IEA Report: 2025 Clean Energy Investment to Reach US$2.2tn
The International Energy Agency’s (IEA) latest outlook for 2025 paints a picture of growing momentum behind clean energy investment.
Global energy investment is forecast to reach US$3.3tn, 2% higher in real terms than in 2024, with clean technologies continuing to dominate the landscape.
However, the report also warns of persistent structural imbalances, especially in grid capacity and support for developing economies.
Clean energy overtakes fossil fuels
The report states that clean energy will attract US$2.2tn in 2025, twice the projected US$1.1tn for fossil fuels.
This includes spending on renewables, nuclear, electricity grids, battery storage, energy efficiency, low-emissions fuels and electrification.
“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 US$3.3tn as countries and companies seek to insulate themselves from a wide range of risks,” explains Fatih Birol, IEA Executive Director.
“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.”
The share of clean energy in total investment has grown steadily over the past five years, driven not only by climate goals, but by economic recovery efforts, industrial policy and national energy security agendas.
Electric mobility, particularly EVs, has become a significant area of investment.
Many EV models are now cost competitive with internal combustion engines in markets such as China, highlighting the rapid commercialisation of electrified transport.
Which regions and sectors are driving investment in renewable energy?
Crucially, 70% of this growth has come from net fossil fuel importers such as China, Europe and India.
In the United States, increased spending is being shaped by strategic competition with China in clean technology supply chains.
Investment in the electricity sector is expected to reach US$1.5tn in 2025, now 50% more than total fossil fuel supply spending.
“It’s encouraging to see growing global investment in the energy transition. We’re getting closer to the US$3.5 trillion annual capital needed between now and 2050 to achieve net zero, but there’s still more to be done,” says Frederic Godemel, EVP Energy Management, Schneider Electric.
“We cannot let geopolitical uncertainty or economic headwinds derail our progress, after all the climate crisis doesn’t abide by our political or economic cycles.
“We must move beyond cautious optimism.
“With many clean energy projects still stalling, we need to double down on demand-side solutions, which are half of the solution to net zero.
“We have the technologies to decarbonise today, now it’s about scaling Electricity 4.0– the combination of electric and digital- to drive immediate progress.”
A decade ago, fossil fuel investment outpaced electricity-focused investment by 30%, a complete reversal.
Today, the main drivers of electricity demand growth include electrified transport, industry, cooling, data centres and artificial intelligence.
Solar power for the win
Low emissions power generation spending has nearly doubled over the past five years.
Solar PV remains the dominant force, with projected investment reaching US$450bn in 2025, making it the single largest energy investment category globally.
Storage infrastructure is growing in parallel, with US$66bn earmarked for batteries supporting power sector flexibility.
China is also increasing its influence in solar exports to the developing world.
In 2024, Pakistan alone imported 19 GW of solar modules, equivalent to nearly half its grid-connected capacity.
The rise of nuclear and coal power
Nuclear power investment will exceed US$70bn in 2025, representing a 50% increase over five years.
Interest in small modular reactors is rising and new gas-fired capacity is being pursued in the US and the Middle East.
However, the fossil fuel landscape remains complex.
While upstream oil investment is forecast to fall by 6% in 2025, the largest drop since 2016, coal supply and approvals are increasing, particularly in Asia.
China and India alone approved nearly 115 GW of new coal capacity in 2024, the highest since 2015.
By contrast, no new coal-fired steam turbines were ordered in advanced economies in 2024, an unprecedented development.
“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,” says Fatih.
“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.”
Grids and infrastructure lag behind
Annual investment in electricity grids stands at around US$400bn, compared to US$1tn for generation assets.
Grid investment is failing to keep pace with the rollout of renewables.
Barriers include protracted permitting processes, transformer and cable shortages, and weak utility balance sheets, especially in developing markets.
The shortfall in transmission and distribution capacity now represents one of the most serious constraints on the global energy transition.
Spending on low emissions fuels is expected to reach a new high in 2025, although it remains modest at under US$30bn.
Investment in carbon capture, utilisation and storage (CCUS) could grow tenfold by 2027 if planned projects proceed.
Hydrogen is another emerging area: while some projects have been cancelled or delayed, 2025 is expected to see around US$8bn in hydrogen-related investment, nearly double that of 2024.
Inequalities and policy drivers
China, Europe and the US continue to dominate clean energy investment.
While developing economies are making progress, they still fall significantly short of the scale needed to meet global climate and energy goals.
Investment gaps remain particularly acute in Africa, Southeast Asia and parts of Latin America.
Key drivers of investment have broadened beyond climate policies.
Energy security, industrial competitiveness and geopolitical considerations are now central to investment decisions, especially in clean tech manufacturing and energy supply resilience.
The IEA’s 2025 forecast confirms that clean energy is now the main destination for global energy investment, backed by falling technology costs, growing policy support and rising electricity demand.
However, coal expansion in Asia, insufficient grid upgrades and weak support for developing nations continue to challenge global climate ambitions.
Investment in mature clean technologies is not always driven by emissions goals but often by economics, security and industrial strategy.
For the global transition to succeed, investment must not only increase, but flow more equitably.
The next phase of progress hinges on stronger infrastructure, better financing mechanisms and a more inclusive approach to energy development.
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