Global energy investment to hit record $3.3 trillion in 2025, driven by renewables and electricity demand: IEA

Global energy investment is expected to increase in 2025 to a record $3.3 trillion, a 2% rise over 2024, despite headwinds from elevated geopolitical tensions and economic uncertainty, says

the International Energy Agency (IEA). Of this, around $2.2 trillion will go collectively to renewables, nuclear, grids, storage, low-emission fuels, efficiency, and electrification, which

is twice as much as the $1.1 trillion going to oil, natural gas, and coal during the year.

The IEA's report – World Energy Investment 2025 – says 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, led by China’s drive to reduce reliance on oil and gas imports, Europe’s push to accelerate spending on renewables, and a pickup in spending on solar in India.

Another 20% of the increase came from the United States. 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 $1.5 trillion in 2025, some 50% higher than the total amount being spent on bringing oil,

natural gas, and coal to market.

Solar leads the waySpending on low-emission 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 $450 billion in 2025, making it the largest single item in the world’s energy investment spending. Global spending on batteries for power sector storage is also set to reach $66

billion this year. Nuclear investment is making a comeback, rising by 50% over the past five years. Spending on new nuclear plants and refurbishments is set to exceed $70 billion, with the

promise of further growth given the burgeoning interest in new technologies such as small modular reactors.

Fossil fuel investment to fallBased on announced and revised plans by companies and the pipeline of projects under construction, investment in fossil fuel supply in 2025 is set to total $1

trillion. This is around 2% lower than investment levels in 2024 and marks the first drop in overall investment since 2020. Upstream oil and gas investment is set to fall by around 4% to

just under $570 billion in 2025. This is driven by a year-on-year decline in upstream oil investment of around 6% (to around $420 billion). Refinery investment is set to drop to a record low

in 2025 — around 1 mb/d of new capacity is set to be added, but this will be offset by a similar level of closures.

More than $20 billion is set to be invested in LNG in 2025, and one new LNG project has recently achieved a final investment decision (FID). The period between 2026 and 2028 is likely to see

some of the largest-ever annual expansions in LNG capacity, around 40% of which will take place in the United States. Investment in liquid biofuels, biogases, and low-emissions hydrogen is

set to rise by 30% in 2025 to a record high close to $25 billion. China and India lead the overall increase in coal investment, but a shortening coal supply project pipeline and lower prices

suggest growth may soon slow globally, says the report.

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