Despite elevated geopolitical tensions and economic uncertainty, this tenth edition of the IEA’s World Energy Investment shows that capital flows to the energy sector are set to rise in 2025 to USD 3.3 trillion, a 2% rise in real terms on 2024. Around USD 2.2 trillion is going collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, twice as much as the USD 1.1 trillion going to oil, natural gas and coal. Open questions about the economic and trade outlook means that some investors are adopting a wait-and-see approach to new project approvals, but we have yet to see significant implications for spending on existing projects. 

Rapid growth in spending on energy transitions over the past five years was kicked off by post-pandemic recovery packages and then sustained by a variety of economic, technology, industrial and energy security considerations, not only by climate policies. Some 70% of the increased spending came from net fossil fuel importers. This was led by China’s drive to reduce reliance on oil and gas imports and exert leadership in new technology areas; Europe’s push to accelerate spending on renewables and efficiency gains after Russia’s full-scale invasion of Ukraine and the consequent cut to pipeline gas deliveries; and a pick-up in spending on solar in India. Another 20% of the increase came from the United States, where supportive policies were motivated in part by the desire to challenge China’s position in emerging clean technology supply chains. Emissions reductions provide a powerful reason to invest, but are often not the primary driver for investment in technologies that are increasingly mature and cost-competitive.

Investment trends are being shaped by the onset of the ‘Age of Electricity’ and the rapid rise in electricity demand for industry, cooling, electric mobility, data centres and artificial intelligence (AI). Ten years ago, investments in fossil fuel supply were 30% higher than those for electricity generation, grids and storage. Today, these positions are reversed. Investment in the electricity sector is set to reach USD 1.5 trillion in 2025, some 50% higher than the total amount being spent on bringing oil, natural gas and coal to market. There is also increasing expenditure on the electrification of end-uses, largely reflecting the additional cost of buying an electric vehicle (EVs) versus an internal combustion engine model, even though many EV models being sold in China – the leading market for sales – are now competitive on an up-front basis with their conventional equivalents.

Spending on low-emissions power generation has almost doubled over the past five years, led by solar PV. Investment in solar, both utility-scale and rooftop, is expected to reach USD 450 billion in 2025, making it the largest single item in our inventory of the world’s investment spending. Fierce competition among suppliers and ultra-low costs are seeing imported solar panels, often paired with batteries, become an important driver of energy investment in many emerging and developing economies. Chinese solar exports to developing economies surpassed those to advanced economies in early 2025, with countries such as Pakistan having imported a reported 19 GW in 2024 alone (equivalent to about half the country’s grid-connected electrical capacity). Global spending on batteries for power sector storage is set to reach USD 66 billion this year.

Nuclear investment is making a comeback, rising by 50% over the past five years, and approvals of new gas-fired power are rising. Spending on new nuclear plants and refurbishments is set to exceed USD 70 billion, with the promise of further growth given the burgeoning interest in new technologies such as small modular reactors. The United States and the Middle East accounted for nearly half of a resurgent level of Final Investment Decisions (FID) for natural gas power.

Fast-growing electricity use and concerns about electricity security underpinned a wave of coal plant approvals in China. China gave the green light to almost 100 GW of new coal-fired plants in 2024, and India a further 15 GW, pushing global approvals to their highest level since 2015. By contrast, for the first time on record, there were no new steam turbine orders for coal-fired power plants in advanced economies in 2024.

Investment in grids is struggling to keep pace with the rise in power demand and renewables deployment. Each year, some USD 400 billion is now spent on grids worldwide, compared with around USD 1 trillion on generation assets. Maintaining electricity security amid rising electricity use requires a rapid increase in grid spending, moving towards parity with the amount spent on generation. However, this is being held back by lengthy permitting procedures, tight supply chains for transformers and cables, and – especially in developing economies – by the poor financial condition of many utilities.

Lower oil prices and demand expectations are set to result in a a 6% fall in upstream oil investment in 2025, the first year-on-year decline since the Covid slump in 2020 and the largest since 2016. Our initial expectation for 2025, based on company announcements, was that upstream oil and gas spending would be flat, but sentiment has since become more downbeat as oil prices came under pressure. While spending in natural gas fields is set to maintain the levels seen in 2024, lower expenditure on oil brings our expectation for overall upstream oil and gas investment for 2025 to just under USD 570 billion, a decline of around 4%. Of this, 40% is dedicated to slowing down production declines at existing fields. Global refinery investment in 2025 is set to fall to its lowest level in the past 10 years.

Its short investment cycle makes US tight oil the bellwether for changing market dynamics, with an anticipated fall of almost 10% in spending in 2025. Nonetheless, a recent wave of consolidation and technology improvements have kept costs in check and production is still set to grow in 2025.

Spending on new LNG facilities is on a strong upward trajectory as new projects in the United States, Qatar, Canada and elsewhere prepare to come online. Despite some delays and cost overruns in LNG projects that are planned and under construction, the period between 2026 and 2028 is likely to see some of the largest ever annual expansions in LNG capacity. Projects under construction in the United States (130 billion cubic metres of annual export capacity) promise to nearly double its export capacity, bringing not only additional volumes but also destination-flexibility to international gas markets.

Investment in low-emissions fuels is set to reach a new high in 2025, but at less than USD 30 billion, it remains small in absolute terms and projects remain heavily dependent on policy and regulatory support. If all approved projects for carbon capture, utilisation and storage (CCUS) move ahead, then investments in CCUS will rise more than tenfold by 2027 from current levels. Low-emissions fuel projects are particularly prone to policy uncertainty. Some hydrogen projects have been cancelled or delayed in the past 12 months, but there remains a pipeline of approved projects that requires around USD 8 billion of investment in 2025, almost double the level seen in 2024.

Investments in coal supply continue to tick upward with another 4% increase expected in 2025, a slight slowdown compared with the 6% annual average growth seen over the last five years. Nearly all the growth in coal investments in 2024 came from China and India to meet domestic demand.

End use investments in electrification and other efficiency improvements have nearly doubled over the last decade. Boosted by strong EV sales, progress with building renovations and the electrification of industrial processes, demand-side investment is set to reach about USD 800 billion in 2025. Investment in the buildings sector is pulled down by slower construction starts, notably in China, but this is offset by higher anticipated sales of efficient appliances and cooling systems.

Costs for some key clean technologies have resumed their strong downward trend, while supply chain pressures are still visible for grid materials and in the oil and gas sector. The IEA’s Clean Energy Equipment Price Index hit a record low in early 2024, a 60% fall compared to 10 years ago, with Chinese solar panel and wind turbine prices down 60% and 50% respectively since 2022 (by contrast, wind turbine prices in Europe rose). But inflationary pressures loom larger in other areas, notably for grid materials which have  nearly doubled in price in the last five years as a result of rising demand for cables and transformers. Upstream oil and gas costs are set to climb by about 3% in 2025. Cost pressures on the oil and gas sector, and for all large engineering projects, in the United States include the effects of higher tariffs on imported steel and aluminium.

Despite growing concerns about the high supply concentration for critical minerals, growth in investment slowed in 2024 amid lower prices, and exploration activity was flat year-on-year. Projects outside the main incumbent producers were most affected by the price uncertainty. The large integrated mining companies continued to raise their investment, but specialist players scaled back. While exploration spending in Canada and the United States increased marginally compared with the previous year, it decreased in Australia and Latin America.

The geography of energy investment is shifting in ways that will have long-term implications. China is the largest global energy investor by a wide margin, and its share of global clean energy investment has risen from a quarter ten years ago to almost one-third today. 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. Meanwhile, spending on upstream oil and gas is gravitating towards large resource-holders in the Middle East. The region’s share of global upstream investment is kept in check by very low costs but is set to reach 20% in 2025 – the highest level on record – while constrained spending in Russia has brought its share down to around 6%.

Spending patterns remain very uneven – with many developing economies, especially in Africa, struggling to mobilise capital for energy infrastructure. Currency depreciation and higher interest rates have made it more difficult to access and service debt: in Africa, overall debt servicing costs are equivalent to over 85% of total energy investment in 2025. Energy investments in Africa are one-third lower in 2025 than they were in 2015, as a decline in oil and gas spending has been only partially offset by higher investments in renewable power. Africa accounts for only 2% of clean energy investment despite having 20% of the world population.

Although well behind China, energy investment trends in India and Brazil stand out among emerging and developing economies. Strong and sustained policy support has enabled these countries to take advantage of low cost solar power, accompanied by significant wind and bioenergy investments, and the development of Brazil’s large offshore oil resources. India looks set to reach its 2030 target of 50% non-fossil generation capacity ahead of schedule. Southeast Asia’s deployment of emerging technologies lags behind other regions, but the region is finding a place in clean energy supply chains, second only to China for solar manufacturing, while Indonesia is the world’s largest nickel producer.

A growing finance gap in developing economies points to a larger role for international sources. Mobilising international finance for clean energy investment in emerging and developing economies will need to be combined with the development of domestic capital markets. International public finance can be a catalyst for private finance and accounts for around 7% of EMDE’s (excluding China) clean energy investment (about USD 32 billion annually), but this is well below developing country needs and expectations.

A growing share of China’s external energy investments and official financing support is going to clean energy and to clean technology manufacturing. China has long been a major overseas investor in energy-related sectors, across a wide range of fuels and technologies (with the exception of new coal-fired power plants since 2021), as well as in critical minerals. There are signs of a shift in emphasis in recent years. In the last five years, Chinese EV and battery manufacturers have announced some USD 80 billion of investment to set up and expand manufacturing facilities in major markets, including Indonesia, Thailand, Brazil, Mexico and Türkiye. Solar manufacturers, long established in Southeast Asia, are also reassessing their overseas strategies, and looking closely at opportunities in the Middle East.

New analysis on export credit agencies (ECA) highlights the evolving roles that they play in financing the energy sector. ECAs mainly provide credit guarantees that have enabled much larger volumes of commercial finance to flow, particularly to emerging and developing economies. Over the last decade, these institutions have been shifting a larger portion of their funding away from fossil fuels.

The rise of sustainable finance over the last decade is facing headwinds. Some elements are still robust, notably sustainable debt issuances, led by green bonds. But the previous flurry of activity from financial institutions to ‘green’ their own practices has slowed, as regulatory and policy support has ebbed in key markets.

Energy innovators are adjusting to higher costs of capital and policy uncertainty, amid signs of a shift in focus for venture capital investment towards AI-related projects. Clean energy R&D spending continued to grow in 2024, supported by both the public and corporate sector. However, energy-related venture capital has been declining over the past two years, while spending on AI grew to reach USD 84 billion in 2024, or three times the level of energy-related venture capital (VC) funding.

The composition of the top 20 firms ranked by energy R&D budgets has changed dramatically since 2015. Ten years ago, the rankings were dominated by US and European automotive companies and oil and gas players, with the only exceptions being China State Grid Company and Petrochina. In 2024, the top 20 included a pure-play battery manufacturer for the first time (CATL, a Chinese firm), and two EV-focused carmakers (BYD and Tesla). Three other firms that seek to position themselves as equipment suppliers for electrification are also on the list (Denso, Schneider Electric and Robert Bosch), while the only oil and gas companies are state-owned Petrochina, Sinopec and Saudi Aramco.

Investment flows are not yet on track to deliver on the renewable and efficiency goals agreed at COP28. The annual investment required in renewable power still needs to double to achieve a tripling of installed renewable capacity by 2030, accompanied by rising spending on grids, storage and other forms of flexibility to ensure secure and cost-effective utilisation of this capacity. Spending on efficiency and electrification needs to almost triple within the next five years to deliver a 4% annual energy intensity improvement by the end of the decade.

Efforts to reduce the cost of capital need to be the cornerstone of ‘the Baku to Belem Roadmap’, launched at COP29, that aims to mobilise at least USD 1.3 trillion in finance for low-emissions projects in developing economies by 2035. Scaling up climate finance to developing countries requires targeted policy action to address a variety of real and perceived risks impeding investments in clean energy that are driving up the cost of financing in these countries. Mobilising private capital hinges on the ability of developing economies to conduct policy reforms and set up predictable regulatory environments. International public finance needs to be better targeted at managing project risks through guarantees, and other credit enhancement tools.

The energy world has changed dramatically since the release of the first World Energy Investment report a decade ago. Nonetheless, some of the trends that we discussed in our first report echo in the 2025 edition. Then, as now, we analysed the impact of price pressures on the oil sector, with shale in the front line. We reported that China edged ahead of the United States as the largest global energy investor. And we found that a “major shift in investment towards low-carbon sources of power generation is underway”. The need for adequate, timely investment remains as important as ever for energy security, sustainability and affordability. Today’s energy decision makers are facing new geopolitical tensions and the risk of energy shocks remains high. However, they have at their disposal a much broader range of highly competitive new technologies than was the case in 2015, and an accumulated wealth of policy experience on how to accelerate their deployment.