Investment in clean energy technologies is set to strike a record this year, despite global economic uncertainty, while spending on fossil fuels is to dip for the first time since 2020, the International Energy Agency (IEA) said yesterday.
US President Donald Trump’s administration has been hostile to renewable energy sources and trumpets boosting oil production, but the IEA said security concerns as well as rising demand for electricity — including from artificial intelligence (AI) and data centers — are driving investment in clean energy sources.
“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$3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks,” IEA executive director Fatih Birol said, as the agency published its latest annual “World Energy Investment” report.
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The IEA expects investment in clean technologies, including nuclear and electricity distribution grids, to hit a record US$2.2 trillion this year, while investment in oil, natural gas and coal is set to dip to US$1.1 billion, as companies react to falling prices and lower demand expectations.
The IEA said the shift in US policies would impact investment there in renewables.
“Spending on renewables and low-emissions fuels in the United States almost doubled over the last 10 years, but is now set to level off as supportive policies are scaled back,” the agency said.
The rapid rise in electricity demand — for industry, cooling, electric mobility, data centers and AI — is expected to attract US$1.5 trillion in investments this year, 50 percent more than fossil fuels, the report found.
The IEA also noted that nuclear energy has been making a comeback as electricity demand from data centers risks doubling in the next five years. While renewables are expected to meet most of that additional demand, the steady supply that nuclear plants offer has prompted a number of tech companies to enter into supply agreements.
Despite the rising levels of investment in renewable energy production, the IEA said that it must double to achieve the goal set at last year’s UN climate conference — a tripling of installed renewable capacity by 2030.
Meanwhile, China and India have approved the construction of the largest capacity of new coal-fired power plants in a decade, as the world’s two most populous nations seek to bolster energy security, the IEA found.
China gave the green light to almost 100 gigawatts of new coal-fired plants last year, and India a further 15 gigawatts, pushing global approvals to their highest level since 2015, the agency said.
“Nearly all the growth in coal investments in 2024 came from China and India to meet domestic demand,” it said.
Additional reporting by Bloomberg
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