that in the first quarter of this year, the scale of clean energy under construction in China reached 512.05 million kilowatts, a year-on-year increase of 30.97%; the completed investment in clean energy was 117.3 billion yuan, a year-on-year increase of 6.64%.

Beware of regional investment imbalances

The report states that in some parts of the world, such as emerging and developing economies outside of China, clean energy investment remains insufficient. The total investment in the clean energy sector by China, the European Union, and the United States accounts for more than two-thirds of the global total. The level of clean energy expenditure in emerging and developing economies like India and Brazil remains low. This year, for the first time, the clean energy expenditure of these emerging and developing economies has just exceeded $300 billion, accounting for only about 15% of global clean energy investment, which is far below the growing energy demand of these countries.

The latest research from the Organisation for Economic Co-operation and Development (OECD) also mentions the gap in clean energy investment levels between different economies. OECD data shows that developing countries, which make up two-thirds of the world's population, invest only 20% of the global total in clean energy. "Strengthening international cooperation in the development of clean energy is particularly important."

Where will the next emerging market for global clean energy investment be?

The IEA believes that the Middle East may become one of the biggest drivers of the rise in global clean energy investment in the future. As a traditional energy-producing region, the Middle East is home to five of the world's largest oil-producing countries and is also an important source of natural gas. Currently, investment in energy in the Middle East is still dominated by traditional fossil fuels. For example, for every $1 invested in fossil fuels, only 20 cents are invested in clean energy.

Global upstream oil and gas investment is expected to grow by 7% in 2024, reaching $570 billion, a similar increase to that of 2023. This is mainly led by national oil companies (NOCs) in the Middle East and Asia.

Currently, several Middle Eastern countries are also accelerating their green transition. For example, Saudi Arabia has announced the establishment of a $1.5 billion sustainable development fund, focusing on investing in technologies needed to support the transition to green energy; the United Arab Emirates Development Bank has stated that for investments in renewable energy, the bank will provide financing up to 100% of the project value, with a financing term of up to 15 years and a grace period of 2 years.The International Energy Agency (IEA) forecasts that by the end of 2030, investment in clean energy in the Middle East will be more than three times that of 2024. At that time, for every dollar invested in fossil fuels in the Middle East, 70 cents will be allocated to clean energy.

The report also warns that investment in clean energy by the traditional oil and gas industry remains insufficient. For instance, in 2023, global oil and gas companies invested $30 billion in clean energy, which is only 4% of the industry's total capital expenditure. Meanwhile, investment in coal continues to grow, with more than 500 gigawatts of coal-fired power projects approved in 2023, the highest level since 2015.

To limit the increase in global temperatures to 1.5 degrees Celsius above pre-industrial levels, according to the IEA's 2050 net-zero emissions scenario, an additional $5 trillion is needed each year to fully bridge this gap. This means that by 2030, global investment in clean energy, including renewable power generation, electricity grids, and storage, needs to double.

Fatih Birol, the IEA's Executive Director, warned: "While the growth in clean energy investment is encouraging, we are far from being on track to achieve the 1.5-degree target."