How Global Energy Investment Transformed from 2019 to 2025

Between 2019 and 2025, the world saw a substantial shift in energy investment trends, with total spending surging from USD 1.8 trillion to USD 3.3 trillion. Clean energy received more than twice the funds compared to fossil fuels by 2025, driven by various factors including post-pandemic recovery initiatives, technological advancements, and geopolitical developments. China's strategy to diminish oil and gas imports, Europe's response to the Ukraine crisis, and U.S. policies promoting clean technology contributed to this change. By 2025, solar photovoltaics (PV) attracted the largest share of investment, reaching USD 450 billion, as costs significantly dropped due to economies of scale, particularly exploited by Chinese manufacturers. This led to a widespread adoption of distributed solar in emerging markets, such as Pakistan, where it provided an alternative to unreliable national grids. Investment in clean energy nearly aligned with the IEA's Sustainable Development Scenario, reaching around two-thirds of total energy investment. However, grid investment lagged, resulting in bottlenecks for renewable energy deployment and highlighting the pressure on infrastructure due to increased electrification of various sectors like transport and data centers. In advanced economies, an unexpected demand for firm baseload power arose, renewing interest in nuclear energy and natural gas to support new demands, such as those from AI and data centers. Innovation and investments also grew in energy storage, with investments in batteries reaching USD 66 billion by 2025. Despite advancements, the energy transition faced challenges such as supply chain constraints for critical minerals, underscoring the complex interactions within technology ecosystems. There were also disparities in clean energy deployment, with Africa receiving a disproportionate share of investment relative to its population. This highlighted the persisting barriers such as financing costs, currency risks, and institutional challenges that technology cost reductions alone cannot overcome. Finally, the decline in fossil fuel investments, particularly in oil, reflected both climate policies and market dynamics, with U.S. shale investments falling. The period from 2019 to 2025 emphasized the importance of integrating policy, finance, technology, and societal behaviour to further progress in clean energy transitions. The IEA recognized the need to double renewable investments, increase grid spending, and establish frameworks for distributed energy to meet 2030 climate goals.