Global Energy Shift: Record $2.2 Trillion Invested in Green Transition in 2024

In its latest report on global energy investments published in early June, the International Energy Agency (IEA) announced that a record $2.2 trillion has been invested in the energy transition in 2024 (including renewables, nuclear, networks, storage, biofuels), or double the investments reserved for fossil fuels (oil, gas, coal).

While the rapid growth in energy transition investments over the past five years has been driven by post-pandemic recovery plans, other factors have now taken over, such as technology, reindustrialization in developed countries, or the need to ensure energy security.

The electrification momentum of the economy is expected to continue in the coming years, continuing to fuel significant energy demand, and we remain convinced that green technologies are now inevitable and will be the ones to benefit most.

The importance of geopolitical factors

The IEA notes that about 70% of the increase in investments in the energy transition comes from the main net importers of fossil fuels: at the forefront is China, which has set itself ambitious goals with the desire to become a world leader in green technologies.

For its part, Europe has significantly accelerated not only its investments in renewable sources but also its energy efficiency gains, faced with Russia’s invasion of Ukraine and the interruption of gas imports. The United States, on the other hand, contributes about 20% of the increase in investments, thanks to infrastructure plans and the IRA (at this point the consequences of a U-turn by the Trump administration are not yet felt) and the desire to counter China in its dominance in the green technology sector.

Strong dynamics in electricity demand

Ten years ago, investments in fossil fuel supply were 30% higher than those in electricity generation, networks and storage. Today, the roles have reversed: investments in electricity will reach $1.5 trillion in 2024, or about 50% more than the total amount spent to bring oil, natural gas and coal to market.

The majority of these investments, $800 billion, are related to the electrification of uses, leading to a strong increase in demand from industry, cooling, electric mobility, data centers and artificial intelligence. In parallel, investments in electricity networks and storage accounted for $390 billion and $66 billion respectively in 2024. Finally, investments in nuclear are back in vogue, with about $70 billion spent in 2024, bringing the increase to over 50% in the last five years.

China Strengthens Technological Leadership in Energy Transition

In 2024, China confirmed its leading position in the energy transition, with around $630 billion invested, or almost 30% of the total, surpassing the United States and Europe, both with investments of around $500 billion.

China, which dominates the solar, storage and electric mobility value chains, also has two of the leading groups in energy R&D spending: battery maker CATL and carmaker BYD. The U.S. backtracking on policies to support green technologies risks amplifying China’s dominance, although the expected strong growth of data centers and artificial intelligence should lead to a surplus of investments in clean energy generation capacity, networks and storage by 2030.

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(Featured image by Andreas Gücklhorn via Unsplash)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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