Energy investment in 2023

The recovery from the Covid-19 pandemic and the response to the global energy crisis have provided a major boost to global clean energy investment

Global energy investment in clean energy and in fossil fuels, 2015-2023


Increases across almost all categories push anticipated spending in 2023 up to a record USD 2.8 trillion

Power investment, 2019-2023


Fuel supply investment, 2019-2023


End use investment, 2019-2023


Oil production investment and solar investment, 2013 vs 2023

Clean energy spending

Renewables, led by solar, and EVs are leading the expected increase in clean energy investment in 2023

Annual clean energy investment, 2015-2023


Less than half of the oil and gas industry’s unprecedented cash flow from the energy crisis is going back into traditional supply and only a small fraction to clean technologies

Distribution of cash spending by the oil and gas industry, 2008-2022


The momentum behind clean energy investment stems from a powerful alignment of costs, climate and energy security goals, and industrial strategies

The recovery from the slump caused by the Covid-19 pandemic and the response to the global energy crisis have provided a significant boost to clean energy investment. Comparing our estimates for 2023 with the data for 2021, annual clean energy investment has risen much faster than investment in fossil fuels over this period (24% vs 15%). Our new analysis highlights how the period of intense volatility in fossil fuel markets caused by the Russian Federation’s (hereafter “Russia”) invasion of Ukraine has accelerated momentum behind the deployment of a range of clean energy technologies, even as it also prompted a short-term scramble for oil and gas supply.

We estimate that around USD 2.8 trillion will be invested in energy in 2023. More than USD 1.7 trillion is going to clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification. The remainder, slightly over USD 1 trillion, is going to unabated fossil fuel supply and power, of which around 15% is to coal and the rest to oil and gas. For every USD 1 spent on fossil fuels, USD 1.7 is now spent on clean energy. Five years ago this ratio was 1:1.

Clean energy investments have been boosted by a variety of factors. These include improved economics at a time of high and volatile fossil fuel prices; enhanced policy support through instruments like the US Inflation Reduction Act and new initiatives in Europe, Japan, the People’s Republic of China (hereafter “China”) and elsewhere; a strong alignment of climate and energy security goals, especially in import-dependent economies; and a focus on industrial strategy as countries seek to strengthen their footholds in the emerging clean energy economy.

This momentum has been led by renewable power and EVs, with important contributions also from other areas such as batteries, heat pumps and nuclear power. In 2023 low-emissions power is expected to account for almost 90% of total investment in electricity generation. Solar is the star performer and more than USD 1 billion per day is expected to go into solar investments in 2023 (USD 380 billion for the year as a whole), edging this spending above that in upstream oil for the first time.

Consumers are investing in more electrified end uses. Demand for electric cars is booming, with sales expected to leap by more than one-third this year after a record-breaking 2022. As a result, investment in EVs (defined as the incremental spending on EVs vs the average price of vehicles sold in a given country) has more than doubled since 2021, reaching USD 130 billion in 2023. Global sales of heat pumps have seen double-digit growth since 2021.

The increase in fossil fuel investment expected in 2023 is unevenly spread around the world; less than half the cash flow available to the oil and gas industry is going back into new supply

2022 was an extraordinarily profitable year for many fossil fuel companies, as they saw revenues soar on higher fuel prices. Net income from fossil fuel sales more than doubled compared with the average in recent years, with global oil and gas producers receiving around USD 4 trillion.

Our overall expectation, based on analysis of the announced spending plans of all the large and medium-sized oil, gas and coal companies, is that investment in unabated fossil fuel supply is set to rise by more than 6% in 2023, reaching USD 950 billion.

The largest share of this total is going to upstream oil and gas, where investment is expected to rise by 7% in 2023 to more than USD 500 billion, bringing this indicator in aggregate back to the levels of 2019. Around half this increase is likely to be absorbed by cost inflation.

Many large oil and gas companies have announced higher spending plans on the back of record revenues. But uncertainties over longer-term demand, worries about costs, and pressure from many investors and owners to focus on returns rather than production growth mean only large Middle Eastern national oil companies are spending much more in 2023 than they did in 2022, and they are the only subset of the industry spending more than pre-pandemic levels.

The headline rise in spending on new oil and gas supply represents less than half of the cash flow that was available to the oil and gas industry. Between 2010 and 2019, three-quarters of cash outflows were typically invested into new supply. This is now less than half, with the majority going to dividends, share buybacks and debt repayment.

Investment by the oil and gas industry in low-emissions sources of energy is less than 5% of its upstream investment. This indicator differs widely by company, with double-digit shares common among the large European companies. Investment by the industry in clean fuels, such as bioenergy, hydrogen and CCUS, is picking up in response to more supportive policies but remains well short of where it needs to be in climate-driven scenarios.

Investment in coal supply is expected to rise by 10% in 2023, and is already well above pre-pandemic levels. Investment in new coal-fired power plants remains on a declining trend, but a warning sign came in 2022 with 40 GW of new coal plants being approved – the highest figure since 2016. Almost all of these were in China, reflecting the high political priority attached to energy security after severe electricity market strains in 2021 and 2022, even as China deploys a range of low-emission technologies at scale.  

The increase in clean energy spending in recent years is impressive but heavily concentrated in a handful of countries

Increase in annual clean energy investment in selected countries and regions, 2019-2023

Clean technology costs

Clean energy costs edged higher in 2022, but pressures are easing in 2023 and mature clean technologies remain very cost-competitive in today’s fuel-price environment

Average prices for selected technologies, 2014-2022


IEA clean energy equipment price index, 2014-2022


Notes of caution amid rising momentum behind clean energy transitions

The positive momentum behind clean energy investment is not distributed evenly across countries or sectors, highlighting issues that policy makers will need to address to ensure a broad-based and secure transition. The macroeconomic environment presents additional obstacles, with higher short-term returns for fossil fuel assets and rising borrowing costs and debt burdens. Clean energy investments often require high upfront spending, making the cost of financing a crucial variable for investors, even if this is offset over time by lower operating costs.

More than 90% of the increase in clean energy investment since 2021 has taken place in advanced economies and China. There are bright spots elsewhere: for example, solar investment remains dynamic in India; deployment in Brazil is on a steady upward curve ; and investor activity is picking up in parts of the Middle East, notably in Saudi Arabia, the United Arab Emirates and Oman. However, higher interest rates, unclear policy frameworks and market designs, financially-strained utilities and a high cost of capital are holding back investment in many other countries. Remarkably, the increases in clean energy investment in advanced economies and China since 2021 exceed total clean energy investment in the rest of the world.

After an unbroken run of cost declines, prices for some key clean energy technologies rose in 2021 and 2022 thanks largely to higher input prices for critical minerals, semiconductors and bulk materials like steel and cement. Solar PV modules were around 20% more expensive in early 2022 than one year earlier, although these price pressures have eased since. Wind turbine costs, especially for European manufacturers, remained high in early 2023, at 35% above the low levels of early 2020. Permitting has been a key concern for investors and financiers, especially for wind and grid infrastructure.

While solar deployment has been increasing year-on-year, the project pipeline for some other technologies has been less reliable. Investment in wind power has varied year-on-year in key markets in response to changing policy circumstances. Nuclear investment is rising but hydropower, a key low-emission source of power market flexibility, has been on a downward trend.

Weak grid infrastructure is a limiting factor for renewable investment in many developing economies, and here too current investment flows are highly concentrated. Advanced economies and China account for 80% of global spending and for almost all of the growth in recent years.

Our analysis presents a mixed picture on the prospects for energy efficiency and end use investments. They rose in 2022 thanks to the stimulus provided by new policies in Europe and North America, alongside exceptionally high energy prices. However, we expect spending to flatten in 2023 amid a slowdown in construction activity, higher borrowing costs and strains on household budgets.

Consequences of the energy crisis

Cuts in Russian gas deliveries to Europe have prompted higher investment in alternative sources of supply and in LNG infrastructure

Annual liquified natural gas import and export capacity additions, 2019-2027


Change in global investment in natural gas supply, 2019-2023

Growing momentum for hydrogen and CCUS

Strong policy signals and new support schemes have triggered a rapid expansion in the project pipelines for low-emissions hydrogen and CCUS

Capacity additions for CO2 capture projects by announced start date, 2017-2026


Capacity additions for hydrogen electrolysis projects by announced start date, 2017-2026


Gas investments are caught between immediate shortfalls and longer-term uncertainty, although low-emission opportunities are growing

Russia cut pipeline deliveries of natural gas to the European Union by around 80% in 2022, seeking leverage by exposing consumers to higher energy bills and supply shortages following its invasion of Ukraine. This led to strong price and policy incentives for investors to step up non-Russian gas supply, build up alternative delivery infrastructure, and scale up alternatives to natural gas. All of these effects are visible in our analysis.

The amount of new oil and gas resources approved for development in 2022 and 2023 has been below the average level seen over the past decade. However, 2023 is seeing a 25% increase in new approvals relative to 2022 and most of these are for natural gas, reflecting the push to substitute for the shortfall in Russian supply.

A wave of new regasification capacity is also underway as countries look to secure liquefied natural gas (LNG) imports. Europe’s annual regasification capacity is set to increase by 50 bcm from 2022-2025, expanding the continent’s overall LNG import capacity by one-fifth. Import projects are growing even more quickly in Asia, which is set to add over 100 bcm of LNG import capacity by 2025 (more than half in China).

The crisis has also prompted additional investment in liquefaction capacity, the most expensive part of the gas value chain. Around 60 bcm of capacity has been given the green light since Russia’s invasion of Ukraine, nearly double the rate of new approvals compared with the past decade. Along with projects already under construction, this leads to an unprecedented 170 bcm of export capacity that could come into operation between 2025 and 2027.

A key dilemma for investors undertaking large, capital‐intensive gas supply projects is how to reconcile strong near‐term demand growth with uncertain and possibly declining longer-term demand. This is a particular issue for Europe, given the continent’s strong climate goals. Many importers have been reluctant to commit to long-term contracts for gas supply. A preference for floating regasification terminals has been a way to avoid locking in future emissions.

Another avenue is to expand investment in low-emission fuels and in CCUS. New policies are swelling the project pipeline in these areas, driven by energy security and climate imperatives. Europe has a burgeoning number of electrolytic hydrogen projects, and reinforced US incentives in the Inflation Reduction Act have prompted a wave of investor interest in hydrogen and CCUS. After a number of false dawns, the number of large-scale projects and well-capitalised sponsors, along with a string of acquisitions by oil and gas majors (notably in transport biofuels and biogases), suggests that investment in low-emission fuels could grow strongly in the coming years.

Critical minerals and manufacturing

Investment is flowing to clean energy manufacturing and critical minerals, but ensuring well- sequenced growth of new supply chains will be a major task

Capital expenditure by major mining companies in the non-ferrous metals, 2018-2022


Lithium-ion battery manufacturing capacity, 2022-2030


Competition for clean energy manufacturing and for supplies of critical minerals and metals is a major issue for the resilience of transitions

A secure transition to clean energy hinges on resilient and diversified clean energy technology supply chains. According to the IEA Energy Technology Perspectives, some USD 1.2 trillion of cumulative investment to 2030 is needed in clean energy manufacturing and in critical minerals supply to get on track for a 1.5°C scenario, in addition to the energy sector investments covered in this report.

Record sales of EVs, strong investment in battery storage for power (which are expected to approach USD 40 billion in 2023, almost double the 2022 level) and a push from policy makers to scale up domestic supply chains have sparked a wave of new lithium-ion battery manufacturing projects around the world. If all capacity announcements were to materialise, then 5.2 TWh of new capacity could be available by 2030.

For the moment, China is the main player at every stage of global battery manufacturing, with the exception of the mining of critical minerals. The announced manufacturing plans would somewhat erode this position. In 2022, over 75% of existing battery manufacturing capacity was located in China. However, despite accounting for two-thirds of yearly global capacity additions to 2030, China’s share of global capacity could fall by nearly 10 percentage points by the end of the decade.

A key question for battery manufacturers is whether supplies of critical minerals will keep up with demand. Thanks to high prices and growing policy support, investment in critical mineral mining rose by 30% in 2022. Exploration spending also grew, notably for lithium, copper and nickel, led by Canada and Australia and with activities growing in Brazil and resource-rich countries in Africa. But moving from exploration to new production can take more than 10 years, and there remain widespread concerns that critical mineral investment will become a constraining factor for clean technology manufacturing and deployment.

Critical minerals and batteries are among the areas where clean technology innovation remains essential. Public spending on research and development has been on a steady upward trend, as has corporate spending. But venture capital funding for clean energy, after reaching a high in 2022, faces headwinds in a more difficult macroeconomic environment.

For a decade, cheap capital has lowered barriers to investment in riskier bets and thereby concealed potential weaknesses in innovation systems. With the cost of money set to rise, the health of these systems and the level of public support will be a critical determinant of how quickly new technology ideas continue to flow.

Scaling up clean investment to meet climate aligned scenarios

Scaling up clean investment is the key task for the sustainable and secure transformation of the energy sector

Historical investment in energy benchmarked against needs in IEA scenarios in 2030

Sustainable finance

Expanding access to finance will be vital: sustainable finance has weathered the storm of the energy crisis, but remains heavily concentrated in advanced economies

Sustainable debt issuances by issuer type, 2016-2022


Clean energy spending in selected regions, 2022


Sustainable debt issuances in selected regions, 2022


Clean energy investment is starting to flow, but imbalances point to continued risks ahead

In the IEA World Energy Outlook 2021, we wrote that “the world is not investing enough to meet its future energy needs […] IEA analysis has repeatedly highlighted that a surge in spending to boost deployment of clean energy technologies and infrastructure provides the way out of this impasse, but this needs to happen quickly or global energy markets will face a turbulent and volatile period ahead”.

This picture is starting to change: global energy investment is picking up, and the rise in clean energy investment since 2021 is leading the way, outpacing the increase in fossil fuel investment by almost three-to-one. Clean electrification is leading the charge. If it continues to grow at the rate seen since 2021, then aggregate spending in 2030 on low‑emission power, grids and storage, and end-use electrification would exceed the levels required to meet the world’s announced climate pledges (the APS). For some technologies, notably solar, it would match the investment required to get on track for a 1.5°C stabilisation in global average temperatures (the NZE Scenario).

However, progress has been uneven. Investment in expanding and modernising grids is lagging behind in many countries. A rising share of solar and wind needs to be accompanied by spending on technologies that provide greater flexibility to power systems. Supply chain and skills bottlenecks could constrain growth. And, above all, the geographical imbalances in investment need addressing, with clean energy investment in many emerging and developing economies growing only slowly and the number of people without access to modern energy services remaining stubbornly high.

Other pillars of clean energy transitions do not yet show the same positive dynamics as clean electrification. Investment in energy efficiency has been increasing, but is well off track to meet more ambitious climate scenarios. Investment in low-emission fuels is being spurred by new policy measures, but from a very low base.

Spending on fossil fuels is most closely aligned with the 2030 needs of a scenario reflecting today’s policy settings (STEPS), but producers need to watch closely how clean energy spending evolves, particularly the ways in which clean electrification affects demand for fuels in power generation, and for mobility and heat. The risks of locking in fossil fuel use are clear: fossil fuel investment in 2023 is now more than double the levels required to meet much lower demand in the NZE Scenario.

The crucial open question is how quickly clean energy investment scales up in emerging and developing economies, where supportive strategies and policies will need to be accompanied by improved access to finance. For the moment, sustainable finance instruments remain concentrated in advanced economies, accounting for nearly 80% of sustainable debt issuance in 2022. Issuances elsewhere (outside China) are growing from a low base, with India’s successful first green bond a landmark in this sector. Scaling up these instruments and mobilising much greater support from development finance institutions will be critical to the continued broadening and acceleration of clean energy transitions