China’s Energy Spending Equals EU, US Combined In 2025: IEA

Global energy investment is set to increase in 2025 to a record $3.3 trillion despite headwinds from elevated geopolitical tensions and economic uncertainty, said a new International Energy Agency (IEA) report, with clean energy technologies attracting twice as much capital as fossil fuels.

Investment in clean technologies – renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification – is on course to hit a record $2.2 trillion this year, reflecting not only efforts to reduce emissions but also the growing influence of industrial policy, energy security concerns and the cost competitiveness of electricity-based solutions, according to the 2025 edition of the IEA’s annual World Energy Investment report.

Over the past decade, China’s share of global clean energy spending has risen from a quarter to almost a third, underpinned by strategic investments in a wide range of technologies, including solar, wind, hydropower, nuclear, batteries, and EVs. A clear pointer to efforts to reduce dependence on fossil fuels as far as possible.  At the same time, global spending on upstream oil and gas is gravitating towards the Middle East.

Interestingly, India remains one of the few remaining large economies where investment in thermal or coal is yet to be pulled back, even as as investments in green energy continue apace.

India is projected to surpass its 2030 non-fossil generation target ahead of time. In 2024, clean energy investment in the country reached USD 33 billion, with a 12% growth anticipated in 2025 to almost $37 billion. All of Solar, battery and wind deployment is improving, with domestic manufacturing improving thanks to the PLI scheme.

However, India approved 15 GW of new coal-fired capacity in 2024, the highest in nearly a decade, thanks to rising demand outpacing the pace of renewables addition, plus issues linked to grid stability and dependable power supplies.

Fatih Birol, IEA head says, “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,” Birol added. “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.”

Electricity Investments Set To be 50% Higher Than Oil, Gas & Coal To Market

Today’s investment trends clearly show a new Age of Electricity is drawing nearer. A decade ago, investments in fossil fuels were 30% higher than those in electricity generation, grids, and storage. This year, electricity investments are set to be some 50% higher than the total amount being spent bringing oil, natural gas, and coal to market.

Globally, 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 $450 billion in 2025, making it the single largest item in the global energy investment inventory. Battery storage investments are also climbing rapidly, surging above $65 billion this year.

Rapid growth in electricity demand also underpins continued investment in coal supply, mainly in China and India. In 2024, China started construction on nearly 100 gigawatts of new coal-fired power plants, pushing global approvals of coal-fired plants to their highest level since 2015.

Investment In Grids Fails To Keep Pace With Spending On Generation & Electrification

In a worrying sign for electricity security, investment in grids, now at $400 billion per year, is failing to keep pace with spending on generation and electrification. Maintaining electricity security would require investment in grids to rise towards parity with generation spending by the early 2030s. However, this is being held back by lengthy permitting procedures and tight supply chains for transformers and cables. Spending patterns remain very uneven globally – with many developing economies, especially in Africa, struggling to mobilize capital for energy infrastructure, the report finds.

Africa accounts for just 2% of global clean energy investment. Despite being home to 20% of the world’s population and rapidly growing energy demand, total investment across the continent has fallen by a third over the past decade due to declining fossil fuel spending and insufficient growth in clean energy. To close the financing gap in African countries and other emerging and developing economies, international public finance needs to be scaled up and used strategically to bring in larger volumes of private capital, according to the report.