# LongBench v2 / 66f3d738821e116aacb2f446

task_id: 0a0a2cdd-c947-57b7-8ed9-1939fdd6b9e0
task_key: train--66f3d738821e116aacb2f446
task_revision_id: 1

{"choice_A":"Establish a global concessional lending framework that allows DFIs to pool resources, co-finance projects, and provide long-term, low-interest loans denominated in hard currencies (e.g., USD, EUR) specifically for renewable energy infrastructure in EMDEs.","choice_B":"Create an international “Green Sovereign Guarantee Fund” backed by multilateral development banks (MDBs), which would issue guarantees for clean energy projects in EMDEs to lower the cost of capital, while tying eligibility for these guarantees to fiscal discipline and climate adaptation measures.","choice_C":"Implement a tiered carbon tax system in advanced economies where revenues are funneled into a new Climate Investment Trust, which issues grants and low-interest loans to EMDEs for energy efficiency, renewable energy projects, and grid modernization, but also requires matched private capital from institutional investors.","choice_D":"Encourage the widespread adoption of local-currency debt instruments (e.g., green bonds) within EMDEs by creating regulatory frameworks that incentivize institutional investors to provide liquidity for local markets, while using concessional finance to hedge currency risk and offer yield-enhancing products for early-stage projects.","context":"PAGE | 1  \nAbstract \nAbstract  \nThis year’s edition of the World Energy Investment provides a full \nupdate on the investment picture in 2023 and an initial reading of the \nemerging picture for 2024.  \nThe report provides a global benchmark for tracking capital flows in \nthe energy sector and examines how investors are assessing risks \nand opportunities across all areas of fuel and electricity supply, \ncritical minerals, efficiency, research and development and energy \nfinance. \nThe report highlights several key aspects of the current investment \nlandscape, including persistent cost and interest rates pressures, the \nnew industrial strategies being adopted by major economies to boost \nclean energy manufacturing, and the policies that support incentives \nfor clean energy spending, notably from the increasingly important \nviewpoints of energy security and affordability. \nThis year’s edition provides an expanded analysis on the sources of \ninvestment and sources of finance in the energy sector, including new \ninsights on the role of development finance institutions in energy \ninvestments across emerging and developing economies. It will also \nlook at how investment trends in clean energy compare with those in \nfossil fuels, as well as the geographic distribution of these \ninvestments. \nThe report also includes a new regional section covering 10 major \neconomies and regions. It also assesses additional efforts needed to \nmeet the COP28 goals to transition away from fossil fuels, triple \nrenewable capacity and double the rate of improvements in energy \nefficiency by 2030. \n\n\n World Energy Investment 2024 \nPAGE | 2  \nTable of contents \nTable of contents \nOverview and key findings ............................................................................. \n3 \nTracking COP28 Progress ....................................................................... \n17 \nFinance......................................................................................................... \n24 \nOverview \n................................................................................................... \n25 \nTrends for financial market actors \n............................................................ \n34 \nTrends for financial instruments ............................................................... \n45 \nImplications \n............................................................................................... \n54 \nPower ........................................................................................................... \n56 \nOverview \n................................................................................................... \n57 \nGeneration \n................................................................................................ \n62 \nFinal investment decisions (FIDs) ............................................................ \n70 \nGrids and storage \n..................................................................................... \n77 \nImplications \n............................................................................................... \n82 \nFuel supply \n................................................................................................... \n85 \nOverview \n................................................................................................... \n86 \nUpstream oil and gas................................................................................ \n90 \nLNG and refining .................................................................................... \n100 \nMethane \n.................................................................................................. \n105 \nCoal ........................................................................................................ \n108 \nBioenergy ............................................................................................... \n111 \nHydrogen ................................................................................................ \n114 \nCCUS ..................................................................................................... \n117 \nCritical minerals \n...................................................................................... \n120 \nImplications \n............................................................................................. \n124 \nEnergy end use and efficiency \n................................................................... \n128 \nOverview / Investment ........................................................................... 129 \nBuildings ................................................................................................ 134 \nTransport................................................................................................ 143 \nIndustry .................................................................................................. 149 \nImplications \n............................................................................................ 152 \nR&D and technology innovation \n.................................................................155 \nOverview \n................................................................................................ 156 \nSpending on energy R&D \n...................................................................... 158 \nVC funding of early-stage energy technology companies ..................... 164 \nImplications \n............................................................................................ 175 \nRegional deep dive \n.....................................................................................178 \nUnited States ......................................................................................... 180 \nLatin America and the Caribbean .......................................................... 183 \nEuropean Union \n..................................................................................... 186 \nAfrica \n...................................................................................................... 189 \nMiddle East ............................................................................................ 192 \nChina \n...................................................................................................... 195 \nIndia ....................................................................................................... 198 \nJapan and Korea .................................................................................... 201 \nSoutheast Asia \n....................................................................................... 204 \nEurasia \n................................................................................................... 207 \nAnnex .........................................................................................................210 \n\n\n World Energy Investment 2024 \n \nPAGE | 3  \nOverview and key findings \nOverview and key findings  \n \n\n\n World Energy Investment 2024 \n \nPAGE | 4  \nOverview and key findings \nThe world now invests almost twice as much in clean energy as it does in fossil fuels… \nGlobal investment in clean energy and fossil fuels, 2015-2024e \n \n  \nIEA. CC BY 4.0 \nNote: Other clean power = fossil fuel power with CCUS, hydrogen, ammonia, and large-scale heat pumps. Low-emissions fuels = modern bioenergy, low-emissions \nH2 based fuels, and CCUS associated with fossil fuels and also includes direct air capture. 2024e = estimated values for 2024.  \n 400\n 800\n1 200\n1 600\n2 000\nFossil fuels\nRenewable power\nGrids and storage\nEnergy efficiency and end-use\nNuclear & other clean power\nLow-emissions fuels\nBillion USD (2023, MER)\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\n\n\n World Energy Investment 2024 \n \nPAGE | 5  \nOverview and key findings \n…but there are major imbalances in investment, and Emerging Market and Developing \nEconomies (EMDE) outside China account for only around 15% of global clean energy spending \nAnnual energy investment by selected country and region, 2019 and 2024e \n \n \n  \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. US = United States. EU = European Union. \n \n 200\n 400\n 600\n 800\n1 000\n2019\n2024e\n2019\n2024e\n2019\n2024e\n2019\n2024e\n2019\n2024e\n2019\n2024e\n2019\n2024e\nFossil fuels\nRenewable power\nGrids and storage\nEnergy efficiency and end-use\nNuclear & other clean power\nLow-emissions fuels\nBillion USD (2023, MER)\nChina\nUS\nEU\nIndia\nSoutheast\nAsia\nLatin\nAmerica\nAfrica\n\n\n World Energy Investment 2024 \n \nPAGE | 6  \nOverview and key findings \nInvestment in solar PV now surpasses all other generation technologies combined \n \nGlobal annual investment in solar PV and other generation technologies, 2021-2024e \n \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. Other = electricity generation from all other technologies including coal, oil, natural gas, wind, hydro and nuclear. \n \n 100\n 200\n 300\n 400\n 500\n2021\n2022\n2023\n2024e\nSolar PV\nOther\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 7  \nOverview and key findings \nThe integration of renewables and upgrades to existing infrastructure have sparked a recovery \nin spending on grids and storage \nInvestment in grids and storage by region 2017-2024e \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. \n \n 100\n 200\n 300\n 400\n 500\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nUnited States\nChina\nEurope\nIndia\nLatin America\nSoutheast Asia\nAfrica\nRest of the World\n\n\n World Energy Investment 2024 \n \nPAGE | 8  \nOverview and key findings \nRising investments in clean energy push overall energy investment above USD 3 trillion for the \nfirst time \nGlobal energy investment is set to exceed USD 3 trillion for the first \ntime in 2024, with USD 2 trillion going to clean energy technologies \nand infrastructure. Investment in clean energy has accelerated since \n2020, and spending on renewable power, grids and storage is now \nhigher than total spending on oil, gas, and coal. \nAs the era of cheap borrowing comes to an end, certain kinds of \ninvestment are being held back by higher financing costs. However, \nthe impact on project economics has been partially offset by easing \nsupply chain pressures and falling prices. Solar panel costs have \ndecreased by 30% over the last two years, and prices for minerals \nand metals crucial for energy transitions have also sharply dropped, \nespecially the metals required for batteries. \nThe annual World Energy Investment report has consistently warned \nof energy investment flow imbalances, particularly insufficient clean \nenergy investments in EMDE outside China. There are tentative \nsigns of a pick-up in these investments: in our assessment, clean \nenergy investments are set to approach USD 320 billion in 2024, up \nby more 50% since 2020. This is similar to the growth seen in \nadvanced economies (+50%), although trailing China (+75%). The \ngains primarily come from higher investments in renewable power, \nnow representing half of all power sector investments in these \neconomies. Progress in India, Brazil, parts of Southeast Asia and \nAfrica reflects new policy initiatives, well-managed public tenders, \nand improved grid infrastructure. Africa’s clean energy investments \nin 2024, at over USD 40 billion, are nearly double those in 2020. \nYet much more needs to be done. In most cases, this growth comes \nfrom a very low base and many of the least-developed economies \nare being left behind (several face acute problems servicing high \nlevels of debt). In 2024, the share of global clean energy investment \nin EMDE outside China is expected to remain around 15% of the total. \nBoth in terms of volume and share, this is far below the amounts that \nare required to ensure full access to modern energy and to meet \nrising energy demand in a sustainable way.  \nPower sector investment in solar photovoltaic (PV) technology is \nprojected to exceed USD 500 billion in 2024, surpassing all other \ngeneration sources combined. Though growth may moderate slightly \nin 2024 due to falling PV module prices, solar remains central to the \npower sector’s transformation. In 2023, each dollar invested in wind \nand solar PV yielded 2.5 times more energy output than a dollar spent \non the same technologies a decade prior. \nIn 2015, the ratio of clean power to unabated fossil fuel power \ninvestments was roughly 2:1. In 2024, this ratio is set to reach 10:1. \nThe rise in solar and wind deployment has driven wholesale prices \n\n\n World Energy Investment 2024 \n \nPAGE | 9  \nOverview and key findings \ndown in some countries, occasionally below zero, particularly during \npeak periods of wind and solar generation. This lowers the potential \nfor spot market earnings for producers and highlights the need for \ncomplementary investments in flexibility and storage capacity. \nInvestments in nuclear power are expected to pick up in 2024, with \nits share (9%) in clean power investments rising after two consecutive \nyears of decline. Total investment in nuclear is projected to reach \nUSD 80 billion in 2024, nearly double the 2018 level, which was the \nlowest point in a decade. \nGrids have become a bottleneck for energy transitions, but \ninvestment is rising. After stagnating around USD 300 billion per year \nsince 2015, spending is expected to hit USD 400 billion in 2024, \ndriven by new policies and funding in Europe, the United States, \nChina, and parts of Latin America. Advanced economies and China \naccount for 80% of global grid spending. Investment in Latin America \nhas almost doubled since 2021, notably in Colombia, Chile, and \nBrazil, where spending doubled in 2023 alone. However, investment \nremains worryingly low elsewhere. \nInvestments in battery storage are ramping up and are set to exceed \nUSD 50 billion in 2024. But spending is highly concentrated. In 2023, \nfor every dollar invested in battery storage in advanced economies \nand China, only one cent was invested in other EMDE. \nInvestment in energy efficiency and electrification in buildings and \nindustry has been quite resilient, despite the economic headwinds. \nBut most of the dynamism in the end-use sectors is coming from \ntransport, where investment is set to reach new highs in 2024 (+8% \ncompared to 2023), driven by strong electric vehicle (EV) sales. \nThe rise in clean energy spending is underpinned by emissions \nreduction goals, technological gains, energy security imperatives \n(particularly in the European Union), and an additional strategic \nelement: major economies are deploying new industrial strategies to \nspur clean energy manufacturing and establish stronger market \npositions. Such policies can bring local benefits, although gaining a \ncost-competitive foothold in sectors with ample global capacity like \nsolar PV can be challenging. Policy makers need to balance the costs \nand benefits of these programmes so that they increase the resilience \nof clean energy supply chains while maintaining gains from trade. \nIn the United States, investment in clean energy increases to an \nestimated more than USD 300 billion in 2024, 1.6 times the 2020 \nlevel and well ahead of the amount invested in fossil fuels. The \nEuropean Union spends USD 370 billion on clean energy today, \nwhile China is set to spend almost USD 680 billion in 2024, supported \nby its large domestic market and rapid growth in the so-called “new \nthree” industries: solar cells, lithium battery production and EV \nmanufacturing.\n\n\n World Energy Investment 2024 \n \nPAGE | 10  \nOverview and key findings \nOverall upstream oil and gas investment in 2024 is set to return to 2017 levels, but companies \nin the Middle East and Asia now account for a much larger share of the total \nChange in upstream oil and gas investment by company type, 2017-2024e \n \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. NOC = national oil companies. Majors include bp, Chevron, ConocoPhillips, ENI, ExxonMobil, Shell and TotalEnergies. \nSources: IEA calculations based on S&P, Bloomberg LP, Rystad and annual reports. Includes reported capital expenditure and 2024 guidance for 73 companies \naccounting for about 70% of global production. \n- 40\n- 20\n0\n20\n40\nMiddle East NOCs\nAsian NOCs\nIndependents\nMajors\nOther NOCs\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 11  \nOverview and key findings \nNewly approved LNG projects, led by the United States and Qatar, bring a new wave of \ninvestment that could boost global LNG export capacity by 50%  \nInvestment and cumulative capacity in LNG liquefaction, 2015-2028 \n \nIEA. CC BY 4.0 \nNote: Newly approved LNG projects in the United States and Qatar are expected to boost capacity by 50% between 2015 and 2026. Bcm = billion cubic metres.  \n200\n400\n600\n800\n1000\n 10\n 20\n 30\n 40\n 50\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024\n2025\n2026\n2027\n2028\nbcm per year\nBillion USD (2023, MER)\nMiddle East\nRussia\nAfrica\nNorth America\nAustralia\nOthers\nCumulative capacity (right axis)\n\n\n World Energy Investment 2024 \n \nPAGE | 12  \nOverview and key findings \nInvestment in fuel supply remains largely dominated by fossil fuels, although interest in low-\nemissions fuels is growing fast from a low base \nUpstream oil and gas investment is expected to increase by 7% in \n2024 to reach USD 570 billion, following a 9% rise in 2023. This is \nbeing led by Middle East and Asian NOCs, which have increased \ntheir investments in oil and gas by over 50% since 2017, and which \naccount for almost the entire rise in spending for 2023-2024.  \nLower cost inflation means that the headline rise in spending results \nin an even larger rise in activity, by approximately 25% compared with \n2022. Existing fields account for around 40% total oil and gas \nupstream investment, while another 33% goes to new fields and \nexploration. The remainder goes to tight oil and shale gas.  \nMost of the huge influx of cashflows to the oil and gas industry in \n2022-2023 was either returned to shareholders, used to buy back \nshares or to pay down debt; these uses exceeded capital expenditure \nagain in 2023. A surge in profits has also spurred a wave of mergers \nand acquisitions (M&A), especially among US shale companies, \nwhich represented 75% of M&A activity in 2023. Clean energy \nspending by oil and gas companies grew to around USD 30 billion in \n2023 (of which just USD 1.5 billion was by NOCs), but this represents \nless than 4% of global capital investment on clean energy.  \nA significant wave of new investment is expected in LNG in the \ncoming years as new liquefaction plants are built, primarily in the \nUnited States and Qatar. The concentration of projects looking to \nstart operation in the second half of this decade could increase \ncompetition and raise costs for the limited number of specialised \ncontractors in this area. For the moment, the prospect of ample gas \nsupplies has not triggered a major reaction further down the value \nchain. The amount of new gas-fired power capacity being approved \nand coming online remains stable at around 50-60 GW per year. \nInvestment in coal has been rising steadily in recent years, and more \nthan 50 GW of unabated coal-fired power generation was approved \nin 2023, the most since 2015, and almost all of this was in China.  \nInvestment in low-emissions fuels is only 1.4% of the amount spent \non fossil fuels (compared to about 0.5% a decade ago). There are \nsome fast-growing areas. Investments in hydrogen electrolysers \nhave risen to around USD 3 billion per year, although they remain \nconstrained by uncertainty about demand and a lack of reliable off-\ntakers. Investments in sustainable aviation fuels have reached \nUSD 1 billion, while USD 800 million is going to direct air capture \nprojects (a 140% increase from 2023). Some 20 commercial-scale \ncarbon capture utilisation and storage (CCUS) projects in seven \ncountries reached final investment decision (FID) in 2023; according \nto company announcements, another 110 capture facilities, transport \nand storage projects could do the same in 2024.\n\n\n World Energy Investment 2024 \n \nPAGE | 13  \nOverview and key findings \nEnergy investment decisions are primarily driven and financed by the private sector, but \ngovernments have essential direct and indirect roles in shaping capital flows \nSources of finance and investment in the energy sector, average 2018-2023 \n \nIEA. CC BY 4.0 \nNote: Sources of investment refers to the entities investing in assets, regardless of the provider or origin of the funds. It includes state-owned enterprises (SOEs), \ncorporates, and households. Sources of finance refers to the entities supplying the funds; this includes government funds (both equity in SOEs and subsidies), \nDevelopment Finance Institutions (DFI) and commercial finance provided by corporates and households, as well as private debt.  \n48%\n15%\n37%\nCorporates\nHouseholds\nGovernments and SOEs\nCommercial\nPublic\nDFI\nSources of investment\n74%\n25%\n1%\nSources of finance\n\n\n World Energy Investment 2024 \n \nPAGE | 14  \nOverview and key findings \nHouseholds are emerging as important actors for consumer-facing clean energy investments, \nhighlighting the importance of affordability and access to capital \nChange in energy investment volume by region and fuel category, 2016 versus 2023 \n \nIEA. CC BY 4.0. \nNote: EMDE includes China. \n \n \n- 200\n0\n 200\n 400\n 600\n 800\nAdvanced economies\nEMDE\nWorld\n(fossil fuels)\nWorld\n(clean energy)\nGovernments\nHouseholds\nCorporates\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 15  \nOverview and key findings \nMarket sentiment around sustainable finance is down from the high point in 2021, with lower \nlevels of sustainable debt issuances and inflows into sustainable funds \nSustainable debt issuances and sustainable fund launches, 2020-2023 \n  \n \nIEA. CC BY 4.0. \nNote: SSA = Sovereign, Supranational and Agency. \nSource: IEA analysis based on Bloomberg New Energy Finance and Morningstar.\n 300\n 600\n 900\n1 200\n1 500\n1 800\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nCorporates\nFinancials\nSSA\nOther\nSustainable debt issuances\n 200\n 400\n 600\n 800\n1 000\n1 200\n2020\n2021\n2022\n2023\nNumber of funds\nEurope\nUnited States\nRest of World\nSustainable fund launches\n\n\n World Energy Investment 2024 \n \nPAGE | 16  \nOverview and key findings \nEnergy transitions are reshaping how energy investment decisions are made, and by whom\nThis year’s World Energy Investment report contains new analysis on \nsources of investments and sources of finance, making a clear \ndistinction \nbetween \nthose \nmaking \ninvestment \ndecisions \n(governments, often via state-owned enterprises (SOEs), private \nfirms and households) and the institutions providing the capital (the \npublic sector, commercial lenders, and development finance \ninstitutions) to finance these investments.  \nOverall, most investments in the energy sector are made by \ncorporates, with firms accounting for the largest share of investments \nin both the fossil fuel and clean energy sectors. However, there are \nsignificant country-by-country variations: half of all energy \ninvestments in EMDE are made by governments or SOEs, compared \nwith just 15% in advanced economies. Investments by state-owned \nenterprises come mainly from national oil companies, notably in the \nMiddle East and Asia where they have risen substantially in recent \nyears, and among some state-owned utilities. The financial \nsustainability, investment strategies and the ability for SOEs to attract \nprivate capital therefore become a central issue for secure and \naffordable transitions.  \nThe share of total energy investments made or decided by private \nhouseholds (if not necessarily financed by them directly) has doubled \nfrom 9% in 2015 to 18% today, thanks to the combined growth in \nrooftop solar installations, investments in buildings efficiency and \nelectric vehicle purchases. For the moment, these investments are \nmainly made by wealthier households – and well-designed policies \nare essential to making clean energy technologies more accessible \nto all. A comparison shows that households have contributed to more \nthan 40% of the increase in investment in clean energy spending \nsince 2016 – by far the largest share. It was particularly pronounced \nin advanced economies, where, because of strong policy support, \nhouseholds accounted for nearly 60% of the growth in energy \ninvestments.  \nThree quarters of global energy investments today are funded from \nprivate and commercial sources, and around 25% from public \nfinance, and just 1% from national and international development \nfinance institutions (DFIs).  \nOther financing options for energy transition have faced challenges \nand are focused on advanced economies. In 2023, sustainable debt \nissuances exceeded USD 1 trillion for the third consecutive year, but \nwere still 25% below their 2021 peak, as rising coupon rates \ndampened issuers’ borrowing appetite. Market sentiment for \nsustainable finance is wavering, with flows to ESG funds decreasing \nin 2023, due to potential higher returns elsewhere and credibility \nconcerns. Transition finance is emerging to mobilise capital for high-\nemitting sectors, but greater harmonisation and credible standards \nare required for these instruments to reach scale.\n\n\n World Energy Investment 2024 \n \nPAGE | 17  \nOverview and key findings \nTracking COP28 Progress \n\n\n World Energy Investment 2024 \n \nPAGE | 18  \nOverview and key findings \nA secure and affordable transitioning away from fossil fuels requires a major rebalancing of \ninvestments  \nInvestment change in 2023-2024, and additional average annual change in investment in the NZE Scenario, 2023-2030 \n    \nIEA. CC BY 4.0 \nNote: CCUS = carbon capture, utilisation, and storage. Low-emissions generation includes modern bioenergy, low-emissions hydrogen, hydrogen-based fuels and \nCCUS associated with fossil fuels. NZE = Net Zero Emissions by 2050 Scenario. \n- 50\n- 25\n0\n25\n50\n75\n100\nTransport Buildings\nIndustry\nClean\npower\nGrids\nBattery\nstorage\nUnabated\npower\nBioenergy, \nH₂ and \nCCUS\nCoal\nNatural\ngas\nOil\nInvestment change, 2023-24\nAdditional average annual change in the NZE to 2030\nBillion USD (2023, MER)\nFuels\nPower\nEnd-use and \nenergy efficiency\n\n\n World Energy Investment 2024 \n \nPAGE | 19  \nOverview and key findings \nA doubling of investments to triple renewables capacity and a tripling of spending to double \nefficiency: a steep hill needs climbing to keep 1.5 °C within reach \nInvestments in renewable power, grids, and battery storage, as well as end-use sectors, today versus 2030 in the NZE Scenario \n \nIEA. CC BY 4.0 \nNote: Investments in end-use sectors include energy efficiency, electrification, and renewables for end use. NZE = Net Zero Emissions by 2050 Scenario. \n 500\n1 000\n1 500\n2 000\n2 500\n2022\n2023\n2030 NZE\nRenewable power\nGrids\nBattery storage\nInvestments in renewables, grids and battery storage\nBillion USD (2023, MER)\n2022\n2023\n2030 NZE\nBuildings\nTransport\nIndustry\nInvestments in end-use sectors\nx 3\nx 2\n\n\n World Energy Investment 2024 \n \nPAGE | 20  \nOverview and key findings \nMeeting COP28 goals requires a doubling of clean energy investment by 2030 worldwide, and a \nquadrupling in EMDE outside China \nInvestments in clean power, clean fuels, and end use, 2024e and 2030 in the NZE Scenario \n \nIEA. CC BY 4.0 \nNote: NZE = Net Zero Emissions by 2050 Scenario. End use includes energy efficiency and electrification.\n 200\n 400\n 600\n 800\n1 000\n1 200\n1 400\n1 600\n1 800\nChina\nUnited States\nRest of the world\nEuropean Union\nJapan and Korea\nIndia\nLatin America\nAfrica\nMiddle East\nSoutheast Asia\n2024e\n2030 Clean power (NZE)\n2030 End-use (NZE)\n2030 Clean fuels (NZE)\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \nPAGE | 21  \nOverview and key findings \nMobilising additional, affordable financing is the key to a safer and more sustainable future \nBreakdown of DFI financing by instrument, currency, technology, and region, average 2019-2022 \nIEA. CC BY 4.0 \nNote: DFI = Development Finance Institutions, excluding China-based DFIs. Eq. = Equity. The volume of DFI financing in the OECD Creditor Reporting System \n(CRS) database is typically reported in donor currency.  \nSource: IEA analysis based on total reported disbursements from the OECD CRS database.\nDebt\nEq. Grant\nUSD, EUR\nOther donor currencies\nClean Energy\nFossil Fuels\nAfrica\nSoutheast \nAsia\nOther Asia\nLatam\nME & Eurasia\n 25\n 50\n 75\n 100\nInstrument\nCurrency\nTechnology\nRegion\n%\n24\nBillion USD (2023, MER)\n18\n12\n6\n0\n0\n\n\n World Energy Investment 2024 \n \nPAGE | 22  \nOverview and key findings \nMuch greater efforts are needed to get on track to meet energy & climate goals, including those \nagreed at COP28 \nToday’s investment trends are not aligned with the levels necessary \nfor the world to have a chance of limiting global warming to 1.5 °C \nabove pre-industrial levels and to achieve the interim goals agreed at \nCOP28. The current momentum behind renewable power is \nimpressive, and if the current spending trend continues, it would \ncover approximately two-thirds of the total investment needed to triple \nrenewable capacity by 2030. But an extra USD 500 billion per year is \nrequired in the IEA’s Net Zero Emissions by 2050 Scenario (NZE \nScenario) to fill the gap completely (including spending for grids and \nbattery storage). This equates to a doubling of current annual \nspending on renewable power generation, grids, and storage in 2030, \nin order to triple renewable capacity. \nThe goal of doubling the pace of energy efficiency improvement \nrequires an even greater additional effort. While investment in the \nelectrification of transport is relatively strong and brings important \nefficiency gains, investment in other efficiency measures – notably \nbuilding retrofits – is well below where it needs to be: efficiency \ninvestments in buildings fell in 2023 and are expected to decline \nfurther in 2024. A tripling in the current annual rate of spending on \nefficiency and electrification – to about USD 1.9 trillion in 2030 – is \nneeded to double the rate of energy efficiency improvements. \nAnticipated oil and gas investment in 2024 is broadly in line with the \nlevel of investment required in 2030 in the Stated Policies Scenario, \na scenario which sees oil and natural gas demand levelling off before \n2030. However, global spare oil production capacity is already close \nto 6 million barrels per day (excluding Iran and Russia) and there is \na shift expected in the coming years towards a buyers’ market for \nLNG. Against this backdrop, the risk of over-investment would be \nstrong if the world moves swiftly to meet the net zero pledges and \nclimate goals in the Announced Pledges Scenario (APS) and the NZE \nScenario. \nThe NZE Scenario sees a major rebalancing of investments in fuel \nsupply, away from fossil fuels and towards low-emissions fuels, such \nas bioenergy and low-emissions hydrogen, as well as CCUS. \nAchieving net zero emissions globally by 2050 would mean annual \ninvestment in oil, gas, and coal falls by more than half, from just over \nUSD 1 trillion in 2024 to below USD 450 billion per year in 2030, \nwhile spending on low-emissions fuels increases tenfold, to about \nUSD 200 billion in 2030 from just under USD 20 billion today. \nThe required increase in clean energy investments in the NZE \nScenario is particularly steep in many emerging and developing \neconomies. The cost of capital remains one of the largest barriers to \n\n\n World Energy Investment 2024 \n \nPAGE | 23  \nOverview and key findings \ninvestment in clean energy projects and infrastructure in many \nEMDE, with financing costs at least twice as high as in advanced \neconomies as well as China. Macroeconomic and country-specific \nfactors are the major contributors to the high cost of capital for clean \nenergy projects, but so, too, are risks specific to the energy sector. \nAlongside actions by national policy makers, enhanced support from \nDFIs can play a major role in lowering financing costs and bringing in \nmuch larger volumes of private capital.  \nTargeted concessional support is particularly important for the least-\ndeveloped countries that will otherwise struggle to access adequate \ncapital.  Our analysis shows cumulative financing for energy projects \nby DFIs was USD 470 billion between 2013 and 2021, with China-\nbased DFIs accounting for slightly over half of the total. There was a \nsignificant reduction in financing for fossil fuel projects over this \nperiod, largely because of reduced Chinese support. However, this \nwas not accompanied by a surge in support for clean energy projects. \nDFI support was provided almost exclusively (more than 90%) as \ndebt (not all concessional) with only about 3% reported as equity \nfinancing and about 6% as grants. This debt was provided in hard \ncurrency or in the currency of donors, with almost no local-currency \nfinancing being reported. \nThe lack of local-currency lending pushes up borrowing costs and in \nmany cases is the primary reason behind the much higher cost of \ncapital in EMDE compared to advanced economies. High hedging \ncosts often make this financing unaffordable to many of the least-\ndeveloped countries and raises questions of debt sustainability. More \nattention is needed from DFIs to focus interventions on project de-\nrisking that can mobilise much higher multiples of private capital.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 24  \nFinance \nFinance \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 25  \nFinance \nOverview \n \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 26  \nFinance \nThe cost of capital has increased across most of the world, with emerging and developing \neconomies outside China facing much higher financing costs \nIndicators of local-currency, economy-wide cost of debt and USD-based equity ranges for utility-scale solar PV in selected regions  \n \n \n \nIEA. CC BY 4.0 \nNote: Data on government bond yields includes information until end-2023. EIRR = expected equity internal rate of return. The shaded bars do not reflect an \nincrease, but rather the range of EIRR for 2023. For emerging market and developing economies (EMDE, which excludes China), this range is wider because risk \nperceptions for solar PV projects vary significantly by country. \nSource: IEA analysis based on Refinitiv (2023) and IEA (2023), Cost of Capital Observatory.\n-2%\n0%\n2%\n4%\n6%\n8%\n10%\n12%\n14%\n2020\n2021\n2022\n2023\nIndia\nSouth Africa\nBrazil\nMexico\nUnited States\nEurozone\nChina\n10-year government bond yield \n 2%\n 4%\n 6%\n 8%\n 10%\n 12%\n 14%\n 16%\n 18%\nRisk-free\nUnited States\nEurope\nEMDE\nEquity IRR expecations, solar utility-scale PV, USD denominated\n2020\n2023\nEIRR range\n2023\n\n\nWorld Energy Investment 2024 \n \nPAGE | 27  \nFinance \nRising finance costs shape today’s energy investment climate\nMeeting the targets for sustainable development, climate and energy \nsecurity will require a substantial increase in capital investment in \nenergy. As these investments scale up globally, it is increasingly \nimportant to understand the prevailing trends affecting capital-\nallocation decisions across various finance providers, which is why \nthis year’s World Energy Investment report begins with a chapter on \nfinance.  \nThis chapter provides an overview of current financing trends. It \nmakes a distinction between the notions of investment – understood \nas a capital expenditure used to build or acquire an asset – and \nfinance, which encompasses the origin of the funds supporting an \ninvestment, as well as the form it takes and who is providing it. Within \nthe energy finance ecosystem, we explore the different roles played \nby capital providers – the ones who make the investment decisions \n(e.g. governments, households and the private sector), also known \nas “sources of investment” – and finance providers. This second \ngroup includes development finance institutions as well as other \npublic and private sources capital – which we refer to as “sources of \nfinance.” We also look at emerging themes such as transition finance \nand consider how the development of transition plans by financial \ninstitutions and corporations can support access to capital for hard-\nto-abate sectors. The role of carbon markets and carbon pricing is \nalso discussed.    \nThe year 2023 was marked by a spike in interest rates across many \ncountries – including advanced economies where relatively low \ninflation and low interest rates had prevailed for more than a decade \nin the wake of the 2008 financial crisis. While the 2020-2022 \npandemic drove interest rates sharply lower across much of the \nworld, inflation pressures mounted in 2022, changing this trajectory. \nCompounding this trend, the invasion of Ukraine by the Russian \nFederation (“Russia” hereafter) in early 2022 – as well as other \ngeopolitical conflicts across the world – increased political risks, \ndriving up the cost of capital. Interest rates on long-term, local-\ncurrency government bonds – a benchmark indicator for the cost of \ncapital in a country – rose considerably in many countries, with the \nnotable exception of the People’s Republic of China (“China” \nhereafter). Yields on ten-year United States Treasury bonds, for \nexample, increased by about three percentage points between 2020 \nand 2023, with even larger differences in the US overnight interbank \nlending rate (the short-term rate). A similar trend was seen in bonds \nissued by European governments. Sharp increases in US interest \nrates have a significant knock-on effect for capital investments \nworldwide – including in emerging market and developing economies \n(EMDE) – because the assets held by most large international \ninvestors, asset managers and financiers are valued in US dollars \n(USD) and most major projects, regardless of geography, are also  \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 28  \nFinance \npriced in USD. On top of this, local-currency financing has also \nbecome more expensive in many EMDE, including Brazil, Mexico, \nIndia and South Africa.   \nIn addition to raising borrowing costs, higher interest rates also affect \nthe cost of equity, which is estimated as the sum of the risk-free rate \n(e.g. the return on a bond issued by a low-risk country like the United \nStates) and the equity risk premium (the additional return that \ncompensates investors for taking on the higher risk of equity). The \nexpected equity internal rate of return (EIRR) of utility-scale solar \nphotovoltaic (PV) projects in the United States, for example, has \nsoared in recent years, reaching between 8% and 9% in 2023. But \nthese USD rates of return are still about half of what foreign investors \nrequire to finance a similar project in some EMDE. Although the \nvariations in both EIRR and the cost of capital vary widely among \nEMDE, developing and emerging economies face higher costs of \ncapital in general due to the greater risks – real or perceived – of \ninvesting in a particular jurisdiction and/or industrial sector. This \nremains a significant barrier to increased levels of investment in \nthese regions. \nA higher cost of capital – the weighted average of the costs \nassociated with raising funds for investments – makes it much more \ndifficult to generate attractive risk-adjusted returns. This is especially \ntrue for relatively capital-intensive clean energy technologies that \nrequire a large upfront investment, that are generally more \ndependent on debt financing (compared to the oil and gas industry) \nand where operating expenses tend to represent a relatively small \nshare of total project costs. Although ambitious government policies, \ntechnological advancements and declining cost trends (all key factors \nin determining energy project costs) have helped offset some of the \nrise in capital costs, the general rise in interest rates and a stronger \nUSD are not good news for investment anywhere. \nThe picture in China is somewhat different. China did not suffer \ninflation pressures in the wake of the pandemic, but it has been \nbattling relatively low economic growth and weakness in the property \nsector, with knock-on effects for local banks. This is why, unlike most \nof the world, China has kept benchmark lending rates low.  \nElsewhere, there are signs that benchmark interest rates may not \nremain high for long. There is ample debate on when and how fast \nthey may come down, though most experts agree that the \nexceptional period of near-zero interest rates is probably over. The \nUS Federal Reserve (Fed) has indicated that it plans to cut its short-\nterm benchmark by 75 basis points in 2024, although this expected \nrate-cutting cycle has been delayed repeatedly because US inflation \nremains stuck above the Fed’s 2% target. These movements are \nbeyond the remit of energy policy makers, but will be important for \ndetermining the pace of the energy transition over the next years. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 29  \nFinance \nFinance from commercial sources supports roughly 73% of energy investments overall, \nalthough public finance plays a larger role in China and some other EMDE countries …  \nChanges in finance providers over time and by category \n \nIEA. CC BY 4.0 \nNote: “Commercial finance” includes equity investments made by private enterprises and households, alongside debt from financial institutions. It also includes some \nfinance from state-owned banks, sovereign wealth funds and pension funds, although this includes a degree of state-directed lending, especially in emerging \neconomies with strong industrial policies. “Public finance” includes public equity stakes in private corporations and state-owned enterprises, state subsidies and tax \nincentives and finance from export credit agencies as well as central banks. “DFI” refers to Development Finance Institutions that have a development mandate. \nSource: IEA analysis based on data from S&P Capital IQ, IJGlobal, Rystad, World Bank, OECD, CRS, China Aid data. \n20%\n40%\n60%\n80%\n100%\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nPublic\nDFI\nCommercial\nSources of finance, 2015-2023\n25%\n50%\n75%\n100%\nClean energy\nFossil fuels\nAdvanced\neconomies\nChina\nEMDE\nSources of finance by category, Average 2018-2023\n\n\nWorld Energy Investment 2024 \n \nPAGE | 30  \nFinance \n… meanwhile the entities making the investments have evolved, with households gradually \ntaking on a larger share through spending on efficiency, electric vehicles and rooftop solar \nChanges in sources of investment over time and by category \n \nIEA. CC BY 4.0 \nNote: “Government” refers to stated-owned companies and state-owned assets (in the case of buildings for example). “Corporates” refer to private and publicly listed \ncompanies. \nSource: IEA analysis based on data from S&P Capital IQ, IJGlobal, Rystad, World Bank, OECD. \n \n \n-\n20%\n40%\n60%\n80%\n100%\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nGovernments\nHouseholds\nCorporates\nSources of investments, 2015-2023\n25%\n50%\n75%\n100%\nClean energy\nFossil fuels\nAdvanced\neconomies\nChina\nEMDE\nSources of investments by category, Average 2018-2023\n\n\nWorld Energy Investment 2024 \n \nPAGE | 31  \nFinance \nDebt financing is more prominently used in power, grids and developed markets, while larger \nequity stakes are seen in emerging and end-use technologies, fossil fuel supply and EMDE  \nCapital structure by energy assets and regions \n  \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on data from S&P Capital IQ, IJGlobal, Rystad, World Bank, OECD. \n \n \n10%\n20%\n30%\n40%\n50%\n60%\nClean fuels\nIndustry\nFossil fuel supply\nBuildings\nTransport\nClean power\nGrid and storage\nFossil power\nDebt share by energy assets, 2018-2023 \n10% 20% 30% 40% 50% 60%\nIndia\nEurasia\nMiddle East and Africa\nChina and developed Asia\nOther developing Asia\nNorth America\nCentral and South America\nEurope\nDebt share by region, 2018-2023 \n\n\nWorld Energy Investment 2024 \n \nPAGE | 32  \nFinance \nClean energy is reshaping the role played by the private sector, including households, while \ngovernment funding still plays a large role in China and in supporting fossil fuels in EMDE\nSince 2016, there has been a significant change in the types of \nenergy assets being financed, but less of a change in where capital \nhas come from. Between 2016 and 2023, clean energy’s share of \ntotal energy investment increased from around 50% to 63%. \nThroughout this period, private sources of finance made up the bulk \nof spending, accounting for 73% in 2023. While this share remains \nroughly the same by 2030 in the NZE Scenario, in absolute terms it \nrepresents an increase of USD 1.5 trillion in private sector spending. \nThe role of public financing – i.e. state-owned enterprises (SOEs), \nequity stakes in public assets such as government buildings and \npublic vehicle fleets, as well as various subsidies and tax incentives \n– has decreased slightly. Public finance plays a larger role in EMDE, \naccounting for 32% of spending between 2016 and 2023, compared \nwith 14% in advanced economies. Debt sustainability has become a \ngrowing concern across EMDE – three quarters of all developing \neconomies have debt-to-GDP ratios of at least 75% – so mobilising \na greater share of private finance in these markets will be essential.  \nGovernment investment in global energy assets has remained \nbroadly stable at around 37% of assets for the 2015-2023 period. The \ngovernment plays a particularly prominent role in fossil fuel asset \nownership, meaning they are most involved in the energy sector in \nregions with high fossil fuel production such as the Middle East, \nRussia and the Caspian states. As these economies respond to the \nenergy transition, many SOEs will remain responsible for electricity \nnetworks and utility-scale power generation, while policy makers are \nincreasingly positioning their SOEs to be key players in the energy \ntransition. Still, the role of SOEs in global energy financing is \nexpected to decrease over time as end-use sectors gradually take on \na larger share of total investment.   \nIn China, government ownership accounts for 60% of all energy \nassets and is particularly evident in fossil fuels, where nearly all of \nassets are government owned. China has taken steps to support \nlarge SOEs and state-owned banks to increase clean energy finance, \nincluding through the development of sustainable finance regulations \nand incentives, so state ownership is expected to remain prominent \neven as clean energy becomes a larger part of the energy mix.  \nAs energy transitions have gained momentum in recent years, we \nhave seen a rise in investments made by households. Their share of \nnew spending has doubled from 9% in 2015 to 18% in 2023. This is \ndue to growth in rooftop solar, energy efficiency in buildings and the \npurchase of electric vehicles. With households taking on a higher \nshare of energy investment, affordability and cost-of-living concerns \nmay act as potential brakes on investment in the coming year. Unlike \ncorporations or governments, consumer finance operates under \n\n\nWorld Energy Investment 2024 \n \nPAGE | 33  \nFinance \ndifferent constraints – use-of-proceeds, application processes, \ninterest rates and fees, etc. – requiring unique policies and financing \ninstruments. The financial institutions supporting consumers with \nfinancing also have a different profile compared to financial \ninstitutions lending to utility-scale projects. This fundamental shift in \nthe system emphasises the need for tailored approaches to support \nhouseholds in their transition towards sustainable energy practices. \nCapital structure – i.e. the combination of debt and equity used to \nfinance energy assets – has remained fairly stable over the last 8 \nyears at around 46% debt. This varies significantly between energy \nassets and regions. Fossil fuels have the lowest share of debt at \naround 40%. The last two years saw large repayments by oil and gas \ncompanies; prior to that, a period of low commodity prices ate into \nfossil fuel companies’ profitability, limiting their use of retained \nearnings to pay back debt. For clean power, the share of debt is \ncloser to 50% – down from 60% in the late 2010s – driven by the \nneed for high upfront capital investment. This change is partly due to \nbetter growth opportunities for the sector and lower equipment costs, \nbut also to the contractual repayment of debt used for the upfront \ncapital of previously installed clean power. Meanwhile, the share of \ndebt financing in the end-use sectors – with higher household \nparticipation – is 45%, close to the average for all energy assets. \nReducing the uncertainty on debt financing availability is crucial for \nthe energy transition. Under the NZE Scenario, around 45% of \ninvestments in clean energy relies on debt – particularly in grid \ninvestment, where debt accounts for more than 50% of capital \nspending. This trend will feed into the concerns about countries’ \ncapacity to sustain high levels of borrowing, particularly in EMDE. \nWhether debt is provided on a corporate or project finance basis also \nmatters. Grids are typically financed on a corporate basis while solar \nPV and wind are increasingly on a project finance basis. This ends \nup being particularly important in EMDE, where lending on a \ncorporate basis to utilities is challenging without tackling the \nfundamental financial health of the utility. \nMeanwhile, equity financing plays a key role in funding clean energy \ntechnologies with high upfront risks – such as geothermal or hydro – \nor less mature technologies like battery storage, carbon capture, and \nlow-carbon hydrogen. As these technologies mature, the risks should \nfall, allowing more debt to be used. Long construction timelines, such \nas for grid and nuclear, also increase the technology risks. \nEqually, in less mature markets, even established technologies can \ncount on a larger share of equity to take on the risks in development \nand construction phase. As newer technologies and markets \nestablish a track record, there is potential for the share of debt to \nincrease as governments implement supportive policies to bolster \nbusiness models with stable cash flows. This can be particularly \nimportant in some EMDE, where a limited supply of equity (e.g. in \nAfrica) acts as a brake on the development of bankable projects. This \nis where Development Finance Institutions (DFI) could step in to \nprovide funds without increasing the debt burden in EMDE countries. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 34  \nFinance \nTrends for financial market actors \n\n\nWorld Energy Investment 2024 \n \nPAGE | 35  \nFinance \nFinancial institutions continued to announce net zero targets or emission disclosure plans, but \nreduced inflows to sustainable funds in 2023 reflected wavering market sentiment \n Trends in sustainable finance investing \n  \n \nIEA. CC BY 4.0 \nNotes: NZBA = Net-Zero Banking Alliance; NZAM = Net-Zero Asset Managers Initiative; NZAOA = Net-Zero Asset Owner Alliance. ‘’Targets” tracks the institutions \nthat have either adopted net-zero targets or met most minimum conditions for targets. ‘’Emissions Disclosure” tracks the institutions that have committed to Scope 3 \nemissions disclosure, or that track or disclose a portion of portfolio emissions. The institutions covered are those tracked by the Climate Policy Initiative.   \nSource: Climate Policy Initiative (2023), Morningstar (2023). \n 100\n 200\n 300\n 400\n 500\n Targets\nEmissions\nDisclosure\nTargets\nEmissions\nDisclosure\nTargets\nEmissions\nDisclosure\nNZAM\nNZBA\nNZAOA\nNet zero targets and Scope 3 emissions disclosure\nNumber of institutions\n2022\n2020\n2018\n- 1\n0\n 1\n 2\n 3\n 4\n- 10\n0\n 10\n 20\n 30\n 40\nQ1 2023\nQ2 2023\nQ3 2023\nQ4 2023\nTrillion USD (2023, MER)\nBillion USD (2023, MER)\nEurope\nNorth America\nRest of world\nTotal net assets\n (right axis)\nSustainable funds flows\n\n\nWorld Energy Investment 2024 \n \nPAGE | 36  \nFinance \nSustainable funds rebounded in early 2024, while interest is growing for financial industry \nengagement to focus on credible transition plans as opposed to emissions disclosure \nSustainable finance regulations have recently provided a tailwind for \nclean energy investments, but 2023 was a challenging year for \nsustainable investment practices. For the first time, sustainable funds \nsaw a net outflow in the fourth quarter, notably including in Europe – \nhome to 84% of sustainable funds by value. Outflows have become \ncommon in the United States, occurring for the last five quarters as \nenvironmental, social and governance (ESG) issues become \nincreasingly politicised. Meanwhile, in Europe, sustainable funds \nconsistently attracted larger proportional inflows than conventional \nfunds, but the two have gradually converged in 2023 and as the \nmarket tightened, actively managed sustainable funds saw outflows \nfor the first time. This is likely due to a combination of factors, with \nmany fund managers increasing their allocations to government \nbonds, and concern growing over the classification of sustainable \nfunds. Despite these concerns, the value of sustainable funds \nglobally  increased by 8% in 2023, driven by a rally in growth stocks \n(those that focus on long-term potential).  \nThe pushback against ESG in the United States had an impact \nbeyond sustainable funds. In February, two of the largest US-based \nasset managers – JPMorgan Chase and State Street – withdrew from \nClimate Action 100+ (CA100+), an investor-led initiative designed to \nencourage decarbonisation by large emitters. Blackrock also scaled \nback its involvement in the initiative, transferring participation from \ntheir US business to the smaller, international arm. CA100+ has also \nseen withdrawals from Europe, including Swiss Re in March 2024, \nwith most firms arguing that they can achieve similar goals through \nindependent engagement with emitters. Analysis of proxy voting \npatterns in 2024 indicates that support for climate-related resolutions \nremains strong, but most of these are focused on emissions \ndisclosure. The departures from CA100+ came at a time when the \ninitiative aimed to increase their focus on enactment of climate \ntransition plans, as well as the continued push for improved \ndisclosure.  \nThere has been a growing emphasis on moving beyond disclosures \nto implementing transition plans, particularly among asset owners, \nwho play a key role in the financing chain due to their ability to \ninfluence both corporate strategy and the approach of asset \nmanagers. In December 2023, the UN-Convened Net Zero Asset \nOwners Alliance (NZAOA) released guidance on how to strengthen \nengagement on transition planning, alongside development of \ncredible plans for their own activities. Several months later, the \nNZAOA also published guidelines for asset managers on how to \nsupport their asset owner clients through strengthened climate \nstewardship.   \n\n\nWorld Energy Investment 2024 \n \nPAGE | 37  \nFinance \nThe banking sector is also wrestling with how to adhere to tighter climate disclosure \nregulations without slowing real economic growth by restricting to key sectors  \nBanks play a particularly important role in the financing of energy \nprojects because of their large pools of capital (primarily for debt \nfinancing) and because they provide funding at both the project and \ncorporate level as well as to households, who play an increasing role \nin energy supply under the NZE Scenario. Banks can support energy \ntransitions through the design of sustainable loan products and \nengagement with the companies they finance. Similarly, banks can \ncreate tailored consumer loan offerings to incentivise clean energy \nspending at the household level with products like green mortgages.  \nThere is significant diversity within the banking sector, and the role of \nbanks in the energy transition is likely to vary by their size and by \nregion. The UN-convened Net Zero Banking Alliance (NZBA) plays a \nleadership role, working across the sector to promote approaches to \ndecarbonise lending, develop transition finance tools and facilitate \nthe managed phase-out of fossil fuels. Currently, more than 140 \nbanks are NZBA members, and around 40% of global banking assets \nare held by banks with net-zero commitments. Despite this, data from \nBloomberg indicate that the ratio of clean energy funding (including \ndebt and equity underwriting) compared to fossil fuels has slightly \nworsened: For every 1 USD loaned  to the fossil fuel sector in 2021, \n75 cents went to clean energy companies. By 2022, the ratio had \nfallen to 73 cents (latest available data).  \nSustainable finance regulations for the banking sector are primarily \nfocused on improving disclosure. For example, in November 2023, \nthe Basel Committee published a draft climate disclosure framework \nfor consultation aimed at improving the tracking of banks’ progress \non climate-related activities. However, several banks have expressed \nconcerns about the metrics used to measure these activities. \nCurrently, the main metric used is financed emissions (i.e. banks’ \nScope 3 emissions) but these emissions are not widely reported by \ncompanies and are hard to estimate accurately. Furthermore, there \nis still debate over whether financed emissions are the best proxy for \nclimate risk, with banks arguing for the use of multiple metrics, \nincluding a calculation related to transition finance. \nTighter regulations increase the risk that businesses in hard-to-abate \nsectors can no longer access financing from banks in markets with \nstricter climate regulations. This forces those businesses to raise \ncapital in markets with more lax environments, where banks are also \nless likely to engage with companies over transition plans. This \npractice – financial carbon leakage – could delay change in the real \neconomy. Avoiding this outcome means increasing the number of \nbanks committed to net zero, while also ensuring that sustainable \nfinance regulation considers transition financing.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 38  \nFinance \n Box 1.1. Growing domestic private financial sector involvement in clean energy in EMDE \n \n Currency risk is often cited as one of the primary drivers of high \nfinancing costs for energy projects, while also contributing to the \ngrowing debt problem in EMDE countries. Given the scale of \ninvestment needs, funding from advanced economies will remain \nimportant. Solutions such as hedging products allow hard \ncurrency funders to lend in local currencies, but these can add \ncomplexity and cost to financing arrangements. Domestic \nfinancial institutions, which lend in local currency and are less \nsubject to external shocks, also therefore play a key role. \nThere is currently significant variation in the role of domestic \ncapital in energy financing based on the depth of local markets. \nDomestic financing dominates in some of the larger EMDE, such \nas India and Brazil, or regions with well-developed financial \nsectors such as ASEAN. In these markets, various approaches \nallow local capital providers to invest in energy projects at an \naffordable rate, including tools like sustainable debt issuance, as \nin ASEAN, or mechanisms where the government absorbs some \ncosts of commercial lenders, as in India.  \nIn EMDE where the financial sector is less deep (e.g. sub-\nSaharan Africa) institutional investors such as pension funds \noften primarily invest in government securities, with limited  \nfamiliarity with other investment classes such as infrastructure.  \n  \nNew mechanisms are emerging to tap into this capital source. For \nexample, in Nigeria, InfraCredit – a local currency guarantee provider \n– has helped 19 local pension funds enter the energy sector, mobilising \nUSD 206 million over the last five years. This group of investors is most \nlikely to invest in operational assets, including via refinancing structures \nthat help free up development capital for greenfield assets. \nFinancial depth indicator, selected countries and regions \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on World Bank data on domestic credit to the private \nsector and the market capitalisation of listed domestic companies. \n \n 50\n 100\n 150\n 200\nSub-\nSaharan\nAfrica\nBrazil\nASEAN\nIndia\nChina\nJapan\nUS\nGlobal average\n\n\nWorld Energy Investment 2024 \n \nPAGE | 39  \nFinance \nDevelopment finance institutions primarily provide debt financing, and are making progress in \nmobilising private capital for renewable power projects \nDevelopment finance provided to different regions by financial instrument, 2013-2021 \n \n \nIEA. CC BY 4.0. \nNote: Based on reported total disbursements. ODA = Official Development Assistance – concessional funds that meet the ODA grant equivalent threshold with \neconomic development and welfare as the main objective; OOF = Other Official Flows that do not meet ODA criteria, excluding export credits. All equity financing is \ncounted as ODA. “China-based DFIs” refer to China Development Bank and the Export-Import Bank of China, which do not report to the OECD Development \nAssistance Committee; hence its financing should be understood as ODA or OOF-like. \nSource: IEA calculations based on OECD CRS and AidData’s Global Chinese Development Finance Dataset, Version 3.0.\n 25\n 50\n 75\nRussia\nEurope\nCaspian and\nMiddle East\nLatin America\nSoutheast Asia\nOther Asia\nAfrica\n 25\n 50\n 75\nEurope\nCaspian and\nMiddle East\nLatin America\nSoutheast\nAsia\nOther Asia\nAfrica\nBillion USD (2023, MER)\nDebt: ODA\nDebt: OOF\nEquity\nGrant\nChina-based DFIs\nWorld (excluding China)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 40  \nFinance \nDevelopment finance institutions have reduced their support for fossil fuel activities, notably \nfrom China, but this has not been accompanied by a surge in financing for clean energy \nDFI financing by technology \n \n \nIEA. CC BY 4.0 \nNote: Based on yearly commitments. Oil, gas and coal include fuel supply and power generation. All Chinese financing covered in this analysis refers to overseas \nflows. Analysis of domestic investment trends is covered in more detail in Chapter 7, Regional Deep Dive.  \nSource: IEA calculations based on OECD CRS and AidData’s Global Chinese Development Finance Dataset, Version 3.0. \n 10\n 20\n 30\n 40\n 50\n 60\n2013\n2015\n2017\n2019\n2021\nBillion USD (2023, MER)\nEnergy Efficiency: Buildings\nEnergy Efficiency: Transport\nEnergy Efficiency: Industry\nTransmission & Distribution\nHydro\nWind\nSolar PV\nCoal\nGas\nOil\nWorld (excluding China), 2013 - 2022\n 10\n 20\n 30\n 40\n 50\n 60\n2013\n2015\n2017\n2019\n2021\nChina-based DFIs, 2013 - 2021\n\n\nWorld Energy Investment 2024 \n \nPAGE | 41  \nFinance \nDFIs play a crucial and unique role due to their ability to take on higher-risk projects, but they \nare facing pressure to ramp up financing and to scale up private sector mobilisation\nDevelopment finance institutions (DFIs) are uniquely positioned to \ncatalyse investment flows towards sustainable and resilient energy \ninfrastructure, particularly in EMDE. Along with direct financing, DFIs \ncan provide policy support, capacity building, and concessional \ncapital focused on de-risking projects to mobilise private capital into \notherwise high-risk markets or technologies.  \nFrom 2013 to 2021, cumulative DFI financing reached approximately \nUSD 468 billion globally, with China-based DFIs and other DFIs \naccounting for 56% and 44%, respectively. While energy financing \nfrom China’s DFIs has fallen from its peak in 2016 – averaging around \nUSD 27 billion in annual disbursements – other DFIs have been fairly \nconstant in their financing, averaging USD 21 billion annually. DFI \nfinancing was disbursed across regions, with Africa being the largest \nrecipient, followed by Asia Pacific and Latin America. Russia has also \nconsistently received global energy financing through China’s DFIs. \nIn terms of financial instruments, DFIs primarily provide debt, \nfollowed by significantly smaller amounts of grant and equity \nfinancing. Less than half of the total debt financing is provided on \nhighly-concessional terms, or in the form of Official Development \nAssistance (ODA), where at least 10-45% of the loan is a grant-\nequivalent. The rest is provided under less-concessional terms, and \nmostly from China. It is also notable that nearly 80% of global DFI \nfinancing is reported to be provided in USD and EUR and limited \namounts of local currency lending was available from DFIs excluding \nChina. This highlights the need to better construct development \nfinance instruments that are more preferential and are better suited \nto the needs of EMDE borrowers.  \nWith regard to technology, around 65% of DFI financing was directed \ntowards clean energy, with investments in energy efficiency in \ntransport and transmission and distribution grids accounting for more \nthan 40%. Notably, financing for fossil fuels continues, albeit from a \nsmaller group of providers. This includes Chinese DFIs which, in line \nwith their pledge in 2021, have stopped financing new coal projects \nabroad, but do still provide funding to oil and gas projects.  \nSeveral signals point to increased participation by DFIs in energy \nfinancing. According to the latest data, financing for energy-related \nsectors from DFIs outside of China reached a record high of \nUSD 31 billion in disbursements in 2022, an increase of more than \n50% from the previous year. A 2017 pledge by multilateral \ndevelopment banks (MDBs)  to Paris align their financial flows  took \neffect in 2023, culminating in a joint MDB assessment framework for \nParis alignment. China’s development finance in energy is also \nshowing signs of revitalisation, with major announcements being \nmade in the 3rd Belt and Road Forum in October 2023, such as the  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 42  \nFinance \npledge to inject nearly USD 48 billion each to China Development \nBank and the Export-Import Bank of China to finance “small yet \nsmart” projects, with an emphasis on green investments, as well as \na USD 11 billion replenishment of the Silk Road Fund, the main \ninvestment platform for the Belt and Road Initiative. It is also notable \nthat China has increasingly expanded its financing through state-\nowned commercial banks, such as the Bank of China and the \nIndustrial and Commercial Bank of China, especially through \nsyndicated loans alongside various multilateral institutions, including \nthe European Bank for Reconstruction and Development (EBRD). \nWhile it is important for DFIs to continue to channel their own capital \ninto EMDE, including by acting as implementation partners for \ndevelopment aid from their donor governments, it is crucial to ensure \nthat such resources also lead to effective mobilisation of the private \nsector. From 2012 to 2022, an average of USD 12 billion was \nmobilised for climate from the private sector annually – of which \nnearly USD 8 billion went to energy, industry, construction and \ntransport. The Latin America and Caribbean region was the largest \nrecipient of mobilised private finance (34%), followed by Asia (29%) \nand Africa (22%), demonstrating how middle-income countries are \nmore likely to be the destination for private sector financing. Under \nthe NZE Scenario, private finance increases across all EMDE regions \nby 2030. So finding solutions that can utilise DFI capital to de-risk \nprivate investments in lower-income countries will be essential to \nmeet investment goals. \n Mobilised private finance for climate in energy-relevant sectors, \n2020-2022 (average) \nIEA. CC BY 4.0 \nNote: Non-renewable generation includes carbon capture and storage. Debt \nfinancing includes syndicated loans and credit lines. Equity financing includes \nshares in collective investment vehicles and direct investment in companies \nand special purpose vehicles. Industry classification in this figure differs from \nthe IEA’s definition. \nSource: IEA calculations based on OECD CRS. \n \n 5\n 10\n 15\n 20\nNon-\nrenewable\ngeneration\nEnergy\ndistribution\nEnergy\npolicy\nTransport &\nStorage\nIndustry &\nConstruction\nRenewable\ngeneration\nBillion USD (2023, MER)\nDebt financing\nEquity financing\nGuarantees\nSimple co-financing\n\n\nWorld Energy Investment 2024 \n \nPAGE | 43  \nFinance \nRequests for financial support included in current NDCs from EMDE are well below the levels of \nclean energy investment needed to meet their 2030 targets … \nInvestment in clean energy in APS and financial support requests for energy mitigation in conditional NDCs, 2020-2030 \n \n \nIEA. CC BY 4.0 \nNote: APS = Announced Pledges Scenario; NDCs = National Determined Contributions. The conditional components of NDCs are contingent upon a range of \npossible conditions, such as receiving enhanced financial resources, technology transfer, technical co-operation and capacity building. Financial support requests \nfrom the conditional NDCs consider those that explicitly put forward a request for the energy sector.  \nSource: IEA analysis of conditional NDCs as of December 2023. \n300\n600\n900\nSouth East Asia\nAfrica\nMiddle East\nLatin America and\nthe Caribbean\nEurasia\nBillion USD (2023, MER)\nAPS\nConditional\nNDCs\n\n\nWorld Energy Investment 2024 \n \nPAGE | 44  \nFinance \n… but the next round of NDCs, expected by 2025, allows EMDE to reflect on their investment \nneeds, providing greater clarity on where climate finance should be channelled\nIncreasing global co-operation on climate change can support clean \nenergy investment via climate finance flows to EMDE. Countries put \nforward their short- to medium-term climate commitments in \nNationally Determined Contributions (NDCs). The majority of NDCs \nhave a target covering the energy sector. Around 70% of current \nNDCs contain a conditional component, the implementation of which \nis contingent on a range of possible conditions. These include \nfinancial, technical and capacity-building support. Some countries \nspecify the level of financial support they would need to receive to \nimplement their conditional NDC component; this can help increase \nclarity, transparency and understanding of these commitments. \nHowever, estimating the financial support needed for clean energy \ninvestments reported in NDCs is difficult to analyse due to \nfragmented and unstandardised data. Overall, the level reported falls \nshort of what countries need to invest to meet their own 2030 clean \nenergy targets. In the first United Nations Framework Convention on \nClimate Change (UNFCCC) report in 2021 on the determination of \nneeds of EMDE (which will be updated in 2024) the Standing \nCommittee on Finance also concluded that there were significant \ngaps in the requests for investment support across the nine types of \nnational reports to the UNFCCC. This discrepancy could be attributed \nto several factors. For instance, some EMDE might not need \ninternational financial support to implement their own proposed \nmitigation measures (e.g. some high-income, high-emitting countries \ndo not have a conditional NDC component). Some NDCs may not \nfully capture the necessary clean energy investments, potentially also \ndue to a lack of detailed planning. Another factor could be the limited \navailability of data or a limited capacity to estimate clean energy \ninvestment needs. African countries stand out for including estimates \nof financial support requirements in their NDCs that are closely \naligned with the IEA’s Announced Pledges Scenario (APS).  \nThe next round of NDCs, expected by early 2025, presents a crucial \nopportunity for countries to act on the outcomes of the first Global \nStocktake (GST), a process that culminated at COP28 and evaluated \nthe collective progress towards the goals of the Paris Agreement. It \nwill also be an opportunity to enhance the clarity and transparency of \ntheir assessment of clean energy investment needs to achieve the \n2030 and 2035 NDC targets. In this light, Brazil’s presidencies of the \nG20 and COP30 have made it a priority to support countries to \ntransform their next round of NDCs into investable plans. A clearer \nassessment of financial support needed in NDCs would have also \nbeen important input for the discussions of the New Collective \nQuantified Goal (NCQG) on climate finance, which will replace the \nUSD 100 billion goal set in 2009. Current discussions around the \nNCQG address its potential quantum, scope and structure, and will \nculminate at COP29.   \n\n\nWorld Energy Investment 2024 \n \nPAGE | 45  \nFinance \nTrends for financial instruments \n\n\nWorld Energy Investment 2024 \n \nPAGE | 46  \nFinance \nRising interest rates have contributed to a 14% decline in sustainable debt issuance since 2022, \nwith investors’ concerns triggering a drop in sustainability-linked debt financing …    \nSustainable debt issuances by type, 2016-2024 \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on data from Bloomberg (2024). \n \n20%\n40%\n60%\n80%\n100%\n 400\n 800\n1 200\n1 600\n2 000\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n1Q 2024\nBillion USD (2023, MER)\nTransition Bond\nSustainability-\nlinked debt\nSustainability bond\nGreen loan\nGreen bond\nEnergy and utilities\nas share of\ncorporate\nissuances\n\n\nWorld Energy Investment 2024 \n \nPAGE | 47  \nFinance \n… but new issues of “green” debt – particularly green bonds – have held steady and thanks to \nsovereign issuances, indications from early 2024 are positive\nSustainable debt issuances reached approximately USD 1.2 trillion in \n2023, exceeding USD 1 trillion for a third consecutive year. \nNonetheless, this represents a 14% decline from 2022 levels, and a \n23% drop from the peak in 2021. Over the last two years, rising \ninterest rates have been a constraining factor, with both the number \nand size of issuances decreasing. During this period, debt issuance \nfrom energy and utilities companies also fell from a high of more than \nUSD 280 billion in 2021 to USD 229 billion in 2023 – though it \nremains above 2020 levels.  \nThe biggest declines have been concentrated mainly in sustainability-\nlinked debt, which in 2023 registered a 50% drop from the previous \nyear, reaching only USD 284 billion. By sector, real estate showed \nthe biggest decrease, followed by utilities and automobiles \nmanufacturing. Some of this decline is likely due to investors’ \nconcerns around the credibility of sustainability-linked debt as a tool \nto drive rapid transitions, as well as industry-specific drivers, such as \nthe contraction of the US commercial real estate market. Meanwhile, \nnew issuance of green bonds – the most mature sustainable debt \ninstrument – reached a record USD 650 billion in 2023 and \naccounted for more than half of total issuances. The steady increase \nin green bond issuance mainly comes from sovereigns, notably \nChina, the United Kingdom, Italy, and Germany.  \nSustainable debt issuance remains concentrated in advanced \neconomies, which account for over three-quarters, and China, which \naccounts for a further 11%. However, there are signs of growth within \nother EMDE, which saw their share of issuance rise to 14% in 2023 \nfrom 8% in 2020. This has been driven by broadening use cases, as \nseen with two large bond issuances for green hydrogen in Saudi \nArabia, and the instruments, such as the sovereign sustainability-\nlinked bond from the Chilean government. The EUR and USD remain \nthe primary currencies for issuance, accounting for 38% and 28%, \nrespectively. While this helps to attract international investors, it \nexposes issuers in EMDE to currency risks. With many EMDE \ngrappling with rising debt levels, the borrowing at lower interest rates \nthrough sustainable debt instruments makes them an attractive tool, \nparticularly for financing large public infrastructure projects. \nInitial indications from 2024 have given a generally positive outlook \nfor sustainable debt issuances for the year. Although there may be \nsome volatility due to political events, the fundamentals of the market, \nparticularly for green bonds, remain strong and growth is expected in \nareas such as transition finance (see below). Additionally, the \nEuropean Green Bond Standard, which comes into force in 2024, is \nexpected to increase market confidence by strengthening disclosure \nrequirements.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 48  \nFinance \nTransition finance tools are emerging as a promising means to drive more capital to high-\nemitting sectors, but further efforts to harmonise standards for transition plans are necessary \nAchieving the NZE Scenario requires a broad range of investments. \nSome of these can easily be classified as clean energy, but many  \nothers are less easy to define. Under the NZE Scenario, technologies \nthat could provide or enable zero emission energy or energy services \naccount for 47% of spending in 2030, and those that provide \nemissions reductions but do not themselves deliver zero emissions \nenergy or energy services account for 7%. Both categories struggle \nto attract financing earmarked for clean energy and are at risk of \nbeing excluded by investors seeking to decarbonise their portfolios. \nTransition finance is a framework that can support these activities. \nSeveral organisations such as ICMA, CBI, GFANZ, OECD and others \nhave developed transition finance guidance, covering activities such \nas retrofitting and substantiating assets, investment in alternatives to \nfossil fuel use, and the role of engagement by financial institutions. \nDespite these guidelines, there is still significant variation in transition \nfinance methodologies, with ICMA finding three overlapping \ndefinitions ranging from economy-wide to only hard-to-abate sectors.  \nTransition-related bonds have been a preferred labelled tool for hard-\nto-abate sectors. Oil refining and marketing, industrials and metals \nand mining accounted for 34% of issuances in the last three years; \nthese sectors accounted for only 15% of green bonds over the same \nperiod. Transition-related bonds issuances in 2023 accounted for just \nUSD 3.5 billion – less than 1% of all sustainable debt issuances and \nare geographically concentrated in Japan, Italy and China. \nShare of corporates issuances by industry 2021-2023 \n \nIEA. CC BY 4.0 \nNote: “Other material” includes chemicals. “Others” includes consumer \ndiscretionary, consumer services, technology, and other business sectors.  \nSource: IEA analysis based on data from Bloomberg (2024). \n2%\n8%\n1%\n20%\n6%\n63%\nTransition-related bonds\n1%\n14%\n1%\n11%\n2%\n4%\n43%\n24%\nAirlines\nRefining & marketing\nRenewable\nOther Energy\nIndustrials\nMetals & mining\nOther Material\nUtilities\nOthers\nGreen bonds\n\n\nWorld Energy Investment 2024 \n \nPAGE | 49  \nFinance \nEstablishing viable, science-based transition plans is a vital first step \nto expanding the use of transition debt instruments. Transition plans \nare generally understood as aligning with the Paris Agreement, and \nspelling out transition pathways, actions and interim targets. These \nelements are fundamental for engagement between corporates and \ninvestors, as well as tracking progress. Governments and regulators \nhave taken different approaches to establishing transition activities. \nFor example, Europe and Singapore are using taxonomies to define \ntransition activities, while Japan has created industry roadmaps. \nCoverage can vary based on the regional methodologies, but both \ntaxonomies and roadmaps can support an increase in funding, \nincluding from advanced economies where investors may be subject \nto stricter rules covering sustainable finance.  \nEven with the provision of stronger transition plans and roadmaps, \nsome additional obstacles have been observed. For example, on the \nissuer side, especially in EMDE, the data necessary to create \ntransition plans and track progress is not always available. External \nsupport may therefore be necessary to help the development of this \ntype of financing and, at least initially, such instruments will only be \nviable for larger companies with the resources to develop this data. \nOn the supply side, many EMDE have sovereign ratings that are \nbelow investment grade, making it hard to attract investment from \ncapital markets via instruments such as bonds without de-risking \nsupport from concessional finance providers. Particularly in EMDE \nwith fossil-fuel intensive energy mixes, this use of concessional \nfinancing could have a significant real-world impact – especially if it \nleads to a “crowding in” of private sector investors. A further challenge \nis that many investors have net zero targets that rely on financed \nemissions as one of their primary metrics. Even though transition \nactivities may be in line with a taxonomy or roadmap, they generally \nhave higher emissions than purely clean activities, which would risk \nskewed investors’ efforts to reduce their financed emissions. Further \nconsideration is needed on appropriate indicators that can monitor \ninstitutions’ proper progress and acceleration of funding for future \nenergy transition of real economy. \nTransition-related bond issuances by country 2019-2023  \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on data from Bloomberg (2024). \n \n 1\n 2\n 3\n 4\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nUnited\nKingdom\nUnited Arab\nEmirates\nJapan\nItaly\nHong Kong\nFrance\nChina\n\n\nWorld Energy Investment 2024 \n \nPAGE | 50  \nFinance \n Box 2.1 The development of Climate Transition Bonds (JCTBs) in Japan \n \n In February 2024, Japan issued the world's first sovereign transition \nbonds – Japan Climate Transition Bonds (JCTBs). Two offerings of \nJPY 800 billion (USD 5 billion) each were issued, with tenors of 5 \nand 10 years. The issuances are certificated by the Climate Bonds \nInitiative and based on Japan’s national transition strategy.  \nJapan’s Basic Policy for the Realization of Green Transformation, \npublished in February 2023, includes a detailed investment plan for \n22 industrial sectors to reach carbon neutrality by 2050, as well as \na commitment to introduce carbon pricing. Under the investment \nplan, the government envisages JPY 20 trillion (USD 130 billion) of \npublic capital to realise more than JPY 150 trillion (USD 1 trillion) in \ninvestment through public and private financing by 2050. The plan \nis accompanied by transition roadmaps for each sector, which were \ndeveloped by expert committees of public and private stakeholders. \nThese roadmaps allow investors to identify transition activities and \ncan also be used by companies for internal transition planning. The \ninvestment plan also includes an emphasis on nascent \ntechnologies, which will receive over half of the proceeds of JCTBs.  \nThe JCTBs also include a novel approach to carbon pricing. \nNormally, revenue from carbon pricing can only fund future energy \ntransition activity, i.e. after the carbon has been paid. This delays \nin the impact of the carbon pricing but Japan’s approach was to  \n \nbuild the future pricing revenue into the issuance, by assuming this \nis the capital government will use to make repayments on the bonds. \nThis allows for the government to immediately take advantage of \nthe assumed future revenue of carbon taxes.  \nStructure of Japan Climate Transition Bonds (JCTBs)   \n \nThe JCTBs approach can potentially be repurposed for EMDE. With \nthe government playing the role of credit intermediary, this could \nenhance corporates’ creditworthiness and eliminate the complexity \nof financing for small-scale projects. Countries with sub-investment-\ngrade credit ratings, may need additional credit enhancements – \nsuch as guarantees from DFIs – to help facilitate access to \ninternational capital markets.  \n \nImplementation of Carbon Pricing in Japan\nPaid Auction start from FY2033 for Power sector\nEmission Trading System (“GX-ETS”)\nFrom FY2028 for fossil fuel importers\nFossil fuel levy (“GX-Surcharge”)\nJCTBs repaid by \nFuture Carbon \nPricing Revenue\nJCTBs\nJPY 20 trillion public capital will be offered to \nrealize more than JPY 150 trillion investment \nthrough public and private financing by 2050\nCorporates/\nIndustries\nThe carbon pricing will start at a low level, and it will be rising gradually to \nincentivise investment in green transformations early as possible\nJapanese\nGovernment\n\n\nWorld Energy Investment 2024 \n \nPAGE | 51  \nFinance \nRevenues from compliance carbon pricing hit record highs in 2023; in the voluntary markets, a \nlarge surplus of unused older credits weighed on prices and demand amid quality concerns \n \nIEA. CC BY 4.0 \nNote: Data on carbon credits relates to the following voluntary carbon markets registries: American Carbon Registry, Climate Action Reserve, Gold Standard, Verra’s \nVerified Carbon Standard, California Air Resources Board, Washington State Climate Commitment Act. The categories considered under energy-related carbon \ncredits are: renewable energy, industry, transport, energy efficiency, carbon capture and storage. ETS = Emissions Trading System.  \nSource: IEA analysis based on data from the World Bank, and Berkeley, 2024 .\n5%\n10%\n15%\n20%\n25%\n30%\n 20\n 40\n 60\n 80\n 100\n 120\n2000\n2005\n2010\n2015\n2020\nBillion USD (2023, MER)\nCarbon taxes\nOther ETS\nEU ETS\nGlobal emission coverage\nCompliance carbon pricing revenues and emission coverage\n 100\n 200\n 300\n 400\n 500\n 600\n2000\n2005\n2010\n2015\n2020\nMillion credits\nCredits issued\nCredits retired\nCumulative surplus\nIssuance and retirement of energy-related carbon credits\n\n\nWorld Energy Investment 2024 \n \nPAGE | 52  \nFinance \nCompliance carbon pricing instruments have seen further expansion and innovation in 2023, \nwhile voluntary carbon markets faced quality concerns \nCarbon pricing is a key instrument for mitigating emissions, \nencouraging investment in low-carbon technologies and reducing \ndemand \nfor \nemissions-intensive \nactivities. \nCarbon \npricing \ninstruments include compliance carbon pricing instruments (CCPIs), \nsuch as carbon taxes, emissions trading systems (ETS) or hybrids of \nthe two, as well as baseline and credit systems, which generate \ncarbon credits. These two types of carbon pricing instruments can \ncontribute in different ways to financing the clean energy transition, \ndepending on the specific local contexts.  \nAs of May 2024, 75 CCPIs were in place worldwide. All CCPIs cover \nthe energy sector and 23% of global greenhouse gas (GHG) \nemissions.  Aggregate revenues from CCPIs hit a new record high in \n2023 and, for the first time, revenues  surpassed USD 100 billion – of \nwhich roughly half was generated by Europe’s ETS. A few notable \nenergy-sector related developments in CCPIs also took place: \nCanada introduced a regulatory framework for a federal cap-and-\ntrade system for the oil and gas sector – its largest source of GHG \nemissions. Meanwhile, as part of a broader reform, the European \nUnion extended the coverage of its ETS by including its domestic \nmaritime sector, which represents 3% to 4% of total EU CO2 \nemissions. Indonesia introduced a new intensity-based ETS for the \npower generation sector. Brazil passed a new draft law for cap-and-\ntrade. Moreover, in October 2023, the EU Carbon Border Adjustment \nMechanism (CBAM) also entered its transitional phase – introducing \nreporting requirements only – in preparation for a definitive regime \nthat will start in 2026. \nVoluntary carbon credit markets have come under particular scrutiny \nin 2023, with some projects being accused of over-crediting, of \nlacking additionality or of enabling human rights abuses. This, \nalongside inconclusive negotiations at COP28 on Article 6 rules, \nimpacted the issuance of energy-related carbon credits in 2023. \nRetirements of credits remained high in 2023, after reaching a peak \nin 2022. However, a surplus of unsold legacy credits has been \naccumulating in recent years, reaching around 480 million credits in \n2023. This keeps the costs of most energy-related carbon credits \nmuch lower than the real cost of mitigation. To address questions that \nsome have raised on the integrity of some legacy credits, CORSIA \nhas introduced cut-off dates for eligible credits. Recent initiatives \nwere also set up to improve the quality of carbon credit supply (such \nas the Core Carbon Principles of the Integrity Council for Voluntary \nCarbon Markets) as well as demand (such as the Claims Code of \nPractice of the Voluntary Carbon Markets Integrity Initiative, the \nNordic Code of best practice for the voluntary use of carbon credits, \nFinland’s guide to good practices for voluntary carbon markets). \n\n\nWorld Energy Investment 2024 \n \nPAGE | 53  \nFinance \n Box 2.3 Innovative financing solutions for energy access \n \n There are still 750 million people living without access to \nelectricity globally and more than 2 billion people without clean \ncooking solutions. Achieving the Sustainable Development Goal \n7 – universal energy access by 2030 – will require annual \nspending of at least USD 42 billion beginning in 2024. This \nrepresents a massive increase in spending, particularly in Africa, \nwhere energy access projects have struggled to attract more than \nUSD 5 billion annually.   \nEnergy access investments are particularly challenging given that \nthey are small scale, and the risks associated with the end user \nare often high. Mounting debt at utilities has slowed grid \nconnections, challenges over demand stimulation have put \npressure on mini-grid business models, and non-payment risks \nhave impacted profitability for providers of home solar systems. \nMeanwhile, it is difficult to keep clean cooking solutions affordable \nfor end users without the use of carbon credits, a market that has \nfaced credibility concerns.  \nFinancial aggregation solutions have emerged as a way to raise \nmore private capital for access projects. In May 2023, Sun King, \nan off-grid electricity provider, finalised a securitisation deal led \nby Citi, the US-based bank. Worth USD 130 million and \ndenominated in Kenyan shillings, the transaction is based on the  \n \nfuture expected revenue of a million customers. Alongside DFIs, the \nstructure included participation from commercial banks in the region. \nSimilarly, in 2021, Winch Energy used a portfolio loan approach – \ncombining successful tenders for mini-grid development in Uganda \nand Sierra Leone into one holding company – to raise USD 16 million \nfor projects that were otherwise too small to access financial markets. \nGrants and concessional capital will still play a key role, particularly in \nrural areas and fragile and conflict-prone states, but aggregation can \nleverage private capital into some of the more commercial projects. \nAnnual energy access investment in Africa \n \nIEA. CC BY 4.0 \nSource: IEA, 2024. \n \n 10\n 20\n 30\n2019\n2024-30\nBillion USD (2023, MER)\nElectricity\nClean cooking\n\n\nWorld Energy Investment 2024 \n \nPAGE | 54  \nFinance \nImplications \n\n\nWorld Energy Investment 2024 \n \nPAGE | 55  \nFinance \nTo meet investment needs under the NZE Scenario, further evolution of today’s financial \narchitecture is needed, including tailored solutions for transition activities and for EMDE\nEnsuring the availability of affordable capital will be vital for driving \nrapid energy transitions. It is critical not only for financing projects and \ncompanies, but also for supporting the enabling environment and \nfacilitating necessary spending by households. Current market \nconditions – particularly the rising interest rate environment – have \nresulted in higher financing costs and highlight the need for \ninnovative risk-mitigation instruments and support mechanisms, \nparticularly for EMDE. Tightening market conditions have also \ncontributed to a setback in sustainable finance instruments as more \nfinancial players voice concerns about regulations becoming overly \nstringent, especially when it comes to financing high-emitting, hard-\nto-abate sectors. \nClean energy projects should adopt a diversified financing strategy \nthat leverages the strengths and risk appetites of each source of \ncapital. While private sector investment is particularly dominant in \nadvanced economies, growing domestic private financial sector \nfinancing in energy in EMDE is particularly important, as it reduces \ncurrency risk and reliance on external sources. Attention is also due \nfor households, which have also become increasingly prominent as \nproviders of capital, as observed by the near doubling of their share \nof energy asset ownership between 2015 and 2023. Given the \nincreases in the cost of living, maintaining affordability of services will \nbe vital over the course of 2024, which may require additional support \nfrom public sources. DFIs can also play a role in ensuring affordability \nand providing capital in higher risk markets and technologies.  \nAppropriate tools and systems need to be in place to direct finance \ntowards energy investment in EMDE as a catalyst for clean energy \ntransitions. This includes enhancing the credibility of carbon markets, \nwhich have faced criticism related to over-crediting, lack of \nadditionality and enabling human rights abuses. Furthermore, \nimproving transition finance mechanisms, and strengthening \nsustainable finance regulations, especially in the context of the \npotential impact on financing high-emitting, hard-to-abate sectors, \ncan help ensure that financing supports the differing trajectories of \nEMDEs compared to advanced economies.  \nOn the EMDE side, providing an accurate assessment of financial \nneeds for clean energy investments around NDCs will be crucial. This \ncan be used as a basis for engagement in some of the global efforts \nto accelerate financing for energy transitions, such as at the \nupcoming G20 discussions, or via initiatives such as the ongoing \nBridgetown Initiative that aims to reform the global financial \narchitecture to better support EMDE.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 56  \nPower \nPower \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 57  \nPower \nOverview \n\n\nWorld Energy Investment 2024 \n \nPAGE | 58  \nPower \nPower sector investment increased by 15% in 2023 to USD 1.3 trillion, with the growth rate \nexpected to slow in 2024 due to cost reductions for renewables and a decline in fossil fuels \nGlobal annual investment in the power sector by category, 2011-2024e \n \nIEA. CC BY 4.0. \nNote: Investment throughout is measured as ongoing capital spending on new and existing power capacity. All numbers throughout are in 2023 USD. Fossil fuel \npower includes unabated and abated power. EMDE = emerging market and developing economies. 2024e = estimated values for 2024. \n10%\n20%\n30%\n40%\n50%\n60%\n 250\n 500\n 750\n1 000\n1 250\n1 500\n2011-17\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nBattery storage\nElectricity grids\nNuclear\nFossil fuel power\nRenewable power\nEMDE outside China\n(share, right axis)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 59  \nPower \nSpending on renewables and batteries continues to reach new highs even as costs for solar PV \nand batteries plummet, while unabated fossil fuel power maintains its downward trend\nGlobal investment in the power sector grew by 15% in 2023, reaching \na record USD 1.3 trillion. Concerns over high interest rates and the \nprofitability of renewables firms were offset by lower prices for solar \nPV modules, coupled with rapid renewables deployment in major \neconomies including China, the European Union and the United \nStates. Growth is set to continue in 2024 but at a more modest pace. \nGlobal spending on renewables also hit a new record of \nUSD 735 billion, driven by solar PV and wind. China alone saw solar \nPV spending jump to USD 220 billion – almost half of global solar \ninvestment for the year – with capacity additions multiplying by a \nfactor of 2.5 compared to 2022 thanks to falling module prices and \npandemic recovery effects. As prices for solar modules and other key \nclean energy technologies continue to fall, we are now expecting the \ngrowth of spending for renewables to slow down – especially for \ndistributed solar PV – and reach USD 770 billion in 2024. This does \nnot reflect a slowdown in the renewable power capacity added, as \nprice decreases allow for more capacity to be added per USD spent. \nNonetheless, grid and curtailment concerns, permitting delays and \nland availability remain constraining factors.    \nAs renewables expanded in 2023, capital expenditures on fossil fuel \npower decreased by 10%, to USD 90 billion, led by declines in coal-\nfired power. For 2024, we are expecting a similar decrease to \nUSD 80 billion, again driven by coal (-30%) and to a smaller extent \nby gas-fired power (-8%). Spending on fossil fuel power with carbon \ncapture utilisation and storage (CCUS) remained below USD 1 billion \nand was concentrated in China. \nWhile investment in nuclear power remained largely unchanged in \n2023, expected growth of around 20% in 2024 promises renewed \nmomentum. However, most of this spending growth in the next few \nyears will be driven by lifetime extensions rather than investment in \nnew nuclear capacity. Investment in hydropower fell slightly and is \nexpected to be even lower in 2024.  \nInvestment in electricity grids reached USD 375 billion, translating to \na 9% average growth rate globally. Notable success stories for grids \nwere in advanced economies as well as China and Latin America. \nInvestment by other emerging market and developing economies \n(EMDE) still lagged the global average, and even declined in some \nregions. Battery storage investment grew in line with our strong \nexpectations, reaching USD 40 billion. \nFinal investment decisions (FIDs) continue to demonstrate a mixed \npicture. While FIDs for utility-scale renewables were at record highs, \nthose for unabated coal-fired power plants also increased to levels \nnot seen since 2015, with almost all of these made in China.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 60  \nPower \nInvestment in renewable power rose rapidly across the board, with promising momentum for \nspending on grids, nuclear and battery storage in 2024 \nAnnual investment in the power sector by geography and category, 2021-2024e \n \nIEA. CC BY 4.0. \nNote: REP = renewable power. FFP = fossil fuel power. BESS = Battery Energy Storage System. Investment spending on BESS in other EMDE is so small \n(USD 2 billion in 2024e) that it can almost not be detected on the chart. 2024e = estimated values for 2024. \n 100\n 200\n 300\n 400\nREP\nGrids\nFFP Nuclear BESS\nREP\nGrids\nFFP Nuclear BESS\nREP\nGrids\nFFP Nuclear BESS\nBillion USD (2023, MER)\n2021\n2022\n2023\n2024e\nAdvanced economies\nChina\nOther EMDE\n\n\nWorld Energy Investment 2024 \n \nPAGE | 61  \nPower \nEMDE are slowly attracting more investment, but not at the scale required, while in advanced \neconomies falling wholesale electricity prices create uncertainty for investors\nWhile total power sector investment in EMDE outside China \nincreased to USD 270 billion in 2023 – a record – its growth rate of \n12% still lagged the 16% average for advanced economies and \nChina. Renewable power spending rose by almost one-fifth and now \nrepresents half of total power sector investment in other EMDE \nregions. Investment in grids increased to USD 80 billion – the highest \nlevel since 2018 – with further growth expected for 2024. Spending \non nuclear and batteries also increased, while investments in fossil \nfuel power generation dipped slightly. \nStrong renewable power investment in EMDE outside China was \ndriven by significant spending in India, Southeast Asia, Brazil and \nAfrica, thanks to policy reforms and the introduction of well-organised \npublic tenders, as well as grid improvements. The volume of \nrenewable energy capacity that was auctioned in India, for example, \ntopped 20 gigawatts (GW) in 2023 – more than double that of 2022 – \nwith a particular focus on solar PV and projects that combine \nrenewables with storage. Seeking to tackle its “state of disaster” in \nthe electricity sector, South Africa also concluded its first battery \nprocurement programme and is seeking to add an additional 5 GW \nof renewables and 600 megawatts (MW) of battery storage. \nLatin America notably increased its spending on grids in 2023. Brazil \nled the way with a record USD 8 billion auction, while Colombia and \nPanama revived interconnection plans. On the other hand, \ninvestment in grids in Southeast Asia and Africa stalled. \nOverall, however, power sector investment in EMDE outside China \nstill represented only around 20% of the global total, while advanced \neconomies and China were responsible for more than USD 1 trillion \nin spending. We expect this trend to persist in 2024, which means \nthat overall spending is still not on track to meet current climate and \nenergy-access goals. One major reason for this is the high cost of \ncapital for clean energy projects in EMDE regions outside China, \nwhich is often double or triple the cost in advanced economies. \nWhile renewable companies in advanced economies saw improved \nprofitability in 2023, lower prices for natural gas and deeper market \npenetration by low-cost renewables are starting to put pressure on \nwholesale electricity prices – creating uncertainties for their revenue \nstreams. This, in turn, puts additional scrutiny on future investments \n– one reason we expect growth in renewable power investment to \nslow in 2024. In some European countries, for example, average \nwholesale electricity prices have fallen to their lowest levels since \n2021 – and have regularly dipped into negative territory. This \nunderscores the pressing need for greater investment in power grids, \ninterconnectors and storage infrastructure as the share of intermittent \nrenewables increases. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 62  \nPower \nGeneration \n\n\nWorld Energy Investment 2024 \n \nPAGE | 63  \nPower \nSolar PV attracted a record USD 480 billion in spending in 2023 – more than all other generation \ntechnologies combined – while investment in coal power has fallen by 40% since 2021 \nGlobal annual investment in power generation by selected technologies, 2021-2024e \n \nIEA. CC BY 4.0. \nNote: Gas-fired generation investment includes both large-scale plants and small-scale generating sets and engines. Hydropower includes pumped-hydro storage. \n2024e = estimated values for 2024. \n 100\n 200\n 300\n 400\n 500\nSolar PV\nWind\nHydro\nNuclear\nCoal\npower\nGas\npower\nBillion USD (2023, MER)\n2021\n2022\n2023\n2024e\n\n\nWorld Energy Investment 2024 \n \nPAGE | 64  \nPower \nPrice pressures in solar PV and wind equipment have eased, and capital costs edged lower in \n2023, reaching record lows for solar PV and batteries \nManufacturers' average selling prices \n \n \n         IEA clean energy equipment price index \n \n \nIEA. CC BY 4.0. \nNote: The clean energy equipment price index, developed by the IEA, tracks price movements in a global basket of solar PV modules, wind turbines, lithium-ion \nbatteries for electric vehicles (EVs) and utility-scale battery storage, weighted by shares of investment. Prices are in current USD, more details can be found here. \nSource: IEA calculations based on companies’ financial reports, Bloomberg data and BNEF.\n 0.25\n 0.50\n 0.75\n 1.00\n 1.25\nQ1\n2017\nQ4\n2023\nMillion USD/MW\nEuropean wind turbine manufacturers\nChinese wind turbine manufacturers\nChinese solar panel manufacturers\n 50\n 100\n 150\n 200\n 250\nQ1\n2014\nQ4\n2023\nIndex (2019 Q4 = 100)\nGlobal index\nHighest quarter\nsince Q4 2018\nLowest quarter\nrecorded\nQ4 \n2022\nQ4 \n2023\n\n\nWorld Energy Investment 2024 \n \nPAGE | 65  \nPower \nThe profitability of renewable utilities improved as capital costs fell; solar manufacturing \nmargins narrowed due to overcapacity, while challenges in wind manufacturing began to ease \nROC and WACC of solar and wind manufacturers \n \nROC and WACC in oil & gas vs renewables companies \n \nIEA. CC BY 4. \nNote:  ROC = return on capital. WACC = weighted average cost of capital. Calculation based on the top 25 publicly listed companies in each sector according to \nproduction capacity, primarily concentrated in advanced economies and China. Renewable companies include utilities and manufacturers. WACC is based on \nimplied market valuation. 2024 Q1 values based on obtainable data from companies. \nSource: IEA analysis based on Bloomberg data and S&P Capital IQ.\n2018\n2019\n2020\n2021\n2022\n2023\nQ1\n2024\nOil & Gas WACC\nRenewables WACC\nOil & Gas ROC\nRenewables ROC\n-5%\n0%\n5%\n10%\n15%\n20%\n25%\n2018\n2019\n2020\n2021\n2022\n2023\nQ1\n2024\nWind WACC\nSolar WACC\nWind ROC\nSolar ROC\n\n\nWorld Energy Investment 2024 \n \nPAGE | 66  \nPower \nOffshore wind developers face contract profitability issues as governments react to new market \nconditions by adjusting energy purchase prices \nOffshore wind auctions in the United Kingdom   \n \nOffshore wind contracts in the United States in 2023 \n \nIEA. CC BY 4.0. \nNote: UK average strike and US average contract prices are expressed in 2023 USD.  \nSource: IEA calculations based on UK Department of Energy and Change and company reports.\n 30\n 60\n 90\n 120\n 150\n 2\n 4\n 6\n 8\n 10\n2016\n2017\n2019\n2022\n2023\n2024\nGW\nAwarded\nRenegotiation\nNot awarded\nCancelled\n 30\n 60\n 90\n 120\n 150\n 2\n 4\n 6\n 8\n 10\nAwarded\nRenegotiation\nCancelled\nGW\nAverage strike price\n(USD/MWh, right axis)\nAverage contract price \n(USD/MWh, right axis)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 67  \nPower \nRenewables developers see improving profitability, while solar PV onshoring plans and wind \nmanufacturers face challenges\nSolar PV and wind projects continue to offer attractive investment \nprospects, despite profitability challenges in the manufacturing \nbusiness. Renewable utility profitability is slowly returning to pre-\npandemic levels, with returns on invested capital (ROIC) increasing \nby one-third in 2023 from a year earlier, thanks to falling solar and \nwind costs. ROIC is also notably more stable compared to the \nvolatility of oil and gas companies in recent years. That said, the \naverage cost of capital for renewable power firms has increased \nslightly in recent years, now hovering at around 7% of market value.  \nAn exception to the trend of improving profitability was offshore wind. \n2023 saw a range of contract cancellations due to previously agreed \nlow prices that were no longer viable given supply chain challenges, \ncost increases and permitting delays. In the United States, for \nexample, 7 GW of planned capacity was cancelled while another 4 \nGW are subject to contract renegotiations at prices that are on \naverage around two times higher. There were multiple cancellations \nin the United Kingdom as well, with the 2023 auction not attracting a \nsingle offer, prompting an increase of the strike price by 165% for its \n2024 auction. Nonetheless, successful contract renegotiations, \nadjustments in auctions and regulatory support such as the European \nUnion’s wind power package are all positive signs that demonstrate \nthe need for regulators to remain responsive to changing market \nconditions.   \nOn the manufacturing side, 2023 was dominated by significant price \ndeclines and concerns about overcapacity. As manufacturing \ncapacity continues to grow within the Chinese solar PV sector, listed \nsolar firms – dominated by Chinese entities – are starting to see their \nprofit margins shrink. Despite government support for domestic \nmanufacturing, cost pressures have led to some cancellations of \nexpansion plans – and in some cases, existing plant closures – in \nEurope, the United States and India. That said, falling prices for solar \nmodules led to a 5% drop in the global average levelised cost of \nelectricity (LCOE) for solar PV last year. \nCompanies specialised in wind turbines – a sector dominated by \nEuropean manufacturers – struggled for roughly two years with \nvarious supply chain, cost and technical issues. But by 2023, \nprofitability had largely recovered, reaching similar levels as solar PV \nmanufacturers. Wind turbines produced by Chinese companies \ncontinue to be around one-third the price of European-made turbines \nand have had some limited success in winning onshore wind auctions \nin Europe and Asia. However, overseas expansion plans by Chinese \nwind turbine producers face obstacles due to more complex logistics \nand higher operation and maintenance costs.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 68  \nPower \n Investment in clean technology manufacturing is surging, driving price decreases but also \ncreating overcapacity in solar PV and battery manufacturing \n \n Clean technology manufacturing is surging: The sector \naccounted for 4% of global GDP growth in 2023. Clean \ntechnology manufacturing attracted almost USD 200 billion in \ninvestment last year – a 70% jump from 2022  – with solar PV and \nbattery manufacturing plants leading the way. Investment in solar \nPV manufacturing more than doubled to around USD 80 billion, \nwhile \ninvestment \nin \nbattery \nmanufacturing \nstood \nat \nUSD 110 billion. Together, both accounted for more than 90% of \ntotal spending on clean technology manufacturing in 2023. \nChina accounted for three-quarters of global clean technology \nmanufacturing investment, down from 85% in 2022, as \ninvestment in the United States and Europe accelerated. This \ngeographic concentration is set to continue to 2030, with China, \nthe United States and the European Union together projected to \naccount for around 80% to 90% of manufacturing capacity for \nsolar PV, wind, battery, electrolyser and heat pumps. \nThis surge in clean technology manufacturing is, however, \ncreating significant overcapacities – especially for solar PV and \nbatteries. Existing capacity for solar modules and cells is already \nsufficient to meet demand under the NZE Scenario in 2030. \n \nAs a result, prices for solar PV modules and batteries have fallen to \nhistoric lows. However, these facilities are also seeing relatively low \nutilisation rates and profit margins are being compressed. \nOutput from existing and announced manufacturing capacity \nrelative to NZE Scenario in 2030 \n \nIEA. CC BY 4.0. \nNotes: Increased utilisation refers to the gap between 2023 production levels and \nexisting capacity being utilised at 85%. A utilisation rate of 85% is used for both \nexisting and announced manufacturing capacity in 2030. \nSource: IEA (2024), Advancing Clean Technology Manufacturing. \n \n50%\n100%\n150%\nSolar PV\nWind\nBatteries\n2023 output\nIncreased utilisation\nCommitted\nPreliminary\nAnnounced capacity: \nExisting capacity:\n2030 NZE deployment\n\n\nWorld Energy Investment 2024 \n \nPAGE | 69  \nPower \nVolatile wholesale electricity prices create uncertainty for renewables companies over the \nimpact on revenues and future investment, underlining the need for storage and grid expansion\nWholesale electricity prices in Europe are declining, with some \nreaching their lowest levels since 2021. Lower natural gas prices, \nincreased hydro and nuclear output, and reduced demand, are all \ndriving down wholesale prices. As renewable capacity grows, power \nproduction from these sources is also reaching unprecedented levels, \noccasionally resulting in negative prices and increased volatility. For \ninstance, Spain achieved record-high solar power production in the \nfirst quarter of 2024 with prices averaging 43 USD/MWh – and \nsometimes approaching zero. Germany and the Netherlands also \nexperienced brief periods of negative prices in March 2024. While \nelectricity prices in the United States have been below those in \nEurope for a while (due to its domestic natural gas production), prices \nhave dipped to record lows in recent months.  \nThe rise in affordable electricity benefits consumers and is a welcome \nrespite from the record highs during the energy crisis. At the same \ntime, it increases uncertainty for renewables companies as revenue \nstreams come under pressure and become more unpredictable – \nleading to greater scrutiny of the future growth prospects for \nrenewables investments. Developers who choose not to co-locate \ntheir wind and solar PV power parks alongside battery storage or \nother sources of flexibility may see a drop in potential revenues during \npeak generation – hampering profits and discouraging investment. \nEnhanced coordination between renewables production, storage and \ndemand response is needed to manage the balance between price \nlevels and growing volatility. Further grid expansion is also urgently \nneeded to mitigate price swings in both directions. Increased \ninterconnection in Europe offers an opportunity to optimise electricity \nflow, especially when prices differ between regions. During the \nenergy crisis, for example, Spain and Portugal experienced lower \npower prices than the rest of Europe due to their ample electricity \nproduction from solar PV and wind, while a lack of interconnection \nconstrained electricity flow to higher-price markets in central Europe.  \nMonthly wholesale electricity prices in selected regions \n \nIEA. CC BY 4.0. \nSource: IEA calculations based on EIA (2024), CEIC (2024), Ember (2024). \n \n 100\n 200\n 300\n 400\n 500\nJan-21\nJan-22\nJan-23\nJan-24\nUSA\nChina\nGermany\nFrance\nUSD/MWh\n\n\nWorld Energy Investment 2024 \n \nPAGE | 70  \nPower \nFinal investment decisions (FIDs) \n\n\nWorld Energy Investment 2024 \n \nPAGE | 71  \nPower \nMore than 50 GW of unabated coal-fired power generation was approved in 2023, the most \nsince 2015, and almost all of this was in China, reflecting security priorities and strong demand \nCoal-fired power generation capacity reaching FID by geography (left) and segment (right), 2016-2023 \n \nIEA. CC BY 4.0. \nNote: FID = final investment decision. FIDs are an indication of the scale of future capacity to come online in the coming years. The IEA tracks projects that reach \nfinancial close or begin construction to provide a forward-looking indicator of future capacity additions and spending activity.  \nSource: IEA calculations based on McCoy Power Reports (2024).\n 20\n 40\n 60\n2016 2017 2018 2019 2020 2021 2022 2023\nGW\nChina\nIndia\nSoutheast Asia\nRest of world\n 20\n 40\n 60\n2016 2017 2018 2019 2020 2021 2022 2023\nHigh efficiency\nSubcritical\n\n\nWorld Energy Investment 2024 \n \nPAGE | 72  \nPower \nFIDs for unabated gas-fired power generation declined by 10% in 2023 to 60 GW, still above the \nlevels observed before the global energy crisis \nGas-fired power generation capacity reaching FID by geography (left) and segment (right), 2016-2023 \n \nIEA. CC BY 4.0. \nNote: MENA = Middle East and North Africa. CCGT = combined-cycle gas turbine. OCGT = open-cycle gas turbine. Share of net importers of natural gas = share of \ngas power that has reached FID in countries that are net importers of natural gas. FIDs are an indication of the scale of future capacity to come online in the coming \nyears. The IEA tracks projects that reach financial close or begin construction to provide a forward-looking indicator of future capacity additions and spending activity. \nSource: IEA calculations based on McCoy Power Reports (2024).\n 20\n 40\n 60\n 80\n2016 2017 2018 2019 2020 2021 2022 2023\nGW\nChina\nUnited States\nMENA\nOther Asia\nSoutheast Asia\nEurope\nRest of world\n20%\n40%\n60%\n80%\n 20\n 40\n 60\n 80\n2016 2017 2018 2019 2020 2021 2022 2023\nOCGT\nCCGT\nNet importers of natural gas (share, right axis)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 73  \nPower \nFIDs for unabated fossil fuel generation rose above their already elevated 2022 levels, reaching \nmore than 110 GW, driven by unabated coal-fired power \nDespite a drop in the number of approvals for natural gas power \nplants, FIDs for unabated fossil fuel generation rose to 110 GW in \n2023, driven by a 30% year-on-year increase in coal-fired capacity. \nEven as its contribution to natural gas FIDs declined significantly and \nclean power expanded drastically, China is still the source of the vast \nmajority of this unabated fossil fuel-generated capacity, accounting \nfor 95% of the world’s coal-fired plants that reached financial close. \nIn fact, if China were excluded, global approvals of unabated fossil \nfuel generation would have decreased by 3% last year. \nThe main drivers for this proposed capacity expansion are ongoing \nsecurity of supply concerns amid the underperformance of \nhydropower in China, inflexible interprovincial electricity export \ncontracts and rising electricity demand, as well as pressure on \nprovincial governments to prioritise economic growth. \nAgainst a backdrop of rapid expansion of renewables capacity in \nChina, these new unabated fossil fuel power plants face the prospect \nof very low utilisation and reliance on capacity markets. It remains \nunclear whether this new capacity will be used primarily for flexibility \npurposes or for baseload generation, but the potential implications for \nChina’s emissions in the latter case are significant given the \ngovernment’s carbon intensity target. \nIn India, new coal FIDs doubled from a year earlier, to 2 GW in 2023 \n– their highest level since 2019 – as the country sought to meet \nhigher-than-expected electricity demand. In the rest of the world, only \ntwo countries – Russia and the Philippines – approved meaningful \nincreases in new coal-fired capacity for development. It appears, \ntherefore, that most countries and financiers are following through \nwith their pledges to stop supporting new coal-fired power plants. \nIn contrast to coal, FIDs for gas-fired power generation fell by 10% in \n2023 – reaching 60 GW – although they remained above the average \nof recent years. China still approved the largest share of gas-fired \nplants, but the number dropped significantly, leading to a lower share \nof plants reaching financial close among net importers of natural gas. \nElsewhere, FIDs for new gas plants increased in the Caspian region \n(Kazakhstan, Uzbekistan, and Azerbaijan) in particular, due to an \ninflux of cheap Russian gas, while Nigeria has started to invest in \ngas-fired power stations using its domestic gas reserves. \nElsewhere, approvals of new gas FIDs in the United States, Europe \nand Asia in 2023 were in line with recent years. At the same time, \nnew projects in the Middle East and North Africa (MENA) region fell \nby 50%. Moreover, all new gas FIDs were for combined-cycle gas \nturbine plants (CCGTs), which indicates that these new projects are \nlooking for operating at higher utilisation rates.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 74  \nPower \nDespite the high levels of new coal FIDs, the pipeline of coal is still slowing; similarly, a good \nyear for new hydropower has not offset the low number of approvals in recent years \nAnnual average capacity additions and FIDs by capacity, 2016-2023 \n \nIEA. CC BY 4.0. \nNote: Annual average FIDs are an indication of the scale of future capacity to come online in the coming years and the time it takes for a new plant to go online can \nvary: A new natural gas plant might take three years, for example, while a new nuclear plant can take seven years.  \nSource: IEA calculations based on McCoy Power Reports (2024), S&P Global (2024), and IAEA (2024).\n 20\n 40\n 60\n 80\nNatural gas\nCoal\nHydro\nNuclear\nGW\nAnnual average capacity additions\nAnnual average FIDs\n\n\nWorld Energy Investment 2024 \n \nPAGE | 75  \nPower \nFIDs for utility-scale renewables climbed to record levels with solar leading the way, but \noffshore wind recovered strongly from its 2022 lows  \nFIDs for utility-scale renewable plants, 2016-2023 \n \nIEA. CC BY 4.0. \nNote: Excludes large hydropower. “Other” includes biomass, waste-to-energy, geothermal, small hydro and marine.  \nSource: IEA calculations based on Clean Energy Pipeline (2024).\n 100\n 200\n 300\n 400\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nSolar\nOnshore wind\nOffshore wind\nOther\n\n\nWorld Energy Investment 2024 \n \nPAGE | 76  \nPower \nContinued growth in solar and a rebound in offshore wind lifted FIDs for utility-scale \nrenewables to an all-time high in 2023\nFIDs for utility-scale renewable projects increased by 15% year-on-\nyear to almost USD 400 billion in 2023, an all-time high. FIDs for solar \nplants represented more than half of the total at USD 220 billion – a \nnew record and 2.5 times the amount approved in 2020. Wind power \nrecovered somewhat from the previous year’s drop due to a strong \nrecovery in offshore FIDs, while fewer onshore wind projects were \napproved. The total numbers of utility-scale deals continued to \nincrease significantly as the combined value of deals above \nUSD 1 billion more than doubled. \nThanks to the European Union’s “Fit-for-55” package,  as well as \nimprovements to the region’s auctions and permitting, approvals of \nutility-scale renewable projects there rose by 50%, led by Germany, \nFrance and Poland. Similarly, the United States saw FIDs increase \nby 20%, with a bumper fourth quarter after details of the Inflation \nReduction Act were disclosed. Elsewhere, notable jumps were also \nobserved in Saudi Arabia and the Philippines.   \nIn a strong year for hydropower, FIDs for large-scale hydro plants \nincreased to 32 GW from 14 GW in 2022. This was the highest level \nseen since 2017 – a promising sign for a technology that will play an \nimportant role in providing future baseload and energy storage \nservices. China dominated approvals – which approved FIDs for \nmore than 23 GW – India, Indonesia, Laos, Viet Nam and Angola. \nPumped hydro – which can serve as energy storage – constituted \nmore than 70% of hydropower FIDs. (Almost all approvals in China \nand Indonesia were for storage projects.) \nIn 2023, China and Egypt were the only countries starting the \nconstruction of new nuclear power plants (6 GW combined). The fact \nthat nuclear continues to stagnate is cause for concern, even though \nadditional capital is being spent on modernising and extending the \nlifetimes of existing plants, which is not captured by FIDs. \nThe strong growth in approvals of utility-scale renewables suggests \nthat the construction delays and supply chain constraints of past \nyears have been largely resolved. However, a range of issues is still \nhampering the scaling up of renewable capacity: Advanced \neconomies face land acquisition, permitting and grid connection \ndelays, for example, while China is keen to keep renewables \ncurtailment rates at 10%. In EMDE outside China, FIDs are still \nlagging behind – with the exception of India and Brazil – and will \nrequire addressing in particular the high cost of capital for clean \nenergy projects. Doing so will mean establishing clear and stable \nregulatory frameworks, reducing off-taker risk and deploying \nconcessional finance where necessary. For 2024, we are therefore \nexpecting overall growth to continue, but growth in FIDs for utility-\nscale renewables will slow in USD terms as costs continue to fall.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 77  \nPower \nGrids and storage \n\n\nWorld Energy Investment 2024 \n \nPAGE | 78  \nPower \nGrid investment is starting to pick up and is expected to reach USD 400 billion in 2024, with \nEurope, the United Sates, China and parts of Latin America leading the way  \nInvestment in power grid infrastructure by geography 2016-2024e \n \nIEA. CC BY 4.0. \nNote: 2024e = estimated values for 2024.  \nSource: IEA analysis based on transmission and distribution companies’ financial statements, Global Transmission (2023).\n 100\n 200\n 300\n 400\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nNorth America\nChina\nEurope\nAsia Pacific\nLatin America\nOthers\n\n\nWorld Energy Investment 2024 \n \nPAGE | 79  \nPower \nInvestment in battery storage continued its rapid growth to reach USD 40 billion in 2023, and \nfurther growth is expected in 2024 as costs continue to decline  \nBattery storage investment by geography (left) and segment (right), 2017-2024e \n \nIEA. CC BY 4.0. \nNote: OECD Pacific = Japan, Korea, Australia, and New Zealand. 2024e = estimated values for 2024. For this report, we improved our methodological approach to \nbattery storage investment. This involved a more accurate association of capacity to utility-scale, commercial and residential battery storage projects as well as their \ncorresponding capital costs. \nSource: IEA calculations based on BNEF (2024), Wood Mackenzie (2024), China National Energy Agency (2024) and CNESA (2024).\n 15\n 30\n 45\n 60\n2017\n2018\n2019\n2020\n2021\n2022\n2023 2024e\nBillion USD (2023, MER)\nUnited States\nChina\nEurope\nOECD Pacific\nOther\nUtility-scale\nBehind-the-meter\n2017\n2018\n2019\n2020\n2021\n2022\n2023 2024e\n\n\nWorld Energy Investment 2024 \n \nPAGE | 80  \nPower \nElectrification efforts are accelerating in advanced economies and Latin America, yet progress \nis urgently needed in EMDE outside China\nThere were positive changes in the grid landscape in 2023. In some \nregions, efforts to deploy networks for electrification increased, \nthough the gains still fell short of what is needed. Advanced \neconomies and China continue to lead investment in power grids, \naccounting for about 80% of global spending. China held its level of \ninvestment at USD 80 billion, with the government-owned State Grid \nCorporation maintaining its appetite for new grids and networks. \nInvestment in advanced economies grew at a rate of 11% in 2023, \nled by the United States, which spent USD 100 billion – mostly on \nenhancing grid reliability and upgrading old infrastructure. Spending \nin the European Union rose strongly, reaching USD 60 billion, \nbolstered by the European Commission’s Grid Action Plan which \ntargets more than USD 600 billion in spending on grids in the next six \nyears. Further investments in grid interconnection are very much \nrequired in the European Union to facilitate the flow of renewable \npower from southern to central European markets. Generally, in \nadvanced economies, a key challenge lies in sustaining investment \ngrowth and ensuring its effective translation throughout the supply \nchain. Power transformers in particular encounter obstacles due to \ninflationary pressures and supply shortages. \nGrid investment in EMDE outside China grew by an impressive 15%, \nreaching almost USD 80 billion in 2023. However, this increase \nmasked very different patterns in the underlying regions. Investment \nin India, for example, remained flat despite the introduction of tenders \nfor smart meters – of which only 10% of the government’s original \ntarget number have been installed. Investment in Africa and \nSoutheast Asia also remained mostly unchanged. However, this lack \nof new investment was partly offset by a doubling of spending in Latin \nAmerica as countries like Colombia, Chile, Panama and Brazil made \nefforts to increase spending. Brazil made particular progress – more \nthan doubling its grid investments in 2023 and auctioning a record \n10 500 km of grid (where China State Grid won the biggest lot). \nMany EMDE are highly dependent on concessional financing and \npublic funding for grid investment, which represented 80% of total \ninvestment in 2023. Most of Southeast Asia lacks robust regulatory \nframeworks for private participation, for example. In Viet Nam there \nis no public-private partnership (PPP) infrastructure with a clear \nrevenue model. In Africa, more than half of investment comes from \npublic sources – and only every third utility can recover operational \nand debt costs, even after including subsidies from governments. \nOne positive exception to this is South Africa, which plans to establish \nan independent transmission project office to procure new \ntransmission capacity using a build-operate-transfer model. Grid \nconnectivity in Africa generally remains a challenge, however. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 81  \nPower \nSharply declining costs helped battery storage investment to double again in 2023\nAs we point out in our recent Battery Special Report, battery storage \nis a critical component for the energy transition. In 2023, investments \nin battery storage reached more than USD 40 billion, 90% of which \nwas concentrated in China, the United States and Europe. But for \nevery 1 USD invested in battery storage in advanced economies and \nChina, only one cent was invested in other EMDE countries. This lack \nof investment in EMDE is mainly due the absence of clear regulatory \nframeworks as well as high capital and financing costs. \nSpending on battery storage in China increased by a factor of almost \n2.5 in 2023 to USD 11 billion. This comes as provinces rolled out \ncapacity payment schemes that subsidise both discharging and \ncharging. In addition, many provinces require project developers to \ninclude a minimum of 10% to 20% of energy storage capacity in every \nnew wind or solar project. After this record year of renewables and \nbattery deployment (as well as continued declines in capital costs) \nwe are expecting capital expenditure for battery storage in China to \ncontinue growing strongly in 2024, albeit at a slightly slower pace. \nIn the United States, investment also rose to USD 11 billion and we \nexpect similar growth 2024. This is supported by the US Inflation \nReduction Act and liberalised power markets that allow for favourable \nstorage economics, as well as strong dynamism in the residential \nbattery market. Even stronger growth has been held back by \npermitting issues and higher financing costs. \nEurope saw battery storage investment more than double to \nUSD 15 billion in 2023, with behind-the-meter applications – for \nexample, battery storage combined with rooftop solar – performing \nparticularly well in Germany and Italy and strong growth in utility-\nscale systems in the United Kingdom. Continued power price \nvolatility, supportive energy storage auctions, and tax exemptions are \nexpected to support a similar investment level in 2024 with \nprogressively greater focus on utility-scale systems. \nThe Asia-Pacific region (outside China) increased its battery storage \nspending by 40% to almost USD 2.5 billion, led by Japan and \nAustralia. India did not meet its growth expectations due to project \nconstruction delays. For select other markets, such as Chile, 2023 \nmarked the take-off year for battery storage as it passed legislation \nto incentivise energy storage and announced that it would be seeking \nto procure 5.4 GWh in energy storage and non-variable renewables \ncapacity by 2028 while setting aside USD 2 billion. \nDespite high expectations for future capacity growth, investment \nspending will likely moderate over time as capital costs continue to \ncome down. After increasing in the previous year for the first time, \ncapital costs returned to their 2021 levels in 2023 due to falling prices \nfor critical minerals and expanding battery manufacturing capacity. \nCapital costs also continued to be significantly lower in China than in \nEurope or the United States.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 82  \nPower \nImplications\n\n\nWorld Energy Investment 2024 \n \nPAGE | 83  \nPower \nTripling installed renewables capacity by 2030 will require annual investment in renewables and \ngrids to increase by 12% and 11%, respectively, while battery investment needs to rise by 25% \nGap in investment spending to triple installed renewables capacity by 2030 \n \n \n \n \nIEA. CC BY 4.0. \nNote: STEPS = Stated Policies Scenario. The annual growth rates mentioned above would ensure that the cumulative required investment to triple installed \nrenewables capacity by 2030 for renewable power, grids and battery storage in 2024-2030 is met. \n 50\n 100\n 150\n 200\n2023\n2030\nBattery storage\n 350\n 700\n1 050\n1 400\n2023\n2030\nBillion USD (2023, MER)\nSTEPS\nGap\nRenewable power\n 200\n 400\n 600\n 800\n2023\n2030\nGrids\n\n\nWorld Energy Investment 2024 \n \nPAGE | 84  \nPower \nWhile investment in renewables, batteries and (most recently) grids is accelerating, more effort \nis required to achieve a tripling of renewables capacity – especially in EMDE\nAt the COP28 international climate conference in Dubai, countries \nfamously signalled the “beginning of the end” of the fossil fuel era. As \npart of this pledge, they agreed to triple installed renewables capacity \nby 2030. While global spending on renewable power hit a record \nUSD 735 billion in 2023, more efforts are required for the tripling goal. \nEarly signs of a potential slowdown in the growth of global spending \non renewables, and persistently insufficient levels of investment in \nEMDE outside China, underline the need to double down if we are to \nachieve our climate and energy access goals. Ensuring further \nincreases in renewables investment requires the following: clear and \nstable regulatory frameworks; policy support; simpler and faster \npermitting; grid expansion; energy storage and sources of flexibility; \npayment guarantees and more concessional finance. \nUnder current policies and market conditions, renewables investment \nover the next seven years could meet around two-thirds of the \nspending necessary to triple installed renewables capacity by 2030. \nThis creates a gap of around USD 400 billion per year in required \nspending on renewables between 2024 and 2030. While advanced \neconomies and China will need to increase their current annual \ninvestments by an average of 6% to meet the cumulative required, \nthe spending gap is particularly pronounced in other EMDE regions, \nwhere annual investment will need to increase by 30% per year. \nKey enablers for the tripling of installed renewables capacity are grids \nand battery storage. While spending on grids has been relatively flat \nin recent years, there was significant growth in 2023 and investment \nis projected to further accelerate. Despite this, in the IEA’s Stated \nPolicies Scenario (STEPS), grid investment would still face a \nsignificant shortfall to the investment levels required for tripling \nrenewables capacity. Current global spending on grids needs to grow \nby an average of 11% every year to meet the cumulative required \ninvestment. Tackling tariff risks, establishing forward-looking \nregulatory frameworks and financing models to mobilise private \ncapital are essential to facilitate this increase in investment levels.  \nThrough its ability to smooth the load curve by storing electricity when \nit is produced in abundance and discharging when additional \nelectricity is required by the system, battery storage is primed to \nsupport the variability of renewables generation. Even though it \nexperienced explosive growth in the past two years, in the STEPS \nbattery storage investment could only meet around two-thirds of the \ncumulative investment need. Closing the gap will require current \nannual spending on battery storage to grow by 25% every year. In \nour recent Special Report on Batteries, the IEA highlights the \nimportance of clear and stable regulatory environments, as well as \naddressing off-taker risk, to attract battery investment at scale.\n\n\n World Energy Investment 2024 \n \nPAGE | 85  \nFuel supply \nFuel supply \n \n\n\n World Energy Investment 2024 \n \nPAGE | 86  \nFuel supply \nOverview \n\n\n World Energy Investment 2024 \n \nPAGE | 87  \nFuel supply \nFossil fuel investment is set to continue its rise in 2024; commitments to low-emissions fuels \nare growing rapidly but from a very low base \nInvestment in fuels and CCUS, 2015-2024e \n \n  \n           IEA. CC BY 4.0 \nNotes: Low-emissions fuels = modern bioenergy, low-emissions hydrogen, hydrogen-based fuels and CCUS associated with fossil fuels. 2024e = estimated values \nfor 2024. \n \n \n \n  \n 200\n 400\n 600\n 800\n1 000\n1 200\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nOil\nNatural gas\nCoal\nLow-emissions fuels\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 88  \nFuel supply \nFuel supply investment remains overwhelmingly focused on fossil fuels with a major new wave \nof LNG approved for development \nWhile power sector investment, discussed in the previous chapter, \nhas shifted substantially in support of energy transitions, the same \ncannot yet be said for investment in fuel supply. Demand for fossil \nfuels remains robust as the world emerges from a period of vast \nturbulence caused first by the Covid-19 pandemic and then by \nRussia’s invasion of Ukraine. But investors peering beyond the short \nterm confront a range of possible energy futures, each with very \ndifferent implications for fuel supply projects.  \nUpstream oil and gas spending is set to increase by around 7% in \n2024 – reaching USD 570 billion – building on a larger increase seen \nin 2023. This is led by national oil companies (NOCs) in the Middle \nEast and Asia.  \nThe huge increase in revenues and profits during the price spikes of \n2021-2022 has not translated into a similar-sized rise in new capital \nexpenditures. More has gone towards dividends, share buybacks \nand net debt repayment than to new investments. Upstream \ninvestment is focusing on projects that are considered viable even \nunder challenging assumptions about future price and regulatory \ndevelopments, typically through a combination of low costs and low \nemissions intensities. Expenditure aimed at extracting value from \nexisting fields is an important element of many strategies, hitting \nUSD 200 billion in 2023 for the first time since 2019. Strong cash \npositions and a hunt for advantaged resources also explain the \nvolume and types of mergers and acquisitions (M&A) activity.  \nInvestment in LNG is set to rise with a major wave of new LNG export \nproject approvals promising to increase LNG supply capacity by \n250 bcm (a 50% increase) between 2023 to 2030, with 75% of the \ngrowth coming from the United States and Qatar. Unlike previous \nLNG supply surges, now there are fewer committed end-use off-\ntakers for these additional volumes, implying a strong shift away from \nthe sellers’ market seen in recent years toward a buyers’ market in \nthe second half of the decade.  \nInvestment in refineries remained broadly flat from 2022 to 2023 and \nis expected to drop in 2024 as long lead time projects and uncertainty \nabout future demand stymie final investment decisions. Refinery \ncapacity growth, driven by projects in China, Nigeria, and the Middle \nEast, added 1.3 mb/d of net capacity in 2023. Future capacity will \nmainly come from China, India, and the Middle East. \nInvestment in coal supply increased in 2023, particularly in China, \nIndia, and Indonesia, with further growth expected in 2024. Coal \n\n\n World Energy Investment 2024 \n \nPAGE | 89  \nFuel supply \ninvestments will be heavily dependent on the demand outlook in \nChina, which may slow due to economic uncertainties and rapid \ngrowth in renewables. \nExisting policies, plans, and commitments – like the Global Methane \nPledge – could reduce methane emissions from fossil fuel operations \nby 50% by 2030. Achieving these reductions will require more than \nUSD 80 billion in cumulative investments, led by fossil fuel \ncompanies. The investment will be offset by the value of the \nadditional gas that will be brought to market. Financial support for \nlow- and middle-income countries will be essential to reach this level \nof abatement, and even more so to achieve the 75% reduction in \nemissions by 2030 that is needed to limit global warming to 1.5 °C. \nCommitments to low-emissions fuels are rising rapidly, but from a \nvery low base. Overall clean energy investment by oil and gas \ncompanies grew to around USD 30 billion in 2023, but this remains \nless than 4% of overall capital spending. Around half of clean energy \ninvestment by the oil and gas industry in 2023 involved M&A of clean \nenergy companies. \nLow-emissions hydrogen is another nascent area for clean energy \ninvestment. Spending is growing but uncertainties, such as the future \nof demand and lack of reliable off-takers, constrain the development \nof large-scale supply projects. \nThere has also been some progress with new CCUS projects. \nAround 20 commercial-scale CCUS projects in seven countries \nreached final investment decision (FID) in 2023 and according to \ncompany announcements, more than 110 capture facilities and \ntransport and storage infrastructure projects could reach FID in 2024. \nThe size of the critical mineral market in 2023 was USD 325 billion, \nshrinking due to commodity price declines, especially for battery \nmaterials (lithium, graphite, cobalt, nickel, and manganese). \nDiversifying supply by activating additional investment in different \ngeographies, as well as stepping up demand-side measures such as \nrecycling, are crucial to ensure well-balanced and resilient markets \nas energy transitions propel demand.  \nAnticipated oil and gas investment in 2024 is broadly in line with the \nlevel of investment required in 2030 in the Stated Policies Scenario, \na scenario which sees oil and natural gas demand levelling off before \n2030. However, global spare oil production capacity is already close \nto 6 million barrels per day (excluding Iran and Russia) and there is \na shift expected in the coming years towards a buyers’ market for \nLNG. Against this backdrop, the risk of over-investment would be \nstrong if the world moves swiftly to meet the net zero pledges and \nclimate goals in the Announced Pledges Scenario (APS) and the \nNZE Scenario. \nCoal investment in 2024 is set to be far higher than the 2030 level \nseen in any IEA scenario. By contrast, despite the positive \nmomentum in developing low-emissions fuel projects, investment in \nthese technologies remains far below the levels projected for 2030 in \nboth the APS and the NZE Scenario. \n\n\n World Energy Investment 2024 \n \nPAGE | 90  \nFuel supply \nUpstream oil and gas \n\n\n World Energy Investment 2024 \n \nPAGE | 91  \nFuel supply \nUpstream oil and gas investment increased globally by 9% in 2023 and looks set for a 7% rise in \n2024, with most increases coming from Middle East and Asian NOCs \nUpstream capital investment by selected oil and gas companies, 2015-2024e \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. Majors = bp, Chevron, ConocoPhillips, ENI, ExxonMobil, Shell, TotalEnergies. NOCs = national oil companies. \nSources: IEA analysis based on S&P, Bloomberg and Rystad and annual reports. Includes a sample of companies that are responsible for about 70% of global \nproduction. \n 50\n 100\n 150\n 200\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nMiddle East and Asia NOCs\nOther NOCs\nIndependents\nMajors\n\n\n World Energy Investment 2024 \n \nPAGE | 92  \nFuel supply \nInvestment in exploration and development rose in recent years pushed by cost inflation while \nstill remaining 30% below the peak in 2015 because of cost efficiency improvements  \nUpstream capital expenditure by activity and field type \n \n IEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024.  \nSource: IEA analysis based on Rystad (2024). \n 50\n 100\n 150\n 200\n 250\n 300\nExploration in conventional\noil and gas fields\nNew conventional\noil and gas fields\nExisting conventional\noil and gas fields\nUS tight oil and shale gas\nBillion USD (2023, MER)\n2015\n2020\n2024e\n\n\n World Energy Investment 2024 \n \nPAGE | 93  \nFuel supply \nUpstream cost inflation cooled in 2023 and costs may fall marginally in 2024 which means \nrecent investment trends translate into larger increases in activity \nUpstream investment in real terms and rebased to 2021 cost levels  \n  \n \nIEA. CC BY 4.0  \nNote: 2024e = estimated values for 2024. Investment rebased to 2021 cost levels adjusts investment in real terms by the IEA’s Upstream Capital Cost Index. \nSource: IEA analysis based on Bloomberg Terminal, FRED, IEA, IMF, and Rystad data.\n 200\n 400\n 600\n 800\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nInvestment in real terms\nInvestment rebased to cost levels in 2021\n\n\n World Energy Investment 2024 \n \nPAGE | 94  \nFuel supply \nUpstream investment is realigning globally, with national oil companies taking the lead \nBased on a review of the spending plans of companies representing \nabout 70% of global production, we estimate that upstream oil and \ngas investment in 2024 will increase to around USD 570 billion, up \n7% from 2023 levels, building on the 9% increase seen in 2023. \nThe period since 2015 has seen a major reorientation in upstream \ninvestment, with greater cost discipline across company types along \nwith a major shift in the approach to spending. Between 2017 and \n2024, investment by Middle East and Asian NOCs increased by more \nthan 50% while investment by private companies fell by close to 20%. \nNOCs are set to provide over 40% of global upstream spending in \n2024, compared with less than 25% in 2015, and NOCs in the Middle \nEast and Asia have been responsible for nearly all the increase in \ninvestment in 2023 and 2024. This includes investment by \nPetroChina to explore for conventional resources and develop tight \nliquids and gas basins, Saudi Aramco’s push to meet its expanded \ngas production target (even as it cuts back on plans to expand oil \nproduction capacity), and new sour gas field developments in the \nUnited Arab Emirates.  \nCapital investment in existing conventional oil and gas has accounted \nfor around 40% of total upstream oil and gas investment over the last \ndecade. A further one-third of overall investment has been devoted \nto new field development and exploration, and most of the rest has \nflowed to US tight oil and shale gas production.  \nFrom 2021 to 2023, nearly USD 130 billion was spent on \nconventional oil and gas exploration. More than half of this \ninvestment took place in China, North America, Norway, and Russia \n–  but the largest discoveries were seen in Guyana (in the Stabroek \nblock) and Namibia. Exploration investment is set to increase by a \nfurther 15% in 2024, mainly because of increases in China and North \nAmerica. \nInvestment in US tight oil and shale gas peaked in 2018-2019, at \naround USD 130 billion per year, and has since fallen back amid \nsignificant cost cutting. Activity is set to remain broadly flat in 2024 \nbut investment will fall marginally, given cost reductions and M&A \nconsolidation that should yield efficiency benefits.  \nThe IEA’s Upstream Capital Cost Index (UICI) increased by 6% in \n2022 because of tight markets for services and labour as well as \nincreased raw material costs. However, the UICI in 2022 was still \nnearly 15% below 2014 levels due to efforts by operators to downsize \nand simplify project designs to maintain competitiveness. Inflation \ncooled in 2023 and costs could even fall marginally in 2024. The \nincreases in upstream investment in 2023 and 2024 thus translate \ninto a near 20% increase in upstream activity since 2022, a rate of \nincrease not seen since 2010-2012.\n\n\n World Energy Investment 2024 \n \nPAGE | 95  \nFuel supply \nDividend payments and stock repurchases exceeded capital expenditure again in 2023 \nCapital expenditure, dividends, and buybacks by the 30 largest upstream oil and gas companies, 2015-2023 \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on Bloomberg (2024) for the largest 30 upstream companies by revenue. \n25%\n50%\n75%\n100%\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nCapital expenditure\nDividends\nStock repurchase\n\n\n World Energy Investment 2024 \n \nPAGE | 96  \nFuel supply \nRobust mergers and acquisitions activity focused on consolidating United States tight oil and \nshale gas assets \n     Upstream merger and acquisition deals by announcement year        Announced and completed deals by geography, 2023-Q1 2024  \n \nIEA. CC BY 4.0 \nNote: Upstream deals include completed deals up to 2020 and completed and pending deals from 2021 to Q1 2024.  \nSource: IEA analysis based on Bloomberg and other market and company data.\n\n\n World Energy Investment 2024 \n \nPAGE | 97  \nFuel supply \nHigh recent profits have been used mainly to benefit stockholders and to fund extensive \nmergers and acquisitions  \nOil and gas exploration and production companies generated \nUSD 2.4 trillion in net income in 2023, down USD 1.5 billion from \n2022, but still well above the lows seen between 2015 and 2017 and \nagain in 2020. Based on a review of the 30 largest upstream oil and \ngas companies, buybacks rose to historic highs in 2023, accounting \nfor 20% of cash flow from operations and payouts from dividends rose \nto around 30%. For a second consecutive year, less than 50% of cash \nflow was allocated to capital expenditures. \nMany large M&A deals were completed and announced in 2023. \nThree quarters of these involved US shale companies, reflecting the \ntrend towards consolidation of operational footprints in specific basins \nwhile also looking to increase overall production levels.  \nSome of the largest deals in 2023 included Chevron’s purchase of \nPDC, with a total enterprise value of USD 7.6 billion and Occidental’s \nannounced acquisition of CrownRock for USD 12 billion. Significant \ndeals were also announced that are likely to be completed in 2024. \nThese include: ExxonMobil’s USD 60 billion purchase of Pioneer; a \nUSD 26 billion merger between Diamondback and Endeavour (the \ncombined company will control close to 1 million acres in the Permian \nBasin); a USD 7.4 billion merger between Chesapeake and \nSouthwestern, which will create the largest US gas producer; and \nSLB’s acquisition of ChampionX, which will enhance its services to  \nthe Permian basin. Chevron also announced its intention to acquire \nHess – which has significant assets in the US oil and tight shale \nsectors, notably the Bakken basin – for USD 60 billion, but the deal \nremains subject to several legal challenges related to some of Hess’s \nnon-US assets.  \nM&A activity beyond North America highlights a trend for oil majors \nand NOCs to focus portfolios on specific geographies. ENI purchased \nNeptune Energy’s assets in Europe, Indonesia, and North Africa – \nlocations where ENI already has a presence – for USD 2.6 billion, \nwhile Var Energi acquired Neptune Norge for USD 2.3 billion. \nTotalEnergies strengthened existing positions in Malaysia with a \nstake in SapuraOMV Upstream for USD 1 billion while Shell sold its \nMasela blocks in Indonesia to Pertamina and Petronas for \nUSD 650 million. In 2024, a number of majors also announced a goal \nto scale down, or exit entirely, activities in Nigeria,  partly driven by \nthe need to comply with sustainability goals.   \nThe acquisitions announced or completed in 2023 were funded either \nthrough cash, stock, reserve-based lending, or other investment \nvehicles, with financing coming from a variety of banks, private \nequity, and institutional lenders.\n\n\n World Energy Investment 2024 \n \nPAGE | 98  \nFuel supply \nClean energy investment by oil and gas companies grew to USD 28 billion in 2023 which is less \nthan 4% of overall capital spending and less than 1% of net income \n                   Oil and gas industry investment in clean energy               Share of clean energy investment in total investment and net income \n  \n        IEA. CC BY 4.0 \nNote: Includes project finance and M&A. CCUS = Carbon Capture Utilisation and Storage. “Other” = EV infrastructure, geothermal, tidal, minerals and M&A of \ncompanies with a portfolio of clean technologies.  \nSource: IEA analysis based on Bloomberg, Clean Energy Pipeline and companies’ annual reports and presentations.\n 5\n 10\n 15\n 20\n 25\n 30\n2015 2016 2017 2018 2019 2020 2021 2022 2023\nBillion USD (2023, MER)\nSolar PV\nWind\nCCUS\nBioenergy\nEnergy storage\nLow-emissions hydrogen\n1%\n2%\n3%\n4%\n5%\n6%\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nShare of total\ncapital expenditure\nShare of net income\n\n\n World Energy Investment 2024 \n \nPAGE | 99  \nFuel supply \nNearly half of clean energy investment by the oil and gas industry in 2023 involved M&A of \nclean energy companies, with a particular focus on CCUS\nIn 2023, oil and gas companies invested USD 28 billion into clean \nenergy, a 30% increase from 2022 levels. This was well below the \n65% jump seen from 2021 to 2022, reflecting in part the inflationary \nenvironment and supply chain issues for some renewable projects in \nthe wake of the energy crisis, as well as some recalibration of \ncompany strategies.  \nMergers and acquisitions completed in 2023 comprised just under \nhalf of total clean energy investment by the oil and gas industry. The \nlargest transactions included: ExxonMobil’s acquisition of Denbury’s \nCCUS network for USD 4.9 billion, which raises ExxonMobil’s CCUS \ncapacity to over 100 Mt CO2 across its refining, chemicals, and \nenhanced oil recovery businesses; TotalEnergies’ USD 1.6 billion \ntakeover of Eren Re, a renewable energy company, and Occidental’s \nUSD 1.1 billion purchase of CarbonEngineering, a direct air capture \n(DAC) business. The ExxonMobil and Occidental deals together \ncomprised the bulk of the industry’s USD 6 billion worth of \ninvestments in CCUS in 2023. \nInvestment in solar PV and wind projects comprised more than 40% \nof total clean energy spending by the oil and gas industry in 2023. \nThis includes more than USD 2.7 billion in investment by Equinor, \nUSD 2.2 billion by TotalEnergies and USD 1.8 billion by Repsol \n(these three companies accounted for around 45% of total \ninvestment in renewables by the oil and gas industry). Despite \nannounced cancellations and divestments in offshore wind projects, \ninvestment remained substantial in 2023. Equinor invested nearly \nUSD 1.6 billion in offshore wind in 2023.  Two other recent projects  \n– by bp in Korea and TotalEnergies in the United States – each \ninvolve around USD 2.5 billion worth of  investment. \nCapital expenditure in electrolysers reached a new high of almost \nUSD 1 billion in 2023. Despite increasing policy support, the \ninvestment environment for low-emissions hydrogen remains fragile, \nmainly because of uncertainty about demand and the price that \nconsumers will be willing to pay for low-emissions hydrogen. Other \nareas of increasing interest include EV charging infrastructure, \nenhanced geothermal systems and lithium extraction from brine. \nClean energy investment by NOCs rose to more than USD 1.5 billion \nin 2023, representing around 5% of total clean energy spending by \nthe oil and gas industry. Petronas, Sinopec, and Saudi Aramco led \nthe NOC investments, which were mostly focused on solar PV and \nlow-emissions hydrogen. Overall, the share of clean energy in total \ncapital investment rose only marginally from 2022 levels.\n\n\n World Energy Investment 2024 \n \nPAGE | 100  \nFuel supply \nLNG and refining \n\n\n World Energy Investment 2024 \n \nPAGE | 101  \nFuel supply \nThe new wave of LNG export projects will add 50% to supply capacity by 2030, mostly from the \nUnited States and Qatar \n        Sanctioned LNG capacity \n                                                   Investment and cumulative capacity \n \n \n       IEA. CC BY 4.0 \nNote: 2024 data is up until Q1 2024. Sanctioned means projects that have received a final investment decision (FID). Qatar’s North Field West expansion is included \nin the figure for 2024, although it has not yet received formal FID.\n 200\n 400\n 600\n 800\n1 000\n 10\n 20\n 30\n 40\n 50\n2015\n2017\n2019\n2021\n2023\n2025\n2027\nbcm per year\nBillion USD (2023, MER)\nMiddle East\nRussia\nAfrica\nNorth America\nAustralia\nOthers\nCumulative capacity (right axis)\n20\n40\n60\n80\n100\n2015\n2017\n2019\n2021\n2023\nbcm per year\n\n\n World Energy Investment 2024 \n \nPAGE | 102  \nFuel supply \nAdditional LNG capacity will come online at an uncertain time for demand with fewer committed \noff-takers for these additional volumes\nGlobal LNG trade expanded by 2% (or 12 bcm) in 2023. This is the \nlowest growth rate since 2014, barring the exceptional contraction in \n2020. Growth was driven primarily by the United States on the supply \nside, which accounted for 90% of incremental global LNG volumes. \nThe Asia-Pacific region led LNG demand growth, accounting for \nvirtually all incremental imports. \nSince Russia’s invasion of Ukraine tightened global LNG markets, \naround 140 bcm per year of new capacity has been announced, \nrepresenting some USD 80 billion of cumulative investment. Despite \nthe cyclical nature of the oil and gas industry investment, total LNG \ntrade was one of the few parts of the oil and gas sector to see \nconsistent growth through the Covid-19 pandemic, Russia’s invasion \nof Ukraine and multiple other geopolitical headwinds.  \nAround two-thirds of the new capacity announced since early 2022 \nhas been in the United States. The federal decision made in early \n2024 to pause approvals of new LNG projects does not affect the \nexisting ones but raises uncertainty for the 350 bcm worth of \ndevelopments that are seeking to raise financing and secure a final \ninvestment decision. \nIn February 2024, Qatar announced that it would develop the North \nField West project, adding a further 20 bcm of new LNG capacity. The \ntotal announced and under-construction projects would see Qatar’s \nLNG export capacity nearly double to almost 200 bcm/year.  With \nlow-cost reserves, established infrastructure and well-developed \nrelationships with contractors and buyers, Qatar can expand its \ncapacity without needing to attract project financing or secure long-\nterm offtake contracts. Qatar is also looking to invest in CCUS to \nimprove the environmental footprint of its LNG exports.  \nLNG markets look amply supplied in the second half of the decade, \nwith the potential to soften global markets and attract price-sensitive \nbuyers. Nearly 250 bcm will come online between 2024 and 2030, \nwith about one-third from Qatar and close to one-half from the United \nStates. \nUnlike previous waves of LNG supply, there are fewer committed end \nuse off-takers for these additional volumes. Of the new capacity \ncoming online, 70 bcm is to be delivered to fixed destination \nterminals. Another 100 bcm has been contracted to portfolio players \nwho sold the volume to end consumers using a mix of short, medium \nand long-term contracts. The remaining 80 bcm of new capacity does \nnot yet have firm off-takers and would therefore currently be sold on \nthe spot market. If future demand for LNG does not materialise, or if \nregional price benchmarks fall to low levels, the sellers of these \nuncontracted volumes would be the most exposed. \n\n\n World Energy Investment 2024 \n \nPAGE | 103  \nFuel supply \nInvestment in refining held steady around USD 37 billion in 2023, but is set to fall in 2024 \nInvestment in oil refineries (greenfield and upgrades) by region and net refining capacity additions \n \nIEA. CC BY 4.0 \nNotes: Investment figures do not include maintenance capital expenditure. 2024e = estimated values for 2024.\n- 1.0\n- 0.5\n0\n 0.5\n 1.0\n 1.5\n 2.0\n 2.5\n 3.0\n- 20\n- 10\n0\n 10\n 20\n 30\n 40\n 50\n 60\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nNorth America\nCentral and South\nAmerica\nAfrica\nEurope/Eurasia\nOther Asia Pacific\nSoutheast Asia\nChina and India\nMiddle East\nNet capacity addition\n(right axis)\nBillion USD (2023, MER)\nmb/d\n\n\n World Energy Investment 2024 \n \nPAGE | 104  \nFuel supply \nAround 0.8 mb/d of new refining capacity is set to come online in 2024, but uncertainties \naround future demand growth weigh on new investment decisions \nIn 2023, investment in oil refineries (excluding maintenance \nspending) was just under USD 37 billion, similar to 2022. China saw \nthe largest share of investment globally, followed by Africa, mainly \nrelated to spending in Nigeria’s Dangote refinery. The industry \nwitnessed the addition of 1.3 mb/d of net capacity in 2023, and \nrefinery runs increased to 82.3 mb/d in 2023. Heightened activity in \nChina largely drives the 1.5 mb/d increase from 2022 levels. \nA further 0.8 mb/d of new refinery capacity is set to be added in 2024, \nbut investment is expected to decline globally by 5%. China and India \nwill likely account for almost half of the expected spending. Between \n2020 and 2022, an average of around 1.3 mb/d of capacity was shut \ndown annually, but the pace of capacity closures is slowing: an \nestimated 300 kb/d is expected to be taken offline in both 2023 and \n2024. Global refinery runs are expected to rise by 1 mb/d in 2024, a \nslower pace compared to 2023, due to lower runs in Russia, \nunplanned outages in Europe and decelerating growth in China.   \nThe sanctions and embargoes on Russian oil trade flows had limited \neffect on Russian oil export volumes, but their impact on export \nrevenue was notable. The redirection of trade routes maintained \nRussian export volumes at 7.4 mb/d in 2023. However, this resulted \nin a 25% reduction in oil export revenue to USD 14.6 billion in 2023. \nFollowing record margins and profits in 2022, refining margins began \nto trend downward in 2023 even though strong middle distillate \ncracks have kept margins well above historical averages. Despite the \nhealthy margin environment, a new wave of investment in refining \ncapacity is unlikely. Building new refineries entails significant capital \ncommitment and long lead times (typically 5-10 years), and \nuncertainties surrounding long-term demand prospects present \nchallenges for investment decisions. Unless the region experiences \nstrong anticipated demand growth or expected operating costs are \nhighly competitive, justifying investment decisions for large-scale \ngreenfield refineries will be challenging. Future investment is \ntherefore likely to be further concentrated in a few regions such as \nChina, India, and the Middle East. \nAmid a multitude of challenges, an increasing number of refiners are \nopting to rationalise capacity or shift to low-carbon feedstock \nprocessing. Following recent decisions by Petroineos and Shell to \nclose capacity in 2025, bp recently announced a restructuring of \noperations, with crude processing at the 257 kb/d Gelsenkirchen site \nin Germany being reduced by around 80 kb/d in 2025. \n\n\n World Energy Investment 2024 \n \nPAGE | 105  \nFuel supply \nMethane \n\n\n World Energy Investment 2024 \n \nPAGE | 106  \nFuel supply \nExisting policies, plans and pledges to cut methane emissions would reduce emissions by \naround 50% by 2030 and will require more than USD 80 billion in capital investment  \nCapital investment to 2030 to cut methane emissions from fossil fuel operations in line with the NZE Scenario \n  \n  IEA. CC BY 4.0 \nNote: GMP = Global Methane Pledge. OGDC = Oil and Gas Decarbonisation Charter. There is overlap between several of the plans and pledges shown: those with \nmore detail provided are given preference in the reductions shown. Other policies, plans and pledges include those of Algeria, Australia, China, Colombia, Côte \nd’Ivoire, Ghana, Korea, Mexico, Norway, Qatar, United Kingdom, Uzbekistan, and Viet Nam. \n 20\n 40\n 60\n 80\n 100\n 120\n 140\nPolicies and plans\nPledges\nAdditional measures required\nBillion USD (2023, MER)\nChina\nUnited States\nOGDC\nGMP\nRussia\nIran\nOther\nOther\nEU\nOther\nCanada\nNigeria\n\n\n World Energy Investment 2024 \n \nPAGE | 107  \nFuel supply \nInvestment in methane abatement is increasing, but a step change is needed in both spending \nlevels and emissions transparency \nMethane emissions from the energy sector remained near a record \nhigh in 2023. However, with several major policies and regulations \nrecently announced – and with 157 countries joining the Global \nMethane Pledge – the world could soon reach a turning point in \nefforts to reduce methane emissions. If all existing pledges on \nmethane were to be achieved in full and on time, methane emissions \nfrom fossil fuels will decrease 50% by 2030. In many cases, however, \npledges still need detailed plans.  \nMethane abatement in the oil and gas industry is one of the lowest \ncost options to reduce greenhouse gas (GHG) emissions anywhere \nin the economy. Achieving current pledges and plans will require \naround USD 80 billion of investment to 2030. Investment levels that \nare needed to cut emissions by 75% by 2030 – the reduction \nassumed in the IEA’s Net Zero Emissions by 2050 (NZE) Scenario – \nwould \nrequire \nan \nadditional \nUSD \n90 \nbillion. \nThe \ntotal \n(USD 170 billion) includes USD 135 billion in capital investment and \nUSD 35 billion in operating costs.  \nThis total amount of spending required to 2030 is less than 5% of the \nincome the industry generated in 2023. Fossil fuel companies carry \nprimary responsibility for financing methane abatement at their \noperations and currently there is very limited public reporting on the \namounts companies spend on reducing methane emissions. \nAdditional transparency is needed to track progress and the efforts \ncompanies are making. Regulations and policies could also help.  \nSome spending on methane abatement will require special attention, \nespecially to reduce emissions in low- and middle-income countries \nand for measures that do not generate meaningful return over their \nlifetimes. Several efforts are underway to increase financing and \ninvestment for methane abatement. These include international \nemissions pricing schemes and regional emissions trading markets, \nas well as direct public funding, emissions standards for market \naccess and price premiums for low-emissions fuels.  \nIn terms of publicly announced funding for methane abatement, the \nBipartisan Infrastructure Law and Inflation Reduction Act in the \nUnited States will provide USD 4.7 billion to plug old oil and gas wells \nand USD 1 billion in financial and technical assistance to cut \nmethane emissions. The World Bank’s more than USD 255 million \nGlobal Methane and Flaring Reduction Fund aims to help cut \nemissions in developing economies. Additional programs are also \nemerging: the Climate Bonds Initiative, for example, is developing \nguidance to incentivise capital markets to finance methane emissions \nabatement. \n\n\n World Energy Investment 2024 \n \nPAGE | 108  \nFuel supply \nCoal \n\n\n World Energy Investment 2024 \n \nPAGE | 109  \nFuel supply \nGlobal coal investment is set to grow by 2% in 2024 to more than USD 160 billion, close to the \naverage level seen in the early 2010s, led by increases in India, Indonesia and Australia \nGlobal investment in coal supply by region, 2010-2024e \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. EMDE = Emerging market and developing economies. \n 40\n 80\n 120\n 160\n2010\n2012\n2014\n2016\n2018\n2020\n2022\n2024e\nBillion USD (2023, MER)\nShipping\nAdvanced economies\nAustralia and New Zealand\nOther advanced economies\nEMDE\nIndonesia\nRussia\nIndia\nChina\nOther EMDE\n\n\n World Energy Investment 2024 \n \nPAGE | 110  \nFuel supply \nCoal investment teeters between strong short-term demand and longer-term uncertainty\nIn 2023, coal demand growth in several countries, most notably \nChina, India, and Southeast Asia, led to a 6% increase in investment \nin coal supply. A further 2% global increase is likely in 2024.  \nCoal companies saw income surge in 2021 and 2022, which \nincreased their capacity and appetite for investment in new supply \nand ushered in a heightened period of merger and acquisition activity.  \nChina is by far the largest coal producer and consumer globally, and \nit is also the main market for coal exports. Coal shortages in 2021, \ncombined with very high prices in 2022, increased the focus on \nenergy security and investment in domestic coal supply. Annual coal \ninvestment increased by nearly 10% on average between 2018 and \n2023. This resulted in increased production which, combined with a \nhigh level of imports, led to a surge in coal stocks.  \nIn 2024, the combination of high stocks, lower coal prices and an \nexpected slowdown in economic activity is likely to reduce Chinese \ncoal demand growth. We estimate that annual investment in coal \nsupply will increase by around 1% in 2024 to roughly USD 100 billion \n(more than 60% of the global total). The use of coal in the power \nsector in China is coming under pressure from competition with \nrenewables. Coal demand in aggregate is set to enter terminal \ndecline, limiting the need for any future increases in coal investment \nin the country. \nIndia is the world’s second-largest coal producer and consumer. The \ngovernment has announced plans to increase domestic production to \nmeet rising demand and investment has been growing steadily since \n2021. Investment increased by 5% in 2023 and is set to expand by \nnearly 10% in 2024 to around USD 15 billion. The Ministry of Coal is \nrelying on a series of measures to boost coal supply, including \ncommercial auctions with a revenue share mechanism, allowances \nfor the sale of additional coal production and rolling auctions. \nNonetheless, based on current trends, demand is set to rise faster \nthan supply, which means India could soon overtake China to \nbecome the world’s largest coal importer. \nElsewhere, Australia and Indonesia are the two largest coal exporters \nglobally and investment in these two countries is set to expand by \naround 5% in 2024 (following a 12% increase in 2023). Poland has \nseen an increase in coal investment in recent years as the European \nUnion weaned itself from Russian imports. This increase is likely to \nbe short-lived given the European Union’s climate targets and the \nincreasing share of renewables in new capacity additions. The United \nStates and other advanced economies are likely to see a continued \ndownward trend in investment. \n\n\n World Energy Investment 2024 \n \nPAGE | 111  \nFuel supply \nBioenergy \n\n\n World Energy Investment 2024 \n \nPAGE | 112  \nFuel supply \nInvestment in bioenergy grew in 2023 and with a further rise in 2024, activity encompasses both \nliquid and, increasingly, gaseous fuels  \nAverage annual investment in biogases and transport biofuels  \n      Cumulative investment by region, 2010-2023 \n \n   \nIEA. CC BY 4.0 \nNote: Biomethane investment includes the cost of producing biogas as an interim step before upgrading to biomethane. 2024e = estimated values for 2024 \nSource: IEA analysis based on S&P Global (2023).\n 5\n 10\n 15\n2010-14 2015-21\n2022\n2023\n2024e\nBillion USD (2023, MER)\nBiogasoline\nBiodiesel\nBio jet kerosene\nBiogas\nBiomethane\n 5\n 10\n 15\n 20\n 25\nUnited States\nChina\nBrazil\nEurope\nRest of World\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 113  \nFuel supply \nSupported by commercial prospects for sustainable aviation fuels, liquid biofuels could see a \nwave of new investments in the coming years\nTransport biofuel capacity additions in 2023 reached a decade-high \nof 270 kb/d, a 6% increase from 2022 that translates into an 8% \nincrease in investment. The growth stems mainly from the expansion \nof renewable diesel refining capacity in the United States, increases \nin bio-ethanol capacity in Brazil and growth (from a low base) in bio-\njet kerosene in China, Brazil, and Europe. \nA number of traditional biofuel projects have been announced in \nrecent years, including a doubling of capacity at OCI Global’s green \nmethanol facility in Texas (which will have a capacity of around \n4 kb/d). However, most biofuels investment increases are set to \ncome from new capacity for so-called “drop-in fuels” (substitutes for \npetroleum products that are not subject to any blending limits). For \nexample, in Spain, Cepsa and Bio-Oils have begun construction of a \nUSD 1.3 billion sustainable aviation fuel (SAF) and renewable diesel \nplant, with a capacity around 10 kb/d. Brazil’s Acelen will invest \nUSD 2.4 billion in a 20 kb/d green diesel plant which will come online \nin 2026. In China, American Honeywell, which teamed up in 2022 \nwith Oriental Energy to build a 20 kb/d SAF plant, announced that its \nrefining technologies will also be used by Sichuan Jinshang \nEnvironmental Protection Technology Co. in a new 6 kb/d SAF plant.  \nMajor energy companies are also looking to invest in the expansion \nof biofuels. For example, Repsol announced plans to diversify into \nbiofuels by retrofitting existing fossil diesel facilities and securing \nfeedstock supply through new partnerships. TotalEnergies and \nSinopec have formed an agreement to produce 5 kb/d of SAF in \nChina. Engie announced the acquisition of Ixora Energy for \nUSD 81 million and plans to spend about USD 3.2 billion to boost \nbiomethane production in Europe. Neste is acquiring the cooking oil \ncollection and aggregation business of Crimson Renewable. \nGoldman Sachs established Verdalia Bioenergy, with the view to \ninvest USD 1.1 billion in the European biomethane sector. \nThe European Union, United States and India have adopted or \nextended policies supporting bioenergy. In March 2023, the \nEuropean Union reached a provisional agreement that strengthens \nthe sustainability criteria for the use of biomass for energy in the \nRenewable Energy Directive (RED III). A mandate to accelerate \nbioethanol in India has already allocated about USD 113 million from \n2019 to 2024 to six commercial projects. Other governments have \nannounced bioenergy support such as a USD 21 million grant from \nthe UK Department for Transport’s Advanced Fuels Fund for a new \nwaste-to-fuels project, and USD 6 million from Canada’s Clean Fuels \nFund to help Azure Sustainable Fuels develop the front-end \nengineering and design for SAF production in Manitoba, with first \nproduction planned for 2027.  \n\n\n World Energy Investment 2024 \n \nPAGE | 114  \nFuel supply \nHydrogen \n\n\n World Energy Investment 2024 \n \nPAGE | 115  \nFuel supply \nInvestment in hydrogen electrolysers is expected to jump by more than 140% in 2024  \n \nInvestment in hydrogen electrolysers and other supply by region (left) and intended use (right) \n  \nIEA. CC BY 4.0 \nNote: 2024e = estimated value for 2024. Other intended uses include biofuels upgrading, grid injection, combined heat and power and domestic heating. \nSource: IEA analysis based on the IEA Hydrogen Production Projects Database  and recent announcements.\n 2\n 4\n 6\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nUnited States\nChina\nEurope\nLatin America\nOther\n 2\n 4\n 6\n2019\n2020\n2021\n2022\n2023\n2024e\nIndustry or refining\nMobility\nElectricity storage\nH₂-based fuels or trade\nOther\n\n\n World Energy Investment 2024 \n \nPAGE | 116  \nFuel supply \nInvestment in electrolysers is driven by higher deployment but also by higher financing costs\nInvestment in electrolysers is set to increase by close to 140% in \n2024 to USD 5 billion. This is mainly because of new capacity \nadditions as well as cost inflation in the sector and resulting increases \nin equipment prices and financing costs. Most of the electrolyser \ncapacity coming online in the next few years aims to replace existing \nuses of hydrogen (refining and the chemical industry). These \ninvestments are generally perceived as lower risk than generating \nnew potential sources of demand (e.g. mobility and conversion into \nlow-emissions hydrogen-based fuels). \nChina is set to see a 140% increase in investment in electrolysers in \n2024, accounting for 40% of global investment. A low-emissions \nhydrogen and ammonia production plant costing USD 900 million is \nexpected to begin operations in 2024, producing around 32 kt of low-\nemissions hydrogen annually. By 2026, more than 20 projects above \n100 MW, with combined capacities around 6.9 GW, could be \noperational in China.  \nEurope is expected to see a 120% increase in investment in 2024, \naccounting for less than one-third of global investment in \nelectrolysers. Major projects include USD 270 million for a 100 MW \nelectrolyser project being developed by GALP in the port of Sines, \nPortugal (capable of producing around 15 kt hydrogen per year) and \njust over USD 7 billion (USD 4.5 billion of debt, USD 2.3 billion of \nequity and USD 300 million of grants) for the construction of a low-\nemissions steel plant in Sweden by H2 Green Steel. A number of \nprojects have suffered from cost inflation and overruns: the Bad \nLauchstädt Energy Park project in Germany, for example, which \nincludes hydrogen production, storage and transport, has seen costs \nrise to USD 230 million when it received FID in 2023, an increase of \n50% over initial estimates. \nThe United States, accounting for about 15% of global investment in \nhydrogen today, is expected to see a 120% rise in 2024, incentivised \nby programs such as the 10-year Clean Hydrogen Production Tax \nCredit which provides up to USD 3 per kilogram of low-emissions \nhydrogen. A number of large-scale projects are under development, \nincluding a USD 550 million liquid hydrogen production plant in \nArizona under development by Fortescue that will be able to produce \n11 kt of hydrogen per year from 2026.  \nInternationally, Fortescue is also set to spend USD 150 million on an \nelectrolyser in Australia, scheduled to be commissioned in two \nphases, one in 2025 and the second in 2028. In Saudi Arabia, the \nworld’s largest low-emissions hydrogen plant is under development \nby NEOM Green Hydrogen – a  USD 8.4 billion project due to start \nproduction in 2026. In Oman, ACME Group is poised to invest \nUSD 480 million in a low-emissions hydrogen project, due to come \nonline in 2025. \n\n\n World Energy Investment 2024 \n \nPAGE | 117  \nFuel supply \nCCUS\n\n\n World Energy Investment 2024 \n \nPAGE | 118  \nFuel supply \nSuccessfully executing announced CO2 capture, utilisation and storage projects would boost \ninvestment by a factor of 10 by 2025  \nCCUS investment pipeline by type (left) and region (right) based on announced projects \n \nIEA. CC BY 4.0 \nNote: Includes commercial capture facilities with a capacity of over 0.1 Mt CO2 per year. Projected spending represents the capital costs of projects with announced \ncapacities based on their planned FID and operational dates. Spending is estimated where project-level cost data are unavailable. “Other” includes Africa, South and \nCentral America and the Middle East.   \nSource: IEA analysis based on IEA CCUS projects database.\n 10\n 20\n 30\n 40\n2015\n2018\n2021\n2024e\n2027e\n2030e\nBillion USD (2023, MER)\nOil and gas supply\nBiofuels\nPower generation\nHydrogen production\nIndustry and refining\nCO₂ infrastructure\nDirect air capture\n 10\n 20\n 30\n 40\n2015\n2018\n2021\n2024e\n2027e\n2030e\nNorth America\nEurope\nChina\nOther Asia Pacific\nMiddle East\nOther\n\n\n World Energy Investment 2024 \n \nPAGE | 119  \nFuel supply \nNew policy momentum is supporting investment in CCUS worldwide, from direct capture \nprojects to transport and permanent storage, but risks remain \nAround 20 commercial-scale carbon capture, utilisation and storage \n(CCUS) projects in seven countries reached FID in 2023. More than \n110 capture facilities, as well as transport and storage projects, could \nreach FID in 2024. If all projects are developed on time, there will be \na near-tenfold increase in CCUS investment by 2025 (to \nUSD 26 billion). Global CO2 capture capacity would increase to \n430 Mt CO2/year by 2030, and global CO2 storage capacity would \nreach 620 Mt CO2/year. However, it remains an open question \nwhether all of these projects will materialise.  \nGovernments sought to significantly accelerate the deployment of \nCCUS in 2023, including initiatives such as the Carbon Management \nChallenge. Nearly USD 20 billion in public funding was allocated to \nCCUS projects in 2023 including: USD 1.7 billion announced by the \nUnited States as part of a Funding Opportunity for carbon capture \ndemonstration projects; USD 1.2 billion announced by Denmark \nunder its CCUS Fund; and more than USD 500 million to four CCUS \nprojects under the European Union's Connecting Europe Facility. \nRisks include delays which may occur between the announcement, \nthe securing of proposal funding and project mobilisation.  \nOil and gas companies continue to develop new CCUS projects. For \nexample, ADNOC took FID on a 1.5 Mt CO2/year project in \nSeptember 2023 to build one of the largest integrated CCUS projects \nin the Middle East. Several CCUS M&A deals involving oil and gas \ncompanies were also announced in 2023 and 2024. \nMany direct air capture (DAC) projects are advancing, and \ninvestment is set to rise to USD 660 million in 2024 (a 140% increase \nfrom 2023). The 36 kt CO2/year Mammoth DAC plant in Iceland \nstarted operation in May 2024, and the Stratos project in Texas – \nwhich will cost USD 1.3 billion and be the world's largest DAC facility \nwith a capacity of 500 kt CO2/year – aims for a mid-2025 start. \nExpansion plans have also been announced by 1PointFive and \nCarbon Engineering (now Occidental), with a target operation year of \n2035, although locations and the fate of the captured CO2 (storage or \nuse) have not yet been finalised. \nInvestment in CO2 transport and storage infrastructure is set to \nincrease to USD 1.4 billion in 2024 (a tenfold increase from 2023) as \nnew business models are developing to create CCUS hubs that more \nefficiently transport and store gases. Three FIDs taken in 2023 \ninclude the Porthos project to carry gas to depleted petroleum \nreservoirs \nin \nthe \nNorth \nSea \n(USD 1.4 billion, \nhandling \n2.5 Mt CO2/year). The extension of the Alberta Carbon Trunk Line by \nWolf Midstream Canada will allow 7 Mt CO2/year to be permanently \nstored. A CO2 transport and storage hub in Louisiana by \nCapturePoint Solutions is set to store more than 10 Mt CO2/year.  \n\n\n World Energy Investment 2024 \n \nPAGE | 120  \nFuel supply \nCritical minerals\n\n\n World Energy Investment 2024 \n \nPAGE | 121  \nFuel supply \nPrices for minerals and metals mostly fell across the board in 2023, with particularly sharp \ndrops in metals required for batteries  \nChange in selected commodity prices in 2023 \n \nIEA. CC BY 4.0 \nNote: REE = rare earth elements. Dy-Tb = dysprosium and terbium. Nd-Pr = neodymium and praseodymium.  \nSource: IEA analysis based on Bloomberg and S&P Global.\n-100%\n-50%\n0%\n50%\n100%\nUranium\nIron ore\nCopper\nAluminium\nLead\nZinc\nSilver\nPlatinum\nREE (Dy-Tb)\nREE (Nd-Pr)\nManganese\nCobalt\nNickel\nGraphite\nLithium\nBulk materials\nPrecious metals\nBattery metals\n\n\n World Energy Investment 2024 \n \nPAGE | 122  \nFuel supply \nInvestment in critical mineral mining grew by 10% in 2023, a smaller increase than in 2022 as \nprice declines weighed on the financial capacity of producers \nCapital expenditure on non-ferrous metal production by major mining companies, 2015-2023 \n \n \nIEA. CC BY 4.0 \nNotes: Co = cobalt. Cu = copper. Ni = nickel. For diversified majors, capex on the production of iron ore, gold, coal and other energy products was excluded. Nominal \nvalues. The results for arcadium start from 2016.  \nSource: IEA analysis based on company annual reports and S&P Global.\n 10\n 20\n 30\n 40\n 50\n 60\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023 MER)\nArcadium\nIGO\nTianqi Lithium\nPilbara Minerals\nMineral Resources\nGanfeng Lithium\nSQM\nAlbemarle\nZijin Mining\nEramet\nSouth 32\nZhejiang Huayou\nCMOC Group\nNorilsk Nickel\nKGHM\nFirst Quantum Minerals\nSouthern Copper\nCodelco\nGlencore\nTeck Resources\nFreeport-McMoRan\nVale\nAnglo American\nBHP\nRio Tinto\nLithium\nspecialists\nFocused players\n(Cu, Ni, Co)\nDiversified\nmajors\n30%\n10%\n\n\n World Energy Investment 2024 \n \nPAGE | 123  \nFuel supply \nRecent critical mineral price declines challenge the diversity and reliability of future supply\nFollowing a price surge that began in 2021, 2023 saw a significant \ndecline in prices for most critical minerals and metals. Prices for \nbattery minerals fell especially sharply, with lithium prices plunging \n75%. Inventory overhang in the downstream sector (such as battery \ncells and cathodes), weaker-than-expected demand growth and an \nincrease in overall supply all contributed to the decline. Uranium was \na notable exception and saw a sharp price increase in 2023 due to \nrenewed momentum for nuclear power and a lack of new supplies. \nIn early 2024, copper prices increased because mining outputs were \nlower than expected with the closure of the Cobre Panama mine and \na reduction in production guidance by Anglo American, which  shifted \nthe market balance to a slight deficit. Nonetheless, battery mineral \nprices remain subdued, prompting some high-cost producers to \ncurtail output and place facilities on care and maintenance. Industry \nrevenue fell by 10% in 2023 and operating profit fell by 34%, which \nhad a major impact on capital investment plans. \nOur assessment of 25 large mining companies suggests that \ninvestment in critical minerals grew by 30% in 2022 and by 10% in \n2023 (6% when adjusted for cost inflation). Exploration investment \ngrew by 15% in 2023, with Canada and Australia registering the \nlargest increases, followed closely by Africa. Lithium saw much larger \ngains with a 50% increase in investment, and an 80% jump in \nexploration spending.  \nDespite demand growth, the size of the market for critical minerals \ncontracted by 10% to USD 325 billion in 2023. This figure would have \nbeen 20% higher if prices had remained at 2022 levels. While current \nsupplies of most materials appear sufficient, the risks of market \ntightness and price volatility are constant as countries continue to \npursue their energy and climate goals. Escalating geopolitical \ntensions, exemplified by trade restrictions on a number of elements \nin 2023 – including gallium, germanium, graphite, and rare earths – \nfurther compound these risks. Lower prices have contributed to cost \nreductions for many clean energy technologies, but they risk slowing \nefforts to diversify supply chains.  \nThe geographic concentration of production has remained largely \nunchanged in recent years. One exception is nickel, where supplies \nhave become more concentrated: between 2021 and 2023, \nIndonesia's share of mined nickel production increased from 34% to \n52% and its share of refined nickel increased from 23% to 37%.  \nThe current investment landscape could lead to further supply \nconcentration for several critical minerals, especially in the \nprocessing and refining segments. Efforts to enhance the diversity \nand reliability of critical mineral supplies therefore remain vital. \nMobilising investment in diversified projects, boosting innovation and \nrecycling and promoting environmental and social considerations in \npolicy and investment decisions must therefore remain priorities.  \n\n\n World Energy Investment 2024 \n \nPAGE | 124  \nFuel supply \nImplications \n\n\n World Energy Investment 2024 \n \nPAGE | 125  \nFuel supply \nOil and gas investment aligns with 2030 STEPS levels, but coal spending is twice as high as \nclean fuel investment is rising from a very low base  \nGlobal investment in fuels and CCUS historically and in 2030 in the STEPS, APS and NZE Scenarios     \n \nIEA. CC BY 4.0 \nNote: STEPS = Stated Policies Scenario. APS = Announced Pledges Scenario. NZE = Net Zero Emissions by 2050 Scenario. \n200\n400\n600\n800\n1000\nBillion USD (2023, MER)\nCoal\nBillion USD (2023, MER)\n30\n60\n90\n120\n150\n2023\nBioenergy\n2021\n2022\n2023\nLow-\nemissions\nH₂ and\nCCUS\n2021\n2022\n2023\n2024e\n2030\nNZE\nAPS\nSTEPS\nOil and\nnatural gas\n\n\n World Energy Investment 2024 \n \nPAGE | 126  \nFuel supply \nRisks of over-investment in traditional elements and under-investment in low-emissions \nalternatives \nWith the anticipated rise in 2024, overall investment in oil and gas \nsupply is at the level projected in 2030 in STEPS, a scenario which \nshows coal, oil and natural gas demand levelling off or declining \nbefore 2030. The increase in 2024 investment is driven by national \noil companies in the Middle East and Asia, although this does not \nnecessarily coincide with expected growth in output. In the case of \noil, increased near-term production is concentrated in the United \nStates, Guyana, Canada, and Brazil.  \nEven though oil and gas investment is broadly aligned with the \ndirection of travel in energy markets, as represented by the STEPS, \nthis trajectory is associated with some significant commercial and \nenvironmental risks. Global spare oil production capacity is already \nclose to 6 million barrels per day (excluding Iran and Russia) and \nthere is a shift expected in the coming years towards a buyers’ market \nfor LNG. Against this backdrop, the risk of over-investment would be \nstrong if the world moves swiftly to meet the net zero pledges and \nclimate goals in the Announced Pledges Scenario (APS) and the \nNZE Scenario. Oil and gas investment in 2024 is set to be around \n35% more than the level required in 2030 if governments achieved \ntheir climate targets in full and on time (as in the APS), and more than \ndouble the 2030 level needed if consumption falls in line with a 1.5 °C \ntarget (the NZE Scenario). Differences in coal industry are even more \nstark: investment in 2024 is more than double the 2030 level in the \nSTEPS, almost four times more than in the APS, and five times more \nthan in the NZE Scenario.  \nIn the APS, the trajectory for oil and gas consumption is curbed by \nrapid growth in renewables, efficiency, and other clean energy \nsources. There is no need in this scenario for further oil and gas \nexploration, as already-discovered fields are sufficient to cover \nprojected demand. Investment is needed in some new oil and gas \nprojects, in maintaining production at existing fields and in safely \ndecommissioning or repurposing existing operations. In the NZE \nScenario, rapidly falling demand means that there is no need for long \nlead time conventional oil and gas projects. In both scenarios, \ninvestment in cutting greenhouse gas emissions from operations – \nmost notably in reducing methane emissions – is essential. \nThe oil and gas industry generated very large profits in 2022 and \n2023. The focus on companies has mainly been to return profits to \nshareholders through share buybacks and dividends. The oil and gas \nindustry is well placed to scale up many crucial technologies for net \nzero transitions, especially those with strong overlap with existing \nstrengths such as offshore wind, low-emissions hydrogen, bioenergy \nand CCUS. To date, only a few companies have markedly increased \n\n\n World Energy Investment 2024 \n \nPAGE | 127  \nFuel supply \ntheir spending in these areas, and less than 4% of the industry’s total \ncapital investment was invested into clean energy in 2023. \nScaling up clean energy investment rapidly is essential to mitigate \nfuture price risks while reducing emissions. Investment in hydrogen \nand CCUS has been growing rapidly in recent years, but from a very \nlow base. Investment in bioenergy has risen modestly in recent \nyears, but remains far below the levels needed by 2030 in the \nSTEPS. To get on track with the APS and NZE Scenario, clarity over \npolicy frameworks and incentives will be essential across all clean \nfuels and technologies to bring forward announced and new projects.  \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 128  \nEnergy end use and efficiency \nEnergy end use and \nefficiency\n \n\n\n World Energy Investment 2024 \n \nPAGE | 129  \nEnergy end use and efficiency \nOverview / Investment \n\n\n World Energy Investment 2024 \n \nPAGE | 130  \nEnergy end use and efficiency \nSupported by strong EV sales, investment on global energy efficiency and electrification \nremained resilient in 2023, despite strong headwinds for the building and industry sectors  \nGlobal investment in energy efficiency, electrification and renewables for end uses by sector 2017-2024e \n \nIEA. CC BY 4.0 \nNote: An energy efficiency investment is defined as the incremental spending on new energy-efficient equipment or the full cost of refurbishments that reduce energy \nuse. The intention is to capture spending that leads to reduced energy consumption. \n 100\n 200\n 300\n 400\n 500\n 600\n 700\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nBuildings\nTransport\nIndustry\n\n\n World Energy Investment 2024 \n \nPAGE | 131  \nEnergy end use and efficiency \nIndicators affecting investment in energy efficiency \nTrends in sectoral indicators for three major economies that are relevant to key sectors for energy efficiency, 2018-2023 \n \n \nIEA. CC BY 4.0 \nNote: Industry-value added for the United States is based on 2023 Q3 updates. The EU construction indicator is useful floor area for which building permits are \nissued (both residential and non-residential). The US construction indicator is new privately owned housing units authorised by building permits in permit-issuing \nplaces. The China construction indicator is newly started residential construction by floor meters, total construction area of houses constructed by real estate \ndevelopers. \nSource: IEA calculations based on Eurostat (2024); BEA (2024); NBS (2024).\n 25\n 50\n 75\n 100\n 125\n 150\n2018\n2023\nIndex (2018 =100)\nEuropean Union\nGDP\nVehicle sales\nIndustrial value-added\nConstruction activity\n2018\n2023\nUnited States\n2018\n2023\nChina\n\n\n World Energy Investment 2024 \n \nPAGE | 132  \nEnergy end use and efficiency \nEnd-use investments in 2023 show a mixed picture, with high inflation and interest rates \naffecting governments’ ability to offer support\nThe year 2023 has been a challenging for investments in the energy \nefficiency and electrification of energy end-use sectors (Buildings, \nTransport, and Industry). Investment plateaued in 2023 at \nUSD 646 billion: The buildings sector experienced one of its sharpest \nyear-on-year declines (-5%), and industry investment fell by 8%, but \nthis was partially offset by a 6% increase for transport, thanks to rapid \ngrowth in EV sales. The United States, Europe, and China account \nfor about 75% of global end-use investment.  \nThis slowdown comes at a time when the case for the affordability of \nboth energy efficiency technologies and financing have been affected \nby the macroeconomic environment. Inflation not only made energy \nand technologies more expensive to buy, but high interest rates also \nmeant that obtaining financing at reasonable terms became more \ndifficult and more costly – especially as the housing market has been \nslow to cool down and disposable income has shrunk.  \nHigh interest rates are also eroding governments’ fiscal room and \ntheir ability to provide incentives for energy efficiency and \nelectrification measures. In recent months, several countries have \nannounced plans to reduce – or scrap in some cases – incentives \nprovided for EVs, heat pump purchases or building renovations. \nDespite lower gas prices, the level of industrial activity has also been \nslower to recover from the combined effects of the global energy and \neconomic crises.  \nThe question for the investment outlook in 2024 and beyond, is \ntherefore whether spending can continue to be resilient in the face of \nwaning government support as well as growing pressures on \nhousehold budgets and company balance sheets.  \nIn the transport sector, the recent drop in battery costs and the \nongoing price wars between EV manufacturers (aimed at seizing \nmarket share) seem to provide hope for continued growth – albeit at \na slower pace than before. In some large EMDE, EV sales are poised \nto take off, notably with the arrival of Chinese manufacturers in Latin \nAmerica and the development of an EV industry in India. The effect \nof measures aimed at onshoring manufacturing capacity (e.g. the \nInflation Reduction Act in the United States and the Carbon Border \nAdjustment Mechanism in Europe) should also increase spending on \nEV production outside China.  \nThe outlook for investment in the building sector is very uncertain. On \nthe one hand, the construction industry has been more resilient than \nanticipated, especially in China, with a focus on completing projects. \nBut in advanced economies, uncertainty over the continued \navailability of public incentive packages dampens optimism about \n\n\n World Energy Investment 2024 \n \nPAGE | 133  \nEnergy end use and efficiency \nprospects for the next few years. In EMDE, weak building codes and \npoor enforcement continue to be a drag on investment.   \nDespite easing inflationary pressures and lower gas prices, the level \nof investment in energy efficiency in industry in 2024 remains \ndependant on the level of growth in industrial activity in Europe and \nChina, for which the outlook remains quite uncertain. \nFor 2024, we project that aggregate spending in end-use sectors will \nbe largely unchanged from the previous year. A continued, though \nslower, decline in building investment should be mostly offset by a \nrecovery in the industrial sector and continued growth in transport.\n\n\n World Energy Investment 2024 \n \nPAGE | 134  \nEnergy end use and efficiency \nBuildings \n\n\n World Energy Investment 2024 \n \nPAGE | 135  \nEnergy end use and efficiency \nEnergy efficiency spending on buildings slowed in 2023 … \nInvestment spending on energy efficiency and electrification by region in the buildings sector, 2016-2024e \n  \n \nIEA. CC BY 4.0 \nNote: Spending on electrification (e.g. heat pumps) is included in the total spending and represented as a share of total spending on the right axis.  \n2024e = estimated values for 2024.  \n2%\n4%\n6%\n8%\n10%\n12%\n14%\n 50\n 100\n 150\n 200\n 250\n 300\n 350\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nUnited States\nChina\nEurope\nRest of world\nShare of electrification spending (right axis)\n\n\n World Energy Investment 2024 \n \nPAGE | 136  \nEnergy end use and efficiency \n… while inflation, higher interest rates and a constrained fiscal space continue to challenge the \noutlook for 2024\nIn 2023, energy efficiency investments in the building sector stood at \naround USD 280 billion – a 7% drop from the 2022 peak – thanks to \nhigher interest rates and the winding down of several large European \ngovernment incentive programmes. This decline is projected to \nextend into 2024 due to continued pressures around construction \nfinancing costs and further phase-outs of government led support \ninitiatives. From 2019 to 2022, stimulus spending and large structural \ngovernment programmes in Europe, including public efficiency \ninvestment schemes in Germany and Italy, had supported average \nannual investment growth of 15%. But 2023 marked a turning point, \nwhere borrowing and construction cost pressures around the world \nslowed the delivery of finished buildings.  \nSeveral large economies saw a reduction in the construction of \nbuildings in 2023. Construction in Brazil fell by around 2% from a year \nearlier, while China experienced a drop of 16%, significantly \nimpacting global growth in construction spending and delivery of \ngreen buildings. Most of Europe has seen a drop in construction \nvalues, which translates into fewer efficient buildings being \nconstructed. In 2023, the United Kingdom saw a 12% drop in housing \ndeliveries, while they fell by 6% in France.  Germany issued 27% \nfewer building permits in 2023 compared to the previous year. \nEurope presented a mixed picture of energy efficient investment in \n2023. Following a ruling in November 2023 by Germany’s highest \ncourt that a EUR 6 billion climate budget was unconstitutional, the \nKfW development bank and BAFA export credit agency began to \ncurtail support programmes such as the “Bundesförderung für \nEffiziente Gebäude” (Federal Funding Scheme for Efficient \nBuildings), which reducing funding by 34% in 2023. Together with \ncutbacks to other incentive schemes, Germany’s investments in \nenergy efficient buildings dropped by 27% compared to 2022. \nThe United Kingdom saw an increase in energy efficiency investment \nthrough the Energy Company Obligation, spending GPB 1.48 billion \nin 2023, a more than threefold increase from 2022. The Public Sector \nDecarbonisation Scheme reached around GBP 1.3 billion in 2023 \nwith a focus on improving heating systems, and a further commitment \nto invest  GBP 1.17 billion from 2024 onward. \nIn Italy, incentives in the building sector have led to more than \nEUR 80 billion of investments in 2023 – of which more than half, or \nEUR 44.4 billion was linked to the country’s so-called Superbonus \nprogramme for homeowners. Since taking effect in July 2020, the \nSuperbonus scheme – which reimbursed 110% of the cost of energy \nsaving renovations – has led to EUR 102.7 billion in efficiency \nimprovements. As of January 2024, however, the Superbonus is only \n\n\n World Energy Investment 2024 \n \nPAGE | 137  \nEnergy end use and efficiency \navailable for condominiums and the maximum tax credit has been cut \nto 70% for 2024 and will drop to 65% in 2025. A slowdown in \ninvestments is therefore anticipated. Italy’s association of private \nconstruction contractors foresees that such changes will trigger a \n27% drop in home renovation investments and a 4.7% decline in \nspending on new construction in 2024. The first two months of 2024 \nsaw investment growth slowing to  % from 4.8% a year earlier. \nThe EU has further strengthened the Energy Efficiency Directive \n(EED), setting a target of 4% improvement in energy efficiency per \nyear and an 11.7% annual reduction in energy consumption by 2030. \nThe EED is complemented by a strengthened Energy Performance \nof Buildings Directive (EPBD), which aims to boost the energy \nperformance of buildings and requires new buildings to be solar-\nready. The EPBD aims to reduce the primary energy use of \nresidential buildings by 16% by 2030 and by 20% to 22% by 2035. \nThe United States has continued to support investment in improving \nthe energy efficiency of buildings through the Inflation Reduction Act \nof 2022. The Department of Energy is investing around \nUSD 705 million on building energy efficiency and weatherization \nthrough the State and Community Energy Program. Similarly, the \nRural Energy for America Program (REAP) will focus on investments \nin rural communities through grants and guaranteed loans to rural \ncommunities and small and medium-sized companies (SMEs) for \nrenewable energy and energy efficiency improvements. \nIn February 2023, the African Development Bank introduced the \nAfrica Super ESCO Acceleration Programme, which provides \nUSD 5 million to support the establishment of public Super Energy \nService Companies (Super ESCOs) in Rwanda, Senegal  and South \nAfrica. Standards that further promote energy efficient buildings \nacross the African continent, such as the EDGE certification scheme \nfrom the International Finance Corporation, are also growing.  \nAlongside improvements to the National Construction Code, Australia \nrecently launched several programmes to support building energy \nefficiency. The government established the Household Energy \nUpgrades Fund, which includes AUD 1 billion for the Clean Energy \nFinance Corporation to partner with lenders to offer low-cost finance \nfor home energy upgrades, and AUD 300 million dedicated to social \nhousing. The Small Business Energy Incentive supports SMEs with \na 20% tax deduction for eligible upgrades, such as electric heating \nand cooling systems and efficient appliances. \nDespite these initiatives, we estimate that global investments will fall \nby a further 3.5% in 2024 to USD 270 billion. Governments need to \nrecommit to the doubling the rate of energy efficiency improvement \nthrough both a combination of direct support for homeowners and \nbusinesses to invest in efficiency and to help structure markets to \nincentivise private investment. For example, the explicit inclusion of \nbuilding efficiency in green taxonomies and directives, such as in \nEurope and an emerging system in Canada, can start unlocking \nprivate financing at greater scale. \n\n\n World Energy Investment 2024 \nEnergy end use and efficiency \n2023 saw heat pump sales fall for the first time as household budgets came under pressure \nNote: heat pumps that deliver heat directly to households and residential or commercial buildings for space heating and/or domestic hot water provision. It includes \nnatural source heat pumps, including reversible air conditioners used as primary heating equipment. It excludes reversible air conditioners used only for cooling, or \nused as a complement to other heating equipment, such as a boiler. \nSource: IEA (2024), Clean Energy Market Monitor.\nPAGE | 138  \nIEA. CC BY 4.0 \n 20\n 40\n 60\n 80\n 100\nRate of growth of heat pump sales in 2022 and 2023 (left) and global heat pump capacity by country (right) \n 120\n2020\n2021\n2022\n2023\nGW\nChina\nUnited States\nEurope\nJapan\nRest of the World\n\n\n World Energy Investment 2024 \n \nPAGE | 139  \nEnergy end use and efficiency \nSustained policy support is key to accelerate heat pump uptake\nThroughout 2023, heat pump sales slowed, aligning with the broader \ninvestment trajectory seen in the building sector. This trend was \nparticularly pronounced in Europe, where sales declined by 5% over \nthe year. The United States also witnessed a near 17% decline \nduring this period. These reversals in sales represent a departure \nfrom previously optimistic trajectories, despite the pressing global \nneed for increased adoption of heat pumps to facilitate the transition \nto net zero emissions by 2050.  \nThat said, this outcome was not entirely unforeseen, as several \nfactors contributed to the reduced enthusiasm of consumers to invest \nin heat pumps in 2023. High interest rates deterred potential buyers, \nwhile the substantial upfront costs associated with heat pump \ninstallation posed financial challenges. Additionally, declining natural \ngas prices rendered electric heating options less economically \nappealing, further dampening demand. Uncertainties, including \ndelays in the adoption of heat pump-related regulations in the \nEuropean Union and the prolonged timeline for rebate distribution for  \nheat pump installations in the US exacerbated the situation. \nNonetheless, there are still reasons to expect a brighter future for the \nindustry. In the United States – where the overall market for HVAC \nequipment experienced a year-on-year decline –  heat pumps still \naccounted for 55% of heating system sales as of December 2023, far \noutpacing a 20% drop in gas equipment sales. Meanwhile, nine US \nstates – which  together represent nearly a quarter of residential \nenergy consumption – recently agreed to a collective target for new \nheating and cooling equipment sales to reach at least 65% by 2030. \nAdditionally, there are tax credit schemes available through the \nInflation Reduction Act that incentivise heat pump installations, \nfurther bolstering the outlook for the market. In Europe, while certain \ncountries experienced declines in sales, others saw notable \nincreases. Heat pump sales rose in Germany and the Netherlands \nfor the first three quarters of 2023 – thanks to the carry-over effect of \nthe previous year’s sales spike – but eventually fell back amid market \npressures and the weakening of government incentives. Such \nfluctuations illustrate the importance of effective regulations \nsupporting the adoption of heat pumps and enhancing building \nefficiency. \nChina emerged as the market where heat pump sales thrived the \nmost in 2023, with robust 12% growth from a year earlier. China \ncurrently leads the world in new heat pump installations, \ncommanding more than a quarter of global sales.  This trend has \nbeen bolstered by ongoing government initiatives aimed at promoting \nthe adoption of clean energy equipment in various industries, such \nas agriculture. China’s experience contrasts with Japan’s relatively \nmature market, which saw a 10% decline in heat pump installations \nin 2023.  \n\n\n World Energy Investment 2024 \n \nPAGE | 140  \nEnergy end use and efficiency \nSustainable finance for green buildings is holding up as construction costs level out \n \n \nIEA. CC BY 4.0 \nSource: Environmental Finance Data, EDGE, Bloomberg Terminal, European Central Bank, Federal Housing Administration, Fannie Mae, Freddie Mac. \n \n \n 40\n 80\n 120\n 160\n2017 2018 2019 2020 2021 2022 2023\nBillion USD (2023, MER)\nChina\nEurope\nJapan and Korea\nNorth America\nMDBs and others\nRest of world\nSustainable debt issuance for green buildings\n5\n10\n15\n20\n 50\n 100\n 150\n 200\n2017 2018 2019 2020 2021 2022 2023 2024e\nIndex (2017=100)\nEDGE square meters (right axis)\nInsulation Industry Revenue\nNew Mortgages\nConstruction costs\nHome mortgage rates\nSelected financial indicators for green buildings and renovations\nMillions of EDGE certified square meters\n\n\n World Energy Investment 2024 \n \nPAGE | 141  \nEnergy end use and efficiency \nFinancing indicators for green building investment paint mixed picture for the years to come\nDespite the decrease in investment in energy efficiency and \nelectrification in the building sector, some financial indicators point to \na brighter future. As with other energy sectors, rising prices and \nhigher interest rates eroded the affordability of the entire construction \nvalue chain, pressing the pause button on the wave of the green \nbuildings and renovation. But there are signs that construction costs \nhave begun to stabilise and interest rates are expected to ease \nslightly over the next few quarters.  \nThe number of sustainable bonds listing green building as a target for \ntheir proceeds had already begun to decline in 2022. But in 2023, the \nvolume of issuances remained relatively stable, in contrast to the \ndeclining trend in the rest of the market for green, social and \nsustainability (GSS) bonds.  \nHistorically, most green building bond sales have been driven by \neither by sovereign issuers (e.g. France, Belgium, Hong Kong) or \npublic or quasi-public actors like Fannie Mae in the United States or \nKfW in Germany. But recently there has been a trend among private \nfinancial institutions and large utilities to issue debt to finance green \nbuildings – though it remains unclear whether the proceeds of these \nbonds can be deployed fast enough to support the 2.5% annual deep \nretrofit rate required in the NZE Scenario. \nMeanwhile, since the beginning of the inflationary period in 2021, the \nnumber and value of current long-term mortgages – typically good \nproxies for measuring renovation activity –  have been declining both \nin the European Union and the United States. This is concerning, \nsince all the IEA’s scenarios assume a greater role for debt to fund \nrenovations. Today, most retrofits are financed through owners’ \nequity, which greatly limits their uptake. \nTherefore, making sure the right consumer financing tools are in \nplace will be crucial. Today, many options exist to finance the \npurchase of a vehicle or even a home, but few mechanisms provide \nreadily available options to finance green buildings or renovations. \nSome governments and banks – mainly Australia, the United \nKingdom, and United States – are experimenting with green \nmortgages, but uptake has so far been limited due to many factors, \nincluding low customer demand and complicated application \nprocesses, as well as a lack of lending capacity or willingness by \nbanks to offer these products. In France, for instance, a recent \ninitiative to provide zero-interest loans for small renovations was \nlargely snubbed by banks and consumers alike until the rules were \nsimplified and revamped in 2024. Financial institutions often point to \na lack of available data and the difficulty of finding the right balance \nbetween the financial risk and return on smaller loans.  \n\n\n World Energy Investment 2024 \n \nPAGE | 142  \nEnergy end use and efficiency \nBanks have identified a need to better address financing for energy \nefficiency and electrification of the building sector, however:  Today, \n37 of the world’s 100 largest commercial banks say they have \nimplemented internal green building policies, although they still \nappear to struggle with communicating these policies across their \nbranch networks. In June 2023, the International Sustainability \nStandards Board issued two new IFRS global sustainability \ndisclosure standards that will require increased and more granular \nreporting from homebuilders and real estate companies on their \nbuilding energy profiles. \nInnovative solutions exist to increase the amount of financing for \ngreen buildings, and they have been tested in various countries. In \nthe United States, the Property Assessed Clean Energy Programs \nhave shown a way to decouple the split incentives for owners – who \nmust shoulder the cost of green investment  but do not necessarily \nbenefit from the resulting savings – by linking renovation costs to the \nvalue of the property itself. In Europe, some of the largest banks have \nalready begun to implement voluntary Mortgage Portfolio Standards \nto incorporate climate targets into their lending practices.  \nAbout 80% of the world’s population are homeowners and unlocking \nat least a portion of the trillions of dollars’ worth of equity embedded \nin this housing pool could also be leveraged to help finance \nrenovations. While many borrowers may not qualify for new \nmortgages – since homeowners tend to skew toward the top the age \npyramid – public guarantees for home-equity loans could help to de-\nrisk commercial financing for renovations. \nOverall, these difficulties are compounded by a regulatory landscape \nwhich can be perceived as a moving signpost. As public budgets \nbecome tighter in many parts of the world, governments are tempted \nto cancel or scale back incentive mechanisms for renovations or \ngreen buildings, thereby reducing demand. One concrete example is \nfrom makers of insulation materials, who invested heavily in \nmanufacturing capacity on the assumption that demand for \nrenovation materials would rapidly materialise at scale. But recent \nhesitation by several European countries over whether to maintain \nincentive programmes have put these investments at risk and in \n2023, revenues from the insulation industry started to decline. \n \n\n\n World Energy Investment 2024 \n \nPAGE | 143  \nEnergy end use and efficiency \nTransport \n\n\n World Energy Investment 2024 \n \nPAGE | 144  \nEnergy end use and efficiency \nSales of electric vehicles reached another milestone in 2023, driven by declining costs  \n \nIEA. CC BY 4.0 \nNote: EV includes battery electric and plug-in hybrid passenger vehicles. 2024e = estimated values for 2024. \nSource: IEA (2024), Global EV Outlook; Marklines.\n6%\n12%\n18%\n24%\n 5\n 10\n 15\n 20\n2018\n2019\n2020\n2021\n2022\n2023 2024e\nMillion units\nChina\nEurope\nNorth America\nJapan and Korea\nRest of world\nShare of total sales (right axis)\nGlobal EV sales and market share\nWeighted average price and battery cost per region\n25\n50\n75\n100\n125\n2018\n2022\n2018\n2022\n2018\n2022\nIndex (2018 = 100)\nChina (vehicle)\nChina (battery)\nEurope (vehicle)\nEurope (battery)\nUnited States (vehicle)\nUnited States (battery)\nSports utility \nvehicle\nMedium car\nSmall car\n\n\n World Energy Investment 2024 \n \nPAGE | 145  \nEnergy end use and efficiency \nBuoyed by lower battery costs, a price war in EVs and signs of life in the commercial markets, \ninvestment in the electrification of road transport is reaching new highs \nInvestment in energy efficiency, electrification, and hydrogen in the road transport sector \n \nIEA. CC BY 4.0 \nNote: 2024e = estimated values for 2024. Hydrogen spending for transport is low and not visible on the figure, the category is included for completeness. \n 50\n 100\n 150\n 200\n 250\n 300\n 350\n 400\n 450\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024e\nBillion USD (2023, MER)\nElectrification\nEnergy Efficiency\nHydrogen\n\n\n World Energy Investment 2024 \n \nPAGE | 146  \nEnergy end use and efficiency \nNearly one in five new cars sold in 2023 was electric, although more than 90% of sales were in \nChina, Europe, and the United States\nIn 2023, approximately 14 million electric cars were sold worldwide, \nconstituting nearly one-fifth of total car sales. Sales of electric cars in \n2023 were 35% higher than in 2022, a trajectory that – if maintained \n– would still be compatible with the targets set in the NZE Scenario.  \nElectric cars accounted for 18% of all cars sold in 2023, up from a \n14% share in 2022 and just 2% in 2018. These trends indicate that \ngrowth in electric car markets remains robust as the technology \nmatures. Battery electric cars accounted for 70% of the electric car \nstock in 2023. But sales continue to remain heavily concentrated in \nthe traditional key markets. In 2023, almost 95% of all global electric \ncar sales took place in China, Europe, and the United States.  China \nled the way at almost 60% of sales, Europe at nearly 25%, and the \nUnited States at 10%. These regions also show significant adoption \nrates, with electric cars representing more than one-third of new car \nregistrations in China, one quarter of registrations in Europe and 10% \nin the US market. In other developed car markets like Japan and \nIndia, EV sales remain limited. \nChina ended its national subsidies for EV purchases in 2022 after \nmore than a decade – yet its EV industry and the level of EV sales \nremained resilient. While the growth rate for Chinese sales fell in \n2023 to just over 35% it was from a high base, which speaks to the \ndynamism of the country’s EV market. \nSales growth in the United States slowed somewhat but remained \nrobust (up 42% year-on-year). The Inflation Reduction Act (IRA) and \nthe revised qualifications for the Clean Vehicle Tax Credit, along with \nprice cuts, seem to have helped in sustaining sales in 2023, despite \ninitial worries that stricter domestic content requirements for EVs and \nbatteries might trigger bottlenecks or delays. \nIn Europe, new electric car registrations reached nearly 3.2 million in \n2023, marking a substantial increase of almost 20% compared to \n2022. European governments have historically offered some of the \nworld’s most generous incentives for the purchase of new electric \nvehicles. However, these  subsidies are beginning to wind down, \nnotably in France, where a  EUR 7000 (~USD 9000) per vehicle \nbonus is set to drop to EUR 4000 in 2024 (USD 5100). Germany has \nalso ended its EUR 4500  (USD 5800) subsidy for the purchase of a \nnew EV.  \nSales increased significantly in EMDE regions, but still accounted for \na small share of the global EV market. In Latin America, electric car \nsales reached almost 90 000 units in 2023. In Brazil, electric car \nregistrations nearly tripled year-on-year to more than 50 000 units, \nsupported by the entry of imported Chinese models, a trend we could \nexpect to see more of as Chinese carmakers prioritise EMDE \nmarkets over the United States and Europe. EV registration in India \n\n\n World Energy Investment 2024 \n \nPAGE | 147  \nEnergy end use and efficiency \nincreased by 70% year-on-year thanks to purchase incentives under \nthe Faster Adoption and Manufacturing of Electric Vehicles (FAME-\nII) scheme, supply-side incentives under the Production Linked \nIncentive scheme, tax benefits and the Go Electric campaign. \nIn 2024, global EV sales growth is expected to slow to around 20%. \nContradicting forces are at play: A certain level of market maturity \nmight have been reached in China, while the reduction or cancellation \nof some subsidies in China, Europe and India cloud the horizon for \nfuture sales. On the other hand, several factors should continue to \nsupport growth, including: recent price drops in many EV models; \nrenewed activity in the commercial fleet segment and new emissions \nstandards such as those proposed by the US Environmental \nProtection Agency. More targeted policy incentives, such as a French \nprogramme offering a EUR 100 per month EV lease to low-income \nhouseholds, could also be of help. (The French scheme was \nsuspended in 2024 after more than 50 000 households signed up).  \nDespite drops in EV prices across the range of models, the largest \nEV manufacturers have been able to maintain their profit margins by \ndelaying the pass-through of falling battery prices to their customers. \nLower battery costs, supported by record levels of investment in \nmanufacturing, should lead to further reductions in EV retail prices \nand increased sales. \nBut as the market enters a new era of slightly slower growth, the car \nindustry – which has seen many new entrants in recent years – is \nlikely to experience lower market capitalisations, increased \nconsolidation, spending restraint and eroding margins amid price \ncompetition and slowing sales. The cancellation of two long-awaited \nIPOs of the battery and EV branches of Volkswagen and Renault \npoints to a degree of investor scepticism about whether  EV sales will \nbe able to keep growing at the rates seen in recent years, especially \nin Europe. The story seems to be different in EMDEs, where in India \nfor instance, companies like Exicom are starting to look to the capital \nmarkets for funding expansion into EVs. Announcements of new \ncapital expenditures and additions of new battery manufacturing \ncapacity continue to point to positive prospects for the sector globally. \nGlobal sales of electric buses reached about 50 000 units in 2023, \nwhich represented 3% of total bus sales. Roughly  60% of those sales \ntook place in China, thanks to early policy support and development \nof domestic production capacity. Battery electric buses reached a \n43% share of new city bus sales in the European Union, and some \nprogress was also made in Latin America and Kenya. In EMDE \nregions, mass transit public transportation investments have been \nsupported by concessional finance, notably in India where multilateral \ndevelopment banks (MDBs) have worked with the government in its \nefforts to deploy a fleet of 50 000 electric buses and the \ncorresponding charging infrastructure. In Dakar, Senegal, the all-\nelectric Bus Rapid Transit system started operation in late 2023 and \nwas co-financed by the World Bank, which provided USD 300 million. \nThis push from MDBs can both establish strong order pipelines for \nelectric buses and help develop local manufacturing capacity.\n\n\n World Energy Investment 2024 \n \nPAGE | 148  \nEnergy end use and efficiency \nCapital expenditures by the major listed battery companies reached USD 10 billion for the first \ntime in Q4 2023, and production capacity grew by 60% from a year earlier \nGlobal trends in the battery manufacturing industry, 2017-2025 \n  \nIEA. CC BY 4.0 \nNote: Listed battery companies include LG Energy Solution, BYD, Contemporary Amperex Technology, Samsung SDI, Gotion High-tech, Eve Energy and Farasis \nEnergy Gan Zhou. 2023 values are based on fully commissioned capacity. 2025 and 2030 capacity values are based on capacity that is either announced, under \nconstruction or fully commissioned.  \nSource: IEA calculations based on Benchmark Mineral Intelligence and Bloomberg Terminal (2024).\n 3\n 6\n 9\n 12\n2023\n2025\n2030\nTWh\nChina\nEurope\nUnited States\nRest of world\nBattery manufacturing capacity\n3\n6\n9\n12\n 100\n 200\n 300\n 400\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nArithmetic return (Q4 2016 = 100)\nQuarterly returns\nCapital expenditure (right axis)\nFinancial indicators for listed battery companies\n\n\n World Energy Investment 2024 \n \nPAGE | 149  \nEnergy end use and efficiency \nIndustry \n\n\n World Energy Investment 2024 \n \nPAGE | 150  \nEnergy end use and efficiency \nEnergy efficiency investments declined in 2023 due to China's property sector downturn and \nthe global slowdown, but remained stable relative to global industrial capital expenditures \nEnergy efficiency investment in the industrial sector, 2015-2022 (left) and EBIT margin of selected industries (right) \n  \n \nIEA. CC BY 4.0 \nNote: The industrial sector includes iron and steel, cement, aluminium, copper, and chemicals. EBIT = earnings before interest and taxes. \nSource: IEA calculations based on S&P Capital IQ.\n3%\n6%\n9%\n12%\n15%\n18%\n2015 2016 2017 2018 2019 2020 2021 2022 2023\nSteel\nFertilizers\nAluminum\nCement\nOther chemicals\nEBIT / Revenue\n3%\n6%\n9%\n12%\n15%\n18%\n 10\n 20\n 30\n 40\n 50\n 60\n2017\n2018\n2019\n2020\n2021\n2022\n2023\n2024\nBillion USD (2023, MER)\nNorth America\nEurope\nChina\nIndia\nOther\nShare of industry investments\n\n\n World Energy Investment 2024 \n \nPAGE | 151  \nEnergy end use and efficiency \nThis slowdown has taken place despite stubbornly high commodity prices across the board \nand rising margins, notably in the cement and fertiliser sectors\nInvestment in energy efficiency and electrification in the industrial \nsector shrank in 2023, cancelling out the gains seen in 2021 and \n2022. This was driven mainly by a fall in investment in China, the \nlargest materials producer in the world. The country is experiencing \nchallenges from a declining property sector and lower growth and \ndemand prospects. Depending on estimates, the property sector \naccounts for between 14% and 30% of China’s GDP. Not only is the \nproperty sector itself very large, but it also drives many related \nindustries such as steel and cement. The global economic slowdown \nand historically high inflation worldwide discouraged investment in \nother regions, which have remained flat.  \nIndustrial energy efficiency investment was down by 30% between \n2022 and 2023 in China, though it is expected to increase by 5% in \n2024. Until 2021, roughly one-third of all energy efficiency and end-\nuse investment in industry took place in China – but this share is \nexpected to fall to 22% in 2024. As part of its 14th Five-Year Plan for \nNational Economic and Social Government, China has set long-term \nobjectives for 2025, emphasising the importance of low-emission and \n“green” development among heavy-polluting manufacturers such as \nsteel companies. In practice, however, most subsidies to steel firms \nhave gone to support investment in expanding capacity and capital \nequipment rather than targeting R&D expenses or investment in \nefficiency gains. \nCompared with global capital expenditures across all industrial \nsectors (iron and steel, cement, aluminium, copper, and chemicals), \nenergy efficiency and other end-use investments have stalled, \nrepresenting 13% of total investment in 2023 compared to 14% in \n2017. This suggests that even in a period of high energy costs such \nas 2021-2022, investments in energy efficiency and end-use have not \nbeen a priority. \nThe surge in commodity prices since 2021 has prompted industrial \nsectors to focus on higher-margin products and consolidation among \nsmaller producers. Driven by the high price of natural gas – a key \ncomponent of most fertilisers – fertiliser makers have enjoyed record \nprofits in recent years. Nonetheless, this has not translated into \nbigger investments in energy efficiency. \nIn 2024, industrial sectors are expected to face growing turbulence. \nGlobal excess capacity is increasing, while demand shows signs of \nslowing, especially amid the potential for a downturn in Chinese \ndemand if the real estate crisis drags on. Steel and cement \nproduction are declining in many countries, notably in Europe, while \ncapacity is rising in Southeast Asia, the Middle East, and Africa. \n\n\n World Energy Investment 2024 \n \nPAGE | 152  \nEnergy end use and efficiency \nImplications \n\n\n World Energy Investment 2024 \n \nPAGE | 153  \nEnergy end use and efficiency \nDoubling annual energy intensity improvements by 2030 requires a tripling of investments \n   \nIEA. CC BY 4.0 \n \n \n1%\n2%\n3%\n4%\n5%\n2023\n2030\nNZE\nAnnual energy intensity improvement\nElectrification and other end-use renewables\nBuildings\nTransport\nIndustry\nEnergy intensity improvements\nx 2\n 500\n1 000\n1 500\n2 000\n2 500\n2021 2022 2023 2024e\n2030\nAPS\n2030\nNZE\nInvestments in end-use sectors\nx 3\nBillion USD (2023, MER)\n\n\n World Energy Investment 2024 \n \nPAGE | 154  \nEnergy end use and efficiency \nEnergy efficiency is one of the key pillars to keeping 1.5 °C within reach, but the world is not \ninvesting nearly enough\nDuring COP28, governments agreed on a set of key climate pillars \nfor keeping the door open to net zero emissions by 2050 and holding \nglobal warming below 1.5 °C. One of these pillars is to double the \nrate at which the energy intensity of the global economy improves. \nToday the annual rate of improvement stands at about 2%. The NZE \nScenario requires this rate to double by 2030. Decarbonizing the \npower and fuel sectors is crucial, but the largest emissions come from \nend uses and efficiency improvements are pivotal in curbing fossil \nfuel demand. To achieve a doubling of energy intensity improvement, \nannual investment needs to triple within a little more than five years. \nBy 2030, investment in buildings nearly triples in the NZE Scenario \n(as the share of deep retrofits reaches 2.5% per year), the number of \nheat pumps installed triples, and every new construction is net zero \ncarbon ready. Clean investment in transport quadruples as 70% of \nnew cars more than half of buses and trucks sold are electric, 17 \nmillion charging points become available and new internal \ncombustion engine vehicles are at least 20% more efficient. While \nindustry is one of the most difficult sectors to decarbonise, it is also \nthe one where funding yields the best results. Only 6% of the total \nincreased \ninvestment \ndelivers \n20% \nof \nthe \ntotal \nintensity \nimprovements by 2030. \nAnnual trajectory of EV sales and retrofits in the NZE Scenario \n \n \nThe upcoming years are pivotal for aligning the energy system with \nthe NZE Scenario. Recent reductions in government support and \nslower growth in EV sales, heat pumps, and construction highlight \nthe correlation between end-use efficiency investment and subsidies. \nHowever, public spending faces challenges due to inflation and \nhigher interest rates. The key question will be whether the business \ncase for electrifying transport, renovating buildings, and improving \nindustrial efficiency becomes strong enough to attract significant \nprivate sector investment\n 20\n 40\n 60\n 80\n2015\n2030\nMillion units\n2024 growth rate\nSTEPS\nNZE\nSales of electric vehicles\n0\n1\n2\n3\n4\n2015\n2030\nBillion square metres\nFloorspace retrofitted \nto Net Zero Carbon Ready\n\n\nWorld Energy Investment 2024 \n \nPAGE | 155  \nR&D and technology innovation \nR&D and technology \ninnovation \n \n\n\n World Energy Investment 2024 \n \nPAGE | 156  \nR&D and Technology innovation \nOverview \n\n\n World Energy Investment 2024 \n \nPAGE | 157  \nR&D and Technology innovation \nDivergent trends for R&D funding and the scaling up of private capital, identified in last year’s \nreport, continued throughout 2023\nThe amount spent globally on clean energy R&D grew again in 2023, \nextending post-pandemic gains. A 13% rise in US government \nspending on energy R&D helped keep global public energy R&D \nspending on a steady upward trend, reaching USD 50 billion. Energy-\nrelated R&D spending in the corporate sector stood at \nUSD 160 billion. Although the pace of growth was slower than the two \nprevious years, the momentum of investment in clean energy \ntechnologies was maintained, led by the automotive sector. \nThis growth trend is driven by three factors. On the public side, \ngovernment commitments to reduce emissions are being taken \nseriously, and research funding is being strategically directed to \nareas that still show a gap between future deployment needs and \ntechnology readiness. Secondly, there is a fast-growing recognition \nat the highest levels of government that clean energy technologies \ncan offer major opportunities for investment and growth and that \nbenefits will accrue to those offering the most competitive products. \nPackages of government incentives aim to steer sectors towards low-\nemissions options and these are spurring corporate R&D to maintain \nfirms’ competitive advantages. These factors are evident in China, \nwhich further increased its share of energy R&D in 2023. \nFor smaller, innovative clean energy companies, however, 2023 was \na difficult year. The types of capital on which start-ups rely – such as \nventure capital (VC) or venture loans – became significantly more \nexpensive amid rising inflation and higher interest rates. Not only did \nhigher interest rates make alternative investments relatively more \nattractive, but inflation and weaker outlooks for consumer spending \nlengthened the expected time that start-ups would need to reach \nprofitability. As a result, many investors either moved their money out \nof VC funds, or the funds offered smaller amounts of equity or debt \nto start-ups – enough to keep them afloat until visibility improved. \nBased on data from the first quarter of 2024, we expect start-ups to \nfind it difficult to raise capital through at least the end of 2024. \nWhen it comes to energy innovation investment, emerging market \nand developing economies (EMDE) remain under-represented. \nConsidering the active role these countries need to play in energy \ntransitions, and the greater impact of higher interest rates on the cost \nof capital for innovators in these countries, their limited investment \nparticipation is a concern. In 2023, just 6% of public R&D spending \nand 3% of corporate R&D came from EMDE (outside China). For \nstart-ups in some EMDE countries – where VC ecosystems are less \ndeveloped than in advanced economies – borrowing rates have been \nreported to be as high as 25%. However, with an 85% increase in \nfundraising by Indian start-ups, the overall EMDE share of energy \nventure capital rose from 3% to 9% of the total in 2023. \n\n\n World Energy Investment 2024 \n \nPAGE | 158  \nR&D and Technology innovation \nSpending on energy R&D \n\n\n World Energy Investment 2024 \n \nPAGE | 159  \nR&D and Technology innovation \nGovernment spending on energy R&D continued to increase in 2023, rising 7% year-on-year. \nChina and the United States led the way  \nGovernment spending on energy R&D, 2015-2023 \n \nIEA. CC BY 4.0 \nNotes: Includes spending on demonstration projects (i.e. RD&D) wherever reported by governments as defined in IEA documentation. Figures for 2023 are a \npreliminary estimate based on data available by mid-May 2024. State-owned enterprise funds comprise a significant share of the Chinese total. China’s 2022 \nestimate is based on reported company spending where available. The IEA Secretariat has estimated US data from public sources. \nSource: IEA Energy Technology RD&D Budgets: Overview.\n 10\n 20\n 30\n 40\n 50\n 60\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nRest of World\nJapan, Korea,\nAustralia, New\nZealand\nEurope\nNorth America\nChina\n\n\n World Energy Investment 2024 \n \nPAGE | 160  \nR&D and Technology innovation \nClean energy R&D dominates the global total, and announced government initiatives point to \ncontinued future spending growth, but in 2023, R&D for unabated fossil fuels also increased\nGlobally, public spending on energy R&D rose by 7% in 2023, to \nalmost USD 50 billion according to our estimates. This continues a \ntrend that has buoyed innovation in recent years despite \nmacroeconomic uncertainty. However, whereas the growth in 2022 \nwas mostly driven by spending by the Chinese government and its \nmajor energy-related state-owned enterprises, in 2023 nearly half the \ngrowth came from North America, especially the United States. \nCollectively, budgets for US energy research at the national energy \nlaboratories, Department of Defense and public grants given to \nenergy R&D and demonstration projects rose by more than \nUSD 1.3 billion in 2023. \nDespite slower growth in 2023, we estimate that China exceeded the \n7% per year planned increase in energy R&D spending in its 14th \nFive-Year Plan (2021-2025). This maintains China’s status as the \nlargest public spender on energy R&D. However, compared to \nprevious years, the share of growth in Chinese public energy R&D \nrelated to fossil fuel technologies was higher. As a result, the global \nshare of public energy R&D devoted to clean energy topics dipped \nsignificantly for the first time in our dataset, after stagnating in 2022. \nNew government initiatives in this area include Korea’s List of Critical \nand Emerging Technologies and a Special Act to create the support \ninstruments for these technologies, which include rechargeable \nbatteries, advanced mobility, advanced nuclear, biotechnology, \naerospace and marine technology and hydrogen. Japan launched a \nprogramme to provide USD 300 million per year to support \ncollaborative research on storage batteries, hydrogen and new \nbioproduction technologies. Austria’s new Climate Neutral Industry \ninitiative includes USD 260 million of R&D funding. The United \nKingdom announced an USD 28 million fund for interdisciplinary, \nuse-inspired research on clean energy and climate change through \ninternational partnerships. \nPublic energy R&D spending in EMDE rose in 2023 but, outside \nChina, its share remained at 6% of the global total and was \nconcentrated in a small number of G20 countries. Under Brazil’s 2024 \nG20 Presidency  the Group has begun work to help EMDEs develop \neffective long-term clean energy innovation systems so that they can \nparticipate more fully in emerging clean energy technology value \nchains. As an example of targeted action in 2023, Colombia \nestablished a Committee of Ministers for Sustainable Productive \nDevelopment, which seeks to guide the government's support for \ndevelopment and commercialisation of technologies for climate \nneutrality, including lithium production. \n\n\n World Energy Investment 2024 \n \nPAGE | 161  \nR&D and Technology innovation \nCorporate energy R&D spending continued to ramp up, growing 7% to USD 160 billion, largely \ndriven by the automotive sector but with growth across all technology areas \nSpending on energy R&D by listed companies (left) and R&D budgets as a share of revenues (right), by sector of activity, 2015-2023 \n \nIEA. CC BY 4.0 \nNote: Includes only publicly reported R&D expenditure by companies active in sectors that are dependent on energy technologies, including energy efficiency \ntechnologies where possible, and based on the Bloomberg Industry Classification System. Automotive includes technologies for fuel economy, alternative fuels and \nalternative drivetrains. To allocate R&D spending for companies active in multiple sectors, shares of revenue per sector are used in the absence of other information. \nValues may include both capitalised and non-capitalised costs, including for product development. Automotive spending is higher compared to that in WEI-2023 due \nto the inclusion of more component suppliers in the sample. Right-hand figure considers the top 20 companies earning more than half of their revenues in the sector. \nSource: IEA analysis based on data from Bloomberg (2024).\n 30\n 60\n 90\n 120\n 150\n 180\n2015 2016 2017 2018 2019 2020 2021 2022 2023\nBillion USD (2023, MER)\nAutomotive\nElectricity generation, supply and networks\nOil and gas\nRenewables\nCoal\nThermal power and combustion equipment\nBatteries, hydrogen and energy storage\nNuclear\n1%\n2%\n3%\n4%\n5%\n6%\n2017-19\n2020-22\n2023\nR&D spending as a share of revenues\n\n\n World Energy Investment 2024 \n \nPAGE | 162  \nR&D and Technology innovation \nR&D remained high in corporate sectors that are under pressure to develop low-emissions \nsolutions, with notable growth for cement and trucks \nR&D spending by globally listed companies in heavy and long-distance transport (left) and industry (middle, right) by activity, 2016-2023 \n \nIEA. CC BY 4.0 \nNote: Values for 2023 are estimates based on reported data at the time of writing. Classifications are based on the Bloomberg Industry Classification System. Trucks \ninclude recreational vehicles, but not industrial vehicles. Year-on-year changes can result from new companies entering the dataset or companies ceasing \noperations, as well as changes in R&D spending. \nSource: IEA analysis based on data from Bloomberg (2024).\n 3\n 6\n 9\n 12\n 15\n 18\n 21\n2016 2017 2018 2019 2020 2021 2022 2023\nBillion USD (2023, MER)\nAviation\nTrucks\nShipping\nRail\n 10\n 20\n 30\n 40\n 50\n 60\n 70\n2016\n2018\n2020\n2022\nChemicals\nIron and steel\n 0.5\n 1.0\n 1.5\n 2.0\n 2.5\n 3.0\n 3.5\n2016\n2018\n2020\n2022\nCement\nPulp and paper\n\n\n World Energy Investment 2024 \n \nPAGE | 163  \nR&D and Technology innovation \nGlobally, energy-related companies are investing more in R&D to stay competitive and much of \nthis is tied to rising revenue at Chinese firms or more competition among car companies\nSince 2019, corporate spending on energy R&D has grown by an \naverage of 7% per year – more than three times faster than the global \nGDP. This reflects the ability of large firms to continue to invest to \ndevelop their competitive advantage in a rapidly evolving technology \nlandscape. In some cases it is also a product of counter-cyclical \ngovernment support that has been earmarked for low-emissions \ntechnologies in these companies. Major automotive manufacturers \nand their suppliers are an example of this situation and their receipt \nof sizeable public loans for electrification R&D since 2020 was \nexplored in WEI-2023. Another factor boosting global growth is the \nallocation of higher sums to energy R&D by Chinese firms. Not only \nare the revenues of Chinese energy-related firms rising faster than \nmany of their international counterparts, but they also increasingly \nneed to innovate to stay competitive domestically and internationally. \nOf the top twenty energy-related corporate R&D spenders in our \ndataset, thirteen are automotive companies based in the United \nStates, Germany, Japan or the Netherlands. The three non-\nautomotive companies in the top ten are Chinese: PowerChina (a \nstate-owned power plant engineering firm), PetroChina (a state-\nowned oil company) and State Grid Corporation (a state-owned \nelectricity network operator). The French energy equipment \nmanufacturer Schneider Electric also features among a “Top 20” \ngroup dominated by vehicle makers and auto parts suppliers, but the \noil majors do not feature. Despite record revenues in 2022 and 2023, \nthe oil major with the highest R&D spending, Shell, is below \nPetroChina, Sinopec and Saudi Aramco. In past years, the oil majors \nhave been higher up the list. \nIn the automotive sector, Volkswagen and Mercedes Benz increased  \nR&D spending by a combined USD 5.5 billion, or 19%. This \nrepresents impressive growth at a time when sales of internal \ncombustion engine vehicles are in decline and electric car sales, \nwhile growing, typically have thinner margins for the supply chain. \nTwo companies focusing on electric vehicles, BYD and Tesla, rank \nthirteenth and fourteenth, respectively. \nOutside the typical scope of the energy sector, corporate R&D has \nbeen rising in so-called hard-to-decarbonise sectors such as long-\ndistance transport and heavy industry. This is a positive sign that \ncompanies, especially in the areas of trucks and cement, are \nembracing the challenge of rapidly changing their long-standing \ntechnological practices. Yet for chemicals, the recent upward trend \nstalled in 2023. There was no noticeable growth in annual R&D \nspending by companies engaged in the aviation, rail and shipping \nsectors.\n\n\n World Energy Investment 2024 \n \nPAGE | 164  \nR&D and Technology innovation \nVC funding of early-stage energy \ntechnology companies \n\n\n World Energy Investment 2024 \n \nPAGE | 165  \nR&D and Technology innovation \nEquity investors in energy start-ups took a “wait-and-see” approach in 2023, delaying deals or \nreducing deal sizes amid market uncertainty – growth-stage deals have not yet bounced back \nVC investment in energy start-ups, by technology area, for early-stage and growth-stage deals, 2010-2024e \n \n \nIEA. CC BY 4.0 \nNote: Number of deals includes deals for which no value has been reported, meaning that the average deal value cannot be accurately derived from the chart. \nIndustry includes start-ups developing alternative pathways to materials. Mobility includes technologies specific to alternative powertrains, their infrastructure and \nvehicles, but not generic shared mobility, logistics or autonomous vehicles. “Other” includes carbon capture utilisation and storage (CCUS), nuclear, critical minerals \nand heat generation. Fossil fuels covers start-ups whose businesses aim to make fossil fuel production and use more efficient or less polluting. \nSource: IEA analysis based on Cleantech Group (2024) and Crunchbase (2024).\n 200\n 400\n 600\n 800\n1 000\n1 200\n 1\n 2\n 3\n 4\n 5\n 6\n2010\n2012\n2014\n2016\n2018\n2020\n2022 2024e\nBillion USD (2023, MER)\nRenewables\nEnergy efficiency\nIndustry\nEnergy storage and batteries\nMobility\nHydrogen and fuel cells\nOther power and grids\nFossil fuels\nOther\nDeal count (right axis)\nEarly stage\n 100\n 200\n 300\n 400\n 500\n 600\n 6\n 12\n 18\n 24\n 30\n 36\n2010 2012 2014 2016 2018 2020 2022 2024e\nGrowth stage\n\n\n World Energy Investment 2024 \n \nPAGE | 166  \nR&D and Technology innovation \nEnergy has outperformed other VC segments since 2021, particularly for early-stage equity \nfunding for start-ups, which held up well in 2023 thanks to policy backing for clean energy \nGrowth in global VC investment by sector of start-ups, 2010-2023 \n \nIEA. CC BY 4.0 \nNotes: Indexed values are in constant USD. \nSource: IEA analysis based on Cleantech Group (2024) and Crunchbase (2024).\n 20\n 40\n 60\n 80\n 100\n 120\n 140\n2010\n2012\n2014\n2016\n2018\n2020\n2022\nIndex (2021 = 100)\nAgriculture and food\nBiotechnology\nMedical\nDigital\nAll\nEnergy\nEarly stage\n 20\n 40\n 60\n 80\n 100\n 120\n 140\n2010\n2012\n2014\n2016\n2018\n2020\n2022\nGrowth stage\n\n\n World Energy Investment 2024 \n \nPAGE | 167  \nR&D and Technology innovation \nEarly-stage VC investment in energy start-ups fell in 2023 for the first time since 2014, largely \nbecause of macroeconomic conditions, but is set to get back on track in 2024\nFrom the perspective of financial flows, 2023 was a disappointing \nyear for venture capital (VC) investment in energy. Whereas 2022 \nachieved unprecedented levels of deals and funding, both early- and \ngrowth-stage equity investment declined in 2023. Early-stage \nfunding, which supports entrepreneurs with technology testing and \ndesign – and plays a critical role in honing good ideas and adapting \nthem to market opportunities – fell by 4%. Growth-stage funding, \nwhich needs more capital but funds less risky innovation, slid 21%. \nThis outcome can largely be attributed to macroeconomic conditions \nrather than a loss of confidence in clean energy technologies. With \nhigher interest rates, fund managers found VC investments less \nattractive than other investment classes. For hardware developers, \nthis was coupled with a more challenging path to market as their input \ncosts rose and potential customers tightened their belts. These \ntrends were already apparent in 2022 and are still expected to \nreverse \nas \nthe \nmacroeconomic \nenvironment \nimproves. \nEncouragingly, there are also reasons for optimism about VC for \nenergy technology innovation. Energy VC investment did not fall as \nfar as other VC segments, such as digital, which saw funding drop by \nmore than 70% compared with 2021. \nThe number of specialist VC funds targeting clean energy and other \nclimate segments continues to grow. These funds are often backed \nby investors that impose criteria – such as potential for deep \nreductions in greenhouse gas emissions – on the use of the money, \nand in some cases allow returns to accrue over longer timeframes. \nThis additional investor focus on energy technology innovators is one \nreason behind the rise in the number of early-stage deals for energy \nstart-ups in 2023. The overall investment trend appears therefore to \nstem from a reduction in the amount invested per deal and a possible \npostponement of very large deals, especially growth equity deals. \nSuch an approach may be expressed as “wait-and-see” via the \nprovision of “bridge finance” – which suggests there could be an \nupward correction if macroeconomic conditions improve. \nData from the first quarter of 2024 indicate that the investment \nenvironment has improved somewhat and delayed early-stage deals \nare getting done. We estimate that early-stage VC funding for energy \nwill return to growth in 2024, but the growth-stage capital shortage \nwill continue. This is despite some big deals already being completed. \nSeveral start-ups have already raised USD 250 million or more in \n2024, including Deep Green (waste heat), Electra Charging (vehicle \ncharging), Fervo Energy (geothermal), H2 Green Steel (hydrogen \nand steel projects), Koloma (hydrogen), NexAmp (solar projects) and \nSunfire (electrolysis). These deals are similar in magnitude to the \nbiggest energy VC transactions in early 2023. \n\n\n World Energy Investment 2024 \n \nPAGE | 168  \nR&D and Technology innovation \nUS-based start-ups attract the most energy-related VC, but there are variations among sectors \nincluding European dominance in energy efficiency and Chinese leadership in batteries \nEarly- and growth-stage equity investment in energy start-ups by region and technology area, 2020-2023 \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on Cleantech Group (2024) and Crunchbase (2024).\n10%\n20%\n30%\n40%\n50%\n60%\n70%\n80%\n90%\n100%\nEnergy efficiency\nEnergy storage and batteries\nFossil fuels\nHydrogen and fuel cells\nIndustry\nMobility\nOther\nOther power and grids\nRenewables\nChina\nIndia\nAustralia\nRest of the world\nUnited Kingdom\nOther Europe\nCanada\nUnited States\n\n\n World Energy Investment 2024 \n \nPAGE | 169  \nR&D and Technology innovation \nThe number of US growth-stage energy VC deals relative to early-stage deals is still higher than \nin Europe, but Europe’s ratio of growth-to-early-stage VC deal value was higher in 2023 \nRatio of growth- to -early-stage VC deal counts and deal values for Europe and the United States, 2010-2023 \n \nIEA. CC BY 4.0 \nSource: IEA analysis based on Cleantech Group (2024).\n 0.5\n 1.0\n 1.5\n 2.0\n2010\n2012\n2014\n2016\n2018\n2020\n2023\nGrowth stage total / early stage total\nEurope\nNorth America\nDeal count\n 5\n 10\n 15\n 20\n2010\n2012\n2014\n2016\n2018\n2020\n2023\nDeal value\n\n\n World Energy Investment 2024 \n \nPAGE | 170  \nR&D and Technology innovation \nVC software vs hardware \nShare of early and growth-stage VC investment in energy start-ups, by type of start-up, 2008-2023 \n \nIEA. CC BY4.0 \nNote: 2024 represents Q1 only. \nSource: IEA analysis based on Cleantech Group (2024) and Crunchbase (2024)\n20%\n40%\n60%\n80%\n100%\n2008\n2011\n2014\n2017\n2020\n2023\nHardware\nDigital\nProject development\nEarly stage\n20%\n40%\n60%\n80%\n100%\n2008\n2011\n2014\n2017\n2020\n2023\nGrowth stage\n\n\n World Energy Investment 2024 \n \nPAGE | 171  \nR&D and Technology innovation \nIn 2023, energy-related VC deals were more likely to be for early-stage companies and those \ndeveloping projects rather than hardware\nIn the three years to 2023, start-ups based in the United States raised \nmore than those in other regions. Most investors in these deals were \nUS-based. While China, Europe and India have consistently \nrepresented growing shares of the total as investment has increased \nin recent years, this is not evenly distributed between the different \nfunding stages or among technologies. The share of Chinese start-\nups is highest in energy storage and batteries, where it now stands \nat 35%, while Indian start-ups have been most successful in the \nmobility sector – including electric urban vehicles and charging \ninfrastructure – where they represent a 6% share. \nEuropean start-ups have significantly increased their share of global \nenergy efficiency VC funding. In absolute terms, the amount of \nmoney raised in 2021-2023 was nearly three times more than in \n2018-2020, reaching USD 1.5 billion in 2023. The share of growth \nequity in this total has also increased, indicating greater success for \nEuropean energy efficiency start-ups as they scale up. However, \nacross energy sectors, there has been a decline in the number of \ngrowth-stage deals – when a defined product or service is in \ndevelopment – relative to the number of deals for early-stage start-\nups, when the business is still being defined. This trend has been \nmost visible in the North American data: Between 2016-2018, the \naverage growth-to-early stage VC deal ratio was more than one \ngrowth-stage deal and USD 11 of growth equity for every early-stage \ndeal and USD 1 of early-stage equity. In the 2021-2023 period, this \nratio was 0.7 growth-stage deals and USD 7 of growth equity per \nearly-stage deal. In absolute terms, nearly three times as much \nfunding went to early-stage deals in 2023 compared to 2018, while \ngrowth-stage deal value fell by 35%. For the first time in our dataset, \nEuropean energy start-ups in aggregate raised more growth equity \nfor every early-stage deal than their North American counterparts. \nThe relative attractiveness of the two regions for scaling up a new \nenergy technology, which has traditionally favoured US start-ups in \nterms of the availability of growth equity, may be converging. \nMuch of the need for clean energy technology innovation relates to \nthe development of hardware solutions, and energy start-ups \ndeveloping hardware continued to attract most of the VC funding. \nHowever, growth-stage funding for energy start-ups dropped further \nin 2023 after a drop in 2022 and now stands at around 75% of total \nfunding. Based on data for the first quarter of 2024, this level is \ndropping further: just 69% of growth-stage VC funding was for \nhardware developers. \nHardware products can take many years of VC funding to be \ndeveloped to meet customers’ needs, but these start-ups can achieve \n\n\n World Energy Investment 2024 \n \nPAGE | 172  \nR&D and Technology innovation \nhigh valuations and pay-offs for investors. By contrast, energy \nsoftware and project development companies can have a quicker \npath to market but offer lower returns. The decline in 2022-2023 likely \nreflects lower willingness among VC funds to make large, long-term \nbets in the current macroeconomic environment. Thus, the share of \nhardware developers in early- and growth-stage deals tends to shift \nwith changing risk perceptions. This indicates that governments could \npreferentially offer counter-cyclical support to hardware developers \nduring periods when capital is temporarily more costly. \nIn a given technology area, the share of VC deals represented by \nproject developers can indicate technology and policy maturity. One \nof the biggest deals in 2023 saw 14 different investors take \nUSD 1.6 billion equity in H2 Green Steel, a Swedish project \ndeveloper for hydrogen-based steel production. The same company \nraised a further USD 300 million from three different investors in \nJanuary 2024. The ability of H2 Green Steel to attract these levels of \ngrowth equity signals that its backers are increasingly comfortable \nwith the level of technology risk and market outlook for hydrogen \nproduction and low-emissions steel.  \nIn contrast, renewables project developers in 2023 attracted the \nsmallest proportion of renewables VC investments in more than a \ndecade (excluding 2020, an outlier year due to the global pandemic). \nAfter 2011, when many VC investors made losses on solar \ncompanies that did not successfully scale up, there was a shift toward \ninvestment in solar project developers or companies that help \nbuilding owners to install proven technologies: Between 2014 and \n2018, project developers attracted more than 60% of VC investment \nin solar, peaking at 70% in 2018. This increase accompanied an \nindustry shakeout triggered by cheaper, Chinese-made crystalline \nphotovoltaic panels. This was partly a reaction to how risks and \ninnovation incentives evolve in a maturing sector. However, VC \ninvestors and start-ups have once again shifted its focus: In 2023, \nowners of new solar hardware technologies received 70% of solar VC \ninvestment. \nThis recent shift back to hardware shows that, even in sectors like \nsolar, which many people consider to be a mature and stable \ntechnology, government policies can have a significant impact on \ninnovation. While the trend may relate, in part, to consolidation in the \nmarket for renewable energy project developers, another factor is \nlikely to be the renewed interest of many governments in hosting solar \nmanufacturing facilities. Knowing that government support is \navailable for setting up a production facility that can compete with \nimports incentivises researchers to push forward the technology \nfrontier to compete for the domestic market. Start-ups developing \nnew approaches to solar photovoltaics – such as thin film, flexible \ndesigns and products that integrate solar cells – raised more VC \nmoney in 2023 than in the previous eight years combined. \n\n\n World Energy Investment 2024 \n \nPAGE | 173  \nR&D and Technology innovation \nCorporate VC investment in clean energy start-ups dropped by almost two-fifths in 2023, with \nautomotive companies reducing their investment activity more than other sectors \nCorporate VC investment in energy start-ups, by sector of corporate investor, 2010-2023 \n \nIEA. CC BY 4.0 \nNotes: Includes early- and growth-stage deals. Includes only investment by private-sector investors. Where there are several investors, deal value is evenly split \namong them. ICT = information and communications technology. Industry includes chemicals, cement, commodities, construction (excluding real estate), iron and \nsteel and other equipment suppliers. Power sector includes independent power producers as well as electricity and renewables equipment and services. “Other” \nincludes food, health, research and mining. \nSource: IEA analysis based on Cleantech Group (2024) and Crunchbase (2024).\n 1\n 2\n 3\n 4\n 5\n 6\n 7\n 8\n 9\n2010\n2011\n2012\n2013\n2014\n2015\n2016\n2017\n2018\n2019\n2020\n2021\n2022\n2023\nBillion USD (2023, MER)\nOther\nEnergy storage and\nbatteries\nIndustry\nTransport\nICT and electronics\nOil and gas\nPower sector\n\n\n World Energy Investment 2024 \n \nPAGE | 174  \nR&D and Technology innovation \nBig corporations cut back equity investment in energy start-ups more sharply than other types \nof VC investors, with the exception of industrial companies \nIn 2023, large companies spent USD 5.5 billion buying equity stakes \nin smaller energy-related start-ups with potential strategic value for \nthe investing firm. This injection of corporate venture capital (CVC) \nhas risen dramatically in recent years, as a way for big corporations \nto acquire knowledge, new technologies and business models quickly \nand at low cost. The nimbleness of start-ups and the “optionality” for \ninvestors can be particularly valuable under conditions of uncertainty, \ncompetition and budget pressures. While CVC remains lower than \ncorporate R&D budgets (which usually target the development \nproducts that fit well with existing business lines) it has notable \nstrategic value when disruption from mass-produced, modular and \nquick-to-scale technologies is anticipated.  \nFor start-ups, CVC complements other sources of funding and can \naccelerate scaling up by providing access to corporate experience \nand resources, especially for manufacturing, as well as access to \nconsumers around the world. \nApart from 2020, when the global pandemic triggered a market \ncontraction, 2023 was the first year since 2017 that energy-related \nCVC declined. This follows a broader dip in energy-related VC activity \nin 2023, but the drop in CVC was more pronounced than the overall \nVC trend. As a result, CVC fell from 22% of total energy-related VC \nin 2022 to 17% in 2023. The change was largest for early-stage VC, \nfor which CVC fell from 17% to 11% of the total. This raises important \nquestions about the availability of this strategic source of capital \nduring periods of macroeconomic uncertainty. \nTwo sectors that have underpinned much of the recent growth in \nenergy-related CVC – oil and gas and automotive – made cuts to their \ninvestment activities. For some firms, this was accompanied by \nmessages about refocusing CVC on technologies closer to their core \nbusiness and integrating start-up activities with corporate strategy. \nSaudi Aramco said in January 2024 that it would increase the capital \nof its CVC fund and prioritise clean energy technology. Volvo \nannounced it would follow some other automotive companies, such \nas BMW, in deepening its start-up incubation and collaboration \nefforts, as a complement to CVC. In 2023, Porsche moved the \nheadquarters of its VC fund and restructured it for efficiency. \nIncreased investment by companies in industrial sectors helped to \noffset some of the CVC decline. Some of these deals were large: The \nChinese aluminium firm Shandong Weiqiao Pioneering Group  \ninvested USD 1 billion in the EV maker Rox Motor; the Chinese \nchemicals company Yibin Tianyuan Group participated in a \nUSD 375 million round of funding for Libode New Material, a battery \ncathode start-up; and ArcelorMittal took part in a USD 120 million \ncapital round for Boston Metal, a US iron electrolysis start-up.\n\n\n World Energy Investment 2024 \n \nPAGE | 175  \nR&D and Technology innovation \nImplications \n\n\n World Energy Investment 2024 \n \nPAGE | 176  \nR&D and Technology innovation \nClean energy policies are fuelling innovation spending, but with high capital costs slowing \nprogress for some technologies, maintaining momentum may require targeted measures\nSeveral conclusions can be drawn from the 2023 trends presented in \nthis chapter. First, governments are continuing to increase spending \non R&D and demonstration projects in keeping with their pledges to \ncut emissions while maintaining economic growth. Second, policies \nthat push the private sector to adopt low-emissions technologies are \ninducing more corporate R&D in the automotive and heavy industrial \nsectors. Third, the cost of capital matters most for early-stage and \nsmaller companies, for whom the pool of available finance has \nshrunk since 2022. \nIt is encouraging for the prospects of addressing climate change that \nmany governments are successfully expanding their budgets for \nclean energy R&D, despite competing shorter-term priorities for \ngovernment funds. Grants for applied research and demonstration \nprojects are essential for shepherding the next generation of energy \ntechnologies to market at lower cost. However, governments should \nalso be concerned by the apparent loss of momentum in equity \nfunding for clean energy start-ups, given the urgency of the \nchallenge. While recent years have demonstrated that higher \ngovernment ambitions and expectations for tackling climate change \ntranslate quickly into the founding of more innovative energy \ncompanies and a corresponding flow of VC capital, it has also \nrevealed the volatility of this funding in a changing interest rate \nenvironment. \nCompared with other segments, clean energy start-ups developing \nnew hardware ideas require more capital and are often more reliant \non large equity deals to pay for testing and manufacturing facilities. \nWhen access to this type of finance tightens, high-potential \ntechnologies \nrisk \nbeing \nabandoned \nor \ndelayed. \nHowever, \ngovernments can use tools such as non-dilutive project debt, equity \nor guarantees to accelerate the sector’s transition to cheaper forms \nof capital for scale-up. \nThe VC data also shows some changes in the technology focus \nareas for investors, as revealed by their selectiveness in a more \ncapital constrained environment. Funding for electric vehicle start-\nups, for example, has noticeably declined. Despite continued growth \nin electric vehicle sales, these are capital-intensive firms and riskier \nbets when the world’s largest car companies concentrate their \nresources on this sector. In comparison, VC investment continues to \nflow to newer areas with less dominant industrial players, including \ncritical minerals, battery components, direct air capture of CO2, \nammonia production and renewable heat. These areas benefit \nstrongly from the entry of new VC investors that have exclusive \nmandates to support climate mitigation technologies, including \nhardware for challenging areas like industrial heat. \n\n\n World Energy Investment 2024 \n \nPAGE | 177  \nR&D and Technology innovation \nRegionally, China is estimated to be the biggest spender on energy \ninnovation. China drove the year-on-year growth in corporate R&D \nand, along with the United States, led the growth in public energy \nR&D. While the link between spending and innovation outcomes is \nunpredictable and not always direct, it is clear that China’s increased \nspending on energy R&D over the past decade has borne fruit. \nChina’s presence is growing in the global market segments for high \nquality electric vehicles, batteries, heavy equipment for power plants \nand solar PV manufacturing. Each of these areas incorporates a \nhigher share of Chinese domestic innovation than ten years ago. \nThe resulting competition within global markets for clean energy \ntechnologies is positive for consumers and for accelerating energy \ntransitions. However, this good news is contingent on the free flow of \nknowledge to stimulate further innovation, and access to markets to \nencourage innovators to compete. Governments around the world \nface a challenge to balance the goal of raising the global pace of \nenergy innovation with securing a return on their R&D investments in \nterms of domestic economic prosperity. The policy toolbox for \naddressing this challenge includes the prioritisation of technologies \nthat are a good fit with existing local industries, measures to support \neffective innovation \necosystems and innovation related to \nmaintaining the competitiveness of manufacturing processes and \nhigh added value products. \nExcept for VC fundraising, especially in India, clean energy \ninnovation investment in EMDE did not noticeably grow in 2023 as a \nshare of the global total. There is much that governments, multilateral \ninstitutions and philanthropists can do to support these countries to \ncontribute actively to clean energy technology development. \nDomestic \nexpertise \nand \nprivate-sector \nadvocates \ncan \nbe \ninstrumental in helping EMDE countries to advance their energy \ntransitions and make technology choices that fit the local context. As \nan example of how more attention to this issue has led to creative \nsolutions, in May 2023, the International Finance Corporation took a \nUSD 20 million equity stake in Boston Metal – a start-up developing \nan early-stage technology for low-emissions steel production – which \nis contingent on construction of the company’s first facility in Brazil. \n .\n\n\nWorld Energy Investment 2024 \n \nPAGE | 178  \nRegional deep dive \nRegional deep dive \n \n\n\nWorld Energy Investment 2024 \n \nPAGE | 179  \nRegional deep dive \nChina, the European Union and the United States have taken the lead on clean energy \ninvestment, accounting for almost 60% of the current global spending on clean energy  \nShares of clean energy investment (left), GDP and population (right) by selected countries and regions  \n \n \nIEA. CC BY 4.0 \nNote: RoW = rest of the world. EU = European Union. APS = Announced Pledges Scenario. NZE = Net Zero Emissions by 2050 Scenario.\n20%\n40%\n60%\n80%\n100%\nClean energy\ninvestment\nGDP\nPopulation\n200\n400\n600\n800\n1000\n2019\n2023\n2030\nAPS\n2030\nNZE\nBillion USD (2023, MER)\nEU\nUnited States\nJapan and Korea\nChina\nMiddle East\nSoutheast Asia\nLatin America\nIndia\nAfrica\nRest of World\n\n\nWorld Energy Investment 2024 \n \nPAGE | 180  \nRegional deep dive \nUnited States \n\n\nWorld Energy Investment 2024 \n \nPAGE | 181  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNote: Sovereign yields of bonds in local currency. bps = basis points. 2016-20 investment reflects annual averages over the five years between 2026 and 2020, \nsimilar with other periods. For other definitions see the WEI Methodology Annex.   \nSource: Moody’s credit ratings (Aaa is the highest rating), Refinitiv Eikon, World Development Indicators and IEA analysis.\n76,892 \n20,952 \n2023\nGDP per capita (USD)\n15%\n4%\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nAaa\n315 bps\nBy 2050\nSovereign debt \nrating\nNZE commitments\nUnited States\nWorld\nEconomic and \nfinancial indicators\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\nEnergy investment\n1.9%\n1.8%\n1,451 \n371 \n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\n1.4 1.8 \n6.1 \n4.7 \n13.2 \n10.5 \nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\nPopulation\nGDP\n15%\n 200\n 400\n 600\n 800\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 182  \nRegional deep dive \nThe United States, the second largest economy in the world, accounts for 15% of global clean \nenergy investment, and remains a major investor in oil and gas\nThe United States has taken important steps to scale up investments \nin clean energy. These investments overtook the spending that went \nto fossil fuels in 2020 – when oil and gas investments fell sharply – \nand increased to USD 280 billion in 2023 from USD 200 billion in \n2020. The country also invests a significant amount in oil and gas: for \nevery USD 1.4 spent on clean energy in 2023, US investors directed \n1 USD to fossil fuels. (That is slightly below the global average of \nUSD 1.8.) \nNew legislative vehicles supporting clean energy investment in the \nUnited States are the Bipartisan Infrastructure Investment and Jobs \nAct of 2021, which allocated around USD 550 billion for clean energy \nand infrastructure, and the US Inflation Reduction Act (IRA) of 2022, \nwhich provides an estimated USD 370 billion in funding to promote \nenergy security and combat climate change.  \nThese incentives are prompting faster deployment and the \ndevelopment of new clean energy manufacturing capacities. By the \nend of 2023, the Infrastructure Investment and Jobs Act allocated \nnearly USD 75 billion to clean energy, including projects related to \ngrid improvement and expansion (USD 21.3 billion), clean energy \ndemonstrations \n(USD 21.5 billion), \nenergy \nefficiency \n(USD 6.5 billion) and clean energy manufacturing and workforce \ndevelopment (USD 8.6 billion). Meanwhile, tax credits from the IRA \nmake clean energy projects in the United States more competitive \nand incentivise investment in vulnerable energy communities. \nThe increase in clean energy investment moves capital flows towards \nalignment with the long-term goal, announced in 2021, to achieve \neconomy-wide net zero emissions by 2050. However, clean energy \ninvestors have faced some headwinds, including high financing costs \ndue to higher benchmark interest rates (that reached over 5.0% since \nthe summer of 2023). Permitting issues and the finalisation of tax \ncredit guidance under the IRA have also meant delays in some cases. \nThe United States is the world’s largest oil and gas producer, and its \nspending on fossil fuel supply – more than USD 200 billion – accounts \nfor around 19% of the global total. The United States is home to \naround 40% of the wave of new LNG export capacity that is set to \ncome to market in the second half of the decade. US spending on \nclean fuels is also on the rise, amid a surge of interest in opportunities \nfor low-emissions hydrogen and CCUS.  \nIn the IEA’s Announced Pledges Scenario (APS), lower demand for \nfossil fuels brings a significant reduction in upstream and midstream \nspending, while investments in low-emissions power double and in \nenergy efficiency nearly triple by 2030.  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 183  \nRegional deep dive \nLatin America and the Caribbean \n\n\nWorld Energy Investment 2024 \n \nPAGE | 184  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNotes: Sovereign yields of bonds in local currency (range of Brazil and Mexico). bps = basis points. 2016-20 investment reflects annual averages over the five years \nbetween 2026 and 2020, similar with other periods. Debt rating reflects the credit rating range for various countries in the region.  \nSource: Moody’s credit ratings (only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nC – A2\n268 – 482 bps \n48%\nSovereign debt \nrating\nCountries with NZE \ncommitments\nLatin America\nWorld\nEconomic and \nfinancial indicators\n7%\n8%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n18,382 \n20,952 \n1.5% 1.8%\n279 \n371 \n0.8 1.8 \n2.2 \n4.7 \n6.5 \n10.5 \nPopulation\nGDP\n4%\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 100\n 200\n 300\n 400\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 185  \nRegional deep dive \nLatin America has been a leader in clean energy but needs to step up investment to stay ahead\nLatin America and the Caribbean (LAC), a diverse region of more \nthan 30 countries, accounted for 7% of the world’s GDP in 2023, \nwhile income per capita is slightly below the world average. LAC \ncountries have generally been prone to high inflation, high debt and \nfiscal issues, although sovereign credit ratings vary from debt in \ndefault (Venezuela) to upper-medium grade (Chile). LAC had a \nperiod of slow growth the past decade, where the region’s GDP \nexpanded at about one-third of the average global pace. This partially \nexplains why energy investment has been relatively low. \nFossil fuels represent two-thirds of the energy mix, well below the \nworld average of 80%. The use of coal is quite low, but oil use –\nmainly for transport but also for industry – is relatively high, despite a \nshare of biofuels in road transport that is twice the global average. \nThe use of renewable energy has been central to LAC, where \nrenewables represent a 60% share of the power mix (double the \nworld average). LAC has a legacy of strong use of hydropower for \nelectricity production, with many large dams built long ago. While its \ngrowth prospects are limited, hydro remains important for flexibility. \nThere has been strong momentum for clean investments in parts of \nthe region, and spending in fossil fuels has also risen in recent years. \nLAC’s overall ratio of clean energy to fossil fuels investment just \nunder half the 2023 global average.  \nEnergy investment is set to reach USD 185 billion in 2024, a record \nhigh. The power sector accounts for over 35%, while fossil fuels \nsupply represents almost 55% and end-use less than 10%. \nRenewables and storage continue their strong growth, with solar \nleading on deployment (including small-scale projects), investment in \nstorage accelerating in Chile (to reduce transmission bottlenecks) \nand even offshore wind picking up in Brazil and Colombia. Many \ncountries are also developing long-term hydrogen strategies and \nimplementing pilot projects, especially in Brazil (where a 1.2GW plant \nobtained environmental permits in late 2023) and Chile. Investment \nin the end-use sectors is low: Less than a third of LAC countries have \nminimum energy performance standards for industrial motors or \nhousehold appliances, for example, and few have implemented \nmandatory building codes.     \nAlmost half of the 33 LAC countries pledged to reach net zero \nemissions by 2050, including Brazil, Chile, Costa Rica and Colombia. \nAverage annual clean energy investment over the 2026-2030 period \nneeds to increase four-fold compared to the preceding decade in \norder to get on track for these goals, which would result in fossil fuel \nconsumption peaking this decade. Efforts to reduce the cost of capital \nwill be critical, and will require improving the economic proposition for \nclean investments while also reducing macroeconomic risks. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 186  \nRegional deep dive \nEuropean Union  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 187  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNote: Sovereign yields of bonds in local currency, for Eurozone. bps = basis points. 2016-20 investment reflects annual averages over the five years between 2026 \nand 2020, similar with other periods. Debt rating reflects the credit rating range for various countries in the region. \nSource: Moody’s credit ratings (Aaa is the highest rating, and only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development \nIndicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nBa1 - Aaa\n296 bps\nBy 2050\nSovereign debt \nrating\nNZE commitments\nEuropean Union\nWorld\nEconomic and \nfinancial indicators\n15%\n6%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n54,249 \n20,952 \n1.7%\n1.8%\n925 \n371 \n20%\n10.9 \n1.8 \n35.0 \n4.7 \n48.2 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 100\n 200\n 300\n 400\n 500\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 188  \nRegional deep dive \nClean energy investment in the European Union has risen as governments respond to the \nglobal energy crisis and the cut in Russian gas supplies \nThe European Union (EU) is one of the leading regions for clean \nenergy deployment and policy momentum has intensified in many \ncountries, and at EU level, due to the global energy crisis that \nfollowed Russia’s invasion of Ukraine and its subsequent cut in gas \ndeliveries. In large part because of its reliance on imported fuels, the \nEuropean Union stands out as one of the regions that has the highest \nclean energy to fossil fuels investment ratios: it spends more than \nUSD 10 on clean energy for every USD 1 invested in fossil fuels. \nIn 2023, investment in renewables generation totalled almost \nUSD 110 billion, an increase of more than 6% from the previous year. \nAlthough the cost of capital for renewables has seen a slight rise due \nto supply chain and inflation pressures, renewable investments \nremain very cost-competitive. Denmark and Germany remain at the \nforefront of the wind power sector in Europe, despite ongoing \nprofitability challenges. Spain has led the surge in solar adoption and \nhas seen wholesale electricity prices fall to record lows during periods \nof high solar output – bringing some benefits for consumers but also \na warning sign for some investor revenue streams and the prospects \nfor future investment.  \nA good balance of investment across generation, grids, storage and \ndemand-side flexibility is key. Investment in power grids rose by more \nthan 20% in 2023, nearly reaching USD 65 billion, a very positive \ndevelopment that reflects the need for more grid interconnection, \nespecially to facilitate power flows to central European markets.  \nMeanwhile, there was also ongoing growth in oil and gas \ninvestments, which reached over USD 30 billion in 2023. Investment \nin liquified natural gas (LNG) reached nearly 7 billion, while Europe \nadded more than 50 bcm/year of extra LNG import capacity to switch \naway from Russian gas, mainly via Floating Storage Regasification \nUnits (FSRUs). The Netherlands, Italy, Finland, Greece and \nGermany have all acquired or leased FSRUs. \nThe European Union has set a target to reduce net greenhouse gas \nemissions by at least 55% by 2030, relative to 1990 levels, and to \nreach climate neutrality by mid-century. Alongside a range of policies \nand targets focused on increased deployment of renewables and \nenergy efficiency, there is also a focus on the diversity and resilience \nof clean energy supply chains, both for manufacturing and for critical \nminerals. The European Commission adopted the Net Zero Industry \nAct in June 2024, to bolster the manufacturing of clean technologies, \nwith the objective of meeting 40% of the EU’s deployment needs by \n2030 and reducing today’s reliance on imports. Overall clean energy \ninvestment trends are broadly aligned with the EU’s energy and \nclimate goals. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 189  \nRegional deep dive \nAfrica  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 190  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNotes: Africa includes North Africa and sub-Saharan Africa. Sovereign yields of bonds in local currency show the change for South Africa. bps = basis points. 2016-\n20 investment reflects annual averages over the five years between 2026 and 2020, similar with other periods. Debt ratings reflect the credit rating range for various \ncountries in the region.   \nSource: Moody’s credit ratings (only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nCaa3 – A3\n91 bps\n30%\nSovereign debt \nrating\nCountries with NZE \ncommitments\nAfrica\nWorld\nEconomic and \nfinancial indicators\n5%\n18%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n5,904 \n20,952 \n1.2%\n1.8%\n72 \n371 \n2%\n0.5 \n1.8 \n2.1 \n4.7 \n6.1 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 191  \nRegional deep dive \nBurdened by significant debt repayments, financing for clean energy projects is scarce as the \nneed for concessional support becomes increasingly evident\nAchieving Africa’s energy- and climate-related goals by 2030 will \nrequire annual investments of over USD 200 billion through the end \nof this decade. This will be vital to meet the growing energy needs of \na continent where the median age of the population is 20 years and \naverage GDP per capita is just over one-fourth of the global average.  \nOur \ntracking \nof \nenergy \nspending \nsuggests \nthat \naround \nUSD 110 billion is set to be invested in energy across Africa in 2024, \nof which nearly USD 70 billion to fossil fuel supply and power, with \nthe remainder going to a range of clean energy technologies. \nSpending trends vary widely across Africa, but neither the total \namount nor the proportion spent on clean energy are enough to put \nthe continent on track to reach its sustainable development goals. As \nthey stand, energy investments are equivalent to only 1.2% of the \nregion’s GDP and clean energy investments, while rising, account for \njust 2% of the global total.  \nDebt repayments, which have increased sharply in recent years, \nmean that many African governments have difficulty accessing the \nfunds required for capital-intensive clean energy projects. Moreover, \nlow sovereign debt ratings further limit access to outside investment \n– in 2023, only two countries, Botswana and Mauritius, held \ninvestment-grade ratings. \nOf the clean energy investments that have recently been made, the \nmajority are in renewable power generation. While these projects are \nvital to meet Africa’s rising electricity needs in a sustainable way, the \nprospects for further growth will be limited as long as the grid itself is \nnot upgraded and expanded. With average line losses of 15%, \ninefficient grids and insufficient interconnections are already creating \nbottlenecks for new renewable energy projects in the region. \nEnergy access is among the top priorities in Africa, where 600 million \npeople live without electricity and roughly 1 billion people lack access \nto clean cooking. Financing needs for energy access initiatives fall \nwell short of the annual USD 25 billion that is required to achieve the \n2030 objectives of full access to modern energy. Progress in this area \nwill require concessional finance providers to mobilise grants for the \nmost vulnerable households and support the creation of bankable \nprojects. The provision of other de-risking capital will also be critical \nto allow the private sector to take a more active role.  \nA high cost of capital is a major impediment to scaling up clean \nenergy investments in Africa. Reducing country-wide and project-\nspecific risks will require a major effort from national policymakers, \nbased on clear strategies and ambitious NDCs, alongside \nsignificantly more international financial and technical support.  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 192  \nRegional deep dive \nMiddle East  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 193  \nRegional deep dive \n \n \nIEA. CC BY 4.0 \nNotes: Sovereign yields of bonds not available. 2016-20 investment reflects annual averages over the five years between 2026 and 2020, similar with other periods. \nDebt ratings reflect the credit rating range for various countries in the region.  \nSource: Moody’s credit ratings (only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nCaa1 – Aa1\n-\n42%\nSovereign debt \nrating\nCountries with NZE \ncommitments\nMiddle East\nWorld\nEconomic and \nfinancial indicators\n4%\n3%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n24,222 \n20,952 \n2.3%\n1.8%\n556 \n371 \n1%\n0.2 \n1.8 \n0.7 \n4.7 \n2.9 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n 250\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 194  \nRegional deep dive \nClean energy investment in the Middle East is rising, but it remains dominated by the region’s \ntraditional role as a supplier of oil and gas \nThe Middle East is home to five of the world’s top oil producers: Saudi \nArabia, Iraq, the United Arab Emirates (UAE), Iran, and Kuwait. \nMoreover, it plays a significant role as a producer of natural gas, with \nthree of the world’s top ten producers being Iran, Qatar, and the UAE. \nFor the moment, spending on fossil fuel supply predominates: for \nevery 1 USD invested in fossil fuels, only 20 cents are allocated to \nclean energy investment, which represents approximately one-tenth \nof the average global ratio of clean energy to fossil fuel investment. \nThere are wide disparities in per capita income and energy \nconsumption levels across the region. For example, countries like \nSaudi Arabia, the UAE and Kuwait are situated at the higher end of \nincome and energy consumption, while Yemen and Syria are \npositioned at the lower end. Sovereign credit ratings also vary \nsignificantly. Saudi Arabia, Kuwait, Qatar, and the UAE hold high \nratings, while Jordan, Oman, and Bahrain fall into the medium-grade \ncategory. Conversely, Iraq and Lebanon have very low ratings.  \nEnergy investment in the Middle East is expected to reach \napproximately USD 175 billion in 2024, with clean energy accounting \nfor around 15% of the total investment. In the APS by 2030, clean \nenergy investment more than triples compared with 2024. As a result, \nby the end of the decade, every 1 USD invested in fossil fuels in this \nscenario would be matched by 70 cents going to clean energy.  \nFive of the twelve countries in the region have set net zero emission \ntargets. The UAE and Oman have set targets to achieve net zero \nemissions by 2050, while Saudi Arabia, Bahrain, and Kuwait have \nannounced a target for 2060. Additionally, the UAE has committed to \nreducing emissions by 19% by 2030 from 2019 levels, and it also \npledged USD 30 billion in catalytic capital to launch a climate-focused \ninvestment initiative at COP28. \nThe region’s power sector holds a distinct opportunity for increasing \ninvestment in clean energy technologies, notably for solar PV.  \nHarnessing these resources could substantially decrease reliance on \nboth oil and gas in the power sector. Saudi Arabia, for example, is \ntargeting 130 GW of renewable capacity by 2030, up from less than \n5 GW today. Projects including the large Al Shuaibah solar plant in \nSaudi Arabia and the Mohammed bin Rashid Al Maktoum solar park \nin UAE are underway. Various countries have also announced blue \nand green hydrogen investments, as well as intensifying investments \nin critical minerals. Saudi Arabia, for instance, has established a \nUSD 182 million mineral exploration incentive program. Similarly, the \nUAE is expanding its efforts to establish a presence in the sector, \nincluding through a USD 1.9 billion mining partnership in the \nDemocratic Republic of the Congo and securing new agreements in \ncopper-rich Zambia.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 195  \nRegional deep dive \nChina \n\n\nWorld Energy Investment 2024 \n \nPAGE | 196  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNote: Sovereign bond yields in local currency. bps = basis points. 2016-20 investment reflects annual averages over the five years between 2026 and 2020, similar \nwith other periods. \nSource: Moody’s credit ratings (A1 is investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.   \n \n \n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nA1\n22 bps\nBy 2050\nSovereign debt \nrating\nNZE commitments\nChina\nWorld\nEconomic and \nfinancial indicators\n19%\n18%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n22,695 20,952 \n2.5%\n1.8%\n577 \n371 \n33%\n3.2 1.8 \n13.6 \n4.7 \n20.7 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 200\n 400\n 600\n 800\n1 000\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 197  \nRegional deep dive \nChina is a clean energy powerhouse, although energy security concerns continue to fuel \napprovals of new coal-fired power plants \nChina accounted for 19% of global GDP in 2023 and its annual \neconomic growth rate of 5.2% narrowly exceeded the government’s \nannual target. Despite initial signs that the recovery would be swift, \nChina’s economy continues to face some challenges, notably with a \ntroubled property market. Yields on Chinese sovereign bonds have \nbeen declining steadily since 2021 and reached a record low in March \n2024.The People’s Bank of China, as well as other state-owned \ncommercial banks, have continued to lower their interest rates, in \ncontrast to the upward trend in most other major economies. \nChinese investments in energy remained extremely strong, \naccounting for one-third of clean energy investments worldwide and \nan important share of China’s overall GDP growth. China has \nannounced dual carbon goals – to peak carbon emissions before \n2030 and achieve carbon neutrality before 2060 – and has shown \nremarkable progress in adding renewable capacity. In 2023, China \ncommissioned as much solar PV as the entire world did in 2022 while \nits wind additions also grew by 66% year-on-year. Over the past five \nyears, China also added 11 GW of nuclear power, by far the largest \nof any country in the world. \nThe year 2023 saw robust growth for the so-called “new three” (xin-\nsanyang) industries – solar cells, lithium batteries and electric \nvehicles (EV) – which saw a 30%  jump  in exports in 2023 from a \nyear earlier, making them a major factor  in Chinese trade. These \ntrends are expected to continue into 2024, with the largest portion of \nChina’s investments heading towards low-emission power. \nAmple domestic manufacturing capacity and continued government \nsupport for clean technologies provides a foundation for strong clean \nenergy investment within China. However, pressures are increasing \non China’s ability to export these technologies to other large \ninternational markets, including Europe and the United States. \nAnother issue that requires close attention is China’s continued \ninvestment in fossil fuels, especially coal with nearly all the new global \ncoal-fired capacity. In tandem with its growing renewable capacity, \ncoal still remains the most prominent fuel source in China’s energy \nmix, with coal production reaching a record high in 2023.  While China \naims to ensure that coal and coal-fired power will play a supporting \nrole in its energy system, these developments reflect a strong \nemphasis on energy security in China's energy strategy. \nOverall energy investment levels in China are comparable to the \namounts required to meet national energy and climate goals, \nalthough full alignment with the targets implies a rebalancing away \nfrom investments in fossil fuel supply, towards grids and the end-use \nsectors. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 198  \nRegional deep dive \nIndia  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 199  \nRegional deep dive \n  \nIEA. CC BY 4.0 \nNote: Sovereign bond yields in local currency. bps = basis points. 2016-20 investment reflects annual averages over the five years between 2026 and 2020, similar \nwith other periods. \nSource: Moody’s credit ratings (only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.  \n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nBaa3\n117 bps\nBy 2070\nSovereign debt \nrating\nNZE commitments\nIndia\nWorld\nEconomic and \nfinancial indicators\n7%\n18%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n8,787 \n20,952 \n0.8%\n1.8%\n72 \n371 \n4%\n2.1 1.8 \n7.8 \n4.7 \n22.9 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n 250\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 200  \nRegional deep dive \nIndia’s clean energy investments have grown fast in the past three years in response to \nambitious clean energy targets   \nWith a GDP growth rate of 7.8%, India was the world’s fastest \ngrowing major economy in 2023. Its economy is now the world’s fifth \nlargest, and is on track to become the third largest by 2030 behind \nthe United States and China. However, per capita income is less than \nhalf of the world average, and India’s development priorities remain \nfocused on poverty alleviation, job growth and infrastructure creation.  \nAs a result of its GDP growth potential, urbanisation, growth in built \nspaces, and the increased demand for electricity as well as materials \nsuch as cement and steel, energy demand growth in India is on track \nto outpace all other regions of the world by 2050. This could put \nstrains on its energy system, which for the moment relies heavily on \nimported fossil fuels, especially crude oil and natural gas. In tandem \nwith this sharp rise in energy demand, carbon emissions in India \ncould increase significantly over this period due to a growth in fossil \nfuel use for transport, power generation and industry.  \nTo address these challenges, India has been pursuing a range of \ndecarbonisation and diversification strategies. Most notably, India \nhas a set a target for reaching net zero emissions by 2070. In recent \nyears, India has scaled up solar and wind power investments and \nalso announced measures to promote domestic clean energy supply \nchains. In 2020, India announced the Production Linked Incentives \nscheme to set up domestic manufacturing of solar modules, batteries \nand other clean energy equipment. India also has a long-standing \nenergy efficiency programme in place, as well as a new hydrogen \npolicy that envisions domestic manufacturing of electrolysers and the \nproduction of low-carbon hydrogen.  \nIndia made its debut in the sovereign green bond market in January \n2023. Two tranches of bonds valued at USD 1 billion (INR 80 billion) \nwere marketed primarily to local investors. The issue of bonds – \nwhose proceeds were destined to support renewables, metro rail \nlines, and low-carbon hydrogen production – was more than four \ntimes oversubscribed.    \nSuch initiatives have led to a surge in Indian clean energy investment \nin recent years. Spending reached USD 68 billion in 2023, up by \nnearly 40% from the 2016-2020 average. Almost half of this was \ndevoted to low-emissions power generation, which includes solar PV. \nFossil fuel investment grew by 6% over the same period to reach \nUSD 33 billion in 2023, in response to rising demand for fuel and \ncoal-fired power generation. Clean energy investment is on track to \ndouble by 2030 under today’s policy settings, but would need to rise \nby a further 20% to get fully on track for the country’s energy and \nclimate goals. Addressing risks that push up the cost of capital will be \ncritical in this endeavour.  \n\n\nWorld Energy Investment 2024 \n \nPAGE | 201  \nRegional deep dive \nJapan and Korea \n\n\nWorld Energy Investment 2024 \n \nPAGE | 202  \nRegional deep dive \n \nIEA.  CC BY 4.0. \nNote: Sovereign bond yields in local currency show the change for Korea. bps = basis points. 2016-20 investment reflects annual averages over the five years \nbetween 2026 and 2020, similar with other periods. \nSource: Moody’s credit ratings (A and Aa are investment grade ratings), Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nAa2 – A1\n57 – 217 bps\nBy 2050\nSovereign debt \nrating\nNZE commitments\nJapan and Korea\nWorld\nEconomic and \nfinancial indicators\n5%\n2%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n51,373 \n20,952 \n1.5%\n1.8%\n760 \n371 \n6%\n9.8 \n1.8 \n27.2 \n4.7 \n61.7 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n 250\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 203  \nRegional deep dive \nJapan and Korea have made important steps to expand clean energy investments \nJapan and Korea are two of the most developed economies in the \nAsian region, accounting for 5% of global GDP, with a per capita GDP \nof approximately 2.5 times the global average. Energy investment \nrepresents 1.5% of GDP, and clean energy investment per dollar of \nfossil fuel investment is 9.8 – over five times the global average. This \nreflects recent growth in clean energy investment as well as the fact \nthat both Japan and Korea import almost all of their fossil fuels. From \n2021 to 2023, average annual clean energy investment in Japan and \nKorea increased by around 40% and 10%, respectively, compared \nwith the 2016-2020 average. Both countries have announced targets \nto reach carbon neutrality in 2050 and in our Announced Pledges \nScenario (APS), the countries increase their clean energy investment \nby a further 27% by the end of the decade to align with these goals. \nThis expands investment in low-emission power sources, as well as \nin the decarbonisation of heavy industry and transport.  \nBoth countries are pursuing policies to promote investments in \nenergy transitions. Japan has clarified investment policies and \nindustry-specific roadmaps for its energy transition under the Basic \nPolicy for the Realization of GX. Multiple plans (such as the Basic \nHydrogen Strategy and the CCS Long Term Roadmap) have been \ndeveloped to support innovation and increase investment in the \ndeployment of a range of decarbonisation technologies. Japan is \nintroducing carbon pricing and setting incentives for companies to \naccelerate investments in decarbonisation by announcing plans to \nincrease carbon prices in the future.   \nKorea’s drive for energy security and its transition to clean energy \nsources have spurred substantial investments in recent years. With \nits first National Basic Plan for Carbon Neutrality and Green Growth \nannounced in 2023 (in line with its pledge to achieve carbon neutrality \nby 2050) Korea plans to significantly increase power generation from \nrenewable energy sources as well as nuclear power, develop core \ngreen technologies and nurture new green industries through policy \nand private financing support, alongside improvements to relevant \nsystems. Commitments to boost carbon neutrality policies are backed \nby enhanced financial support, such as climate response funds to \nmobilise private investment. Korea also aims to refine its emission \ntrading systems (ETS) and introduce emissions permit trading. \nInternational export and co-operation are also seen as key pillars of \nKorea’s plan to help finance the energy transition, targeting the \nindustrialisation of nuclear exports, as well as the EV, renewable \nenergy, hydrogen and CCUS industries. Additionally, Korea has \npledged to raise the amount of its development assistance devoted \nto climate and global energy transitions to OECD average levels by \n2025. \n\n\nWorld Energy Investment 2024 \n \nPAGE | 204  \nRegional deep dive \nSoutheast Asia \n\n\nWorld Energy Investment 2024 \n \nPAGE | 205  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNote: Sovereign bond yields in local currency reflect the range of change of Indonesia. bps = basis points. 2016-20 investment reflects annual averages over the five \nyears between 2026 and 2020, similar with other periods. Debt rating reflects the credit rating range for various countries in the region. \nSource: Moody’s credit ratings, Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nCaa3 - Aaa\n34 bps\n80%\nSovereign debt \nrating\nCountries with NZE \ncommitments\nSoutheast Asia\nWorld\nEconomic and \nfinancial indicators\n6%\n9%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\n2023\nEnergy investment \nindicators\n15,753 \n20,952 \n0.7%\n1.8%\n107 \n371 \n2%\n0.8 \n1.8 \n4.7 4.7 \n9.0 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 206  \nRegional deep dive \nMost countries in Southeast Asia now have ambitious long-term clean energy goals, but \ninvestments are not yet on track\nSoutheast Asia accounts for 9% of the world's population, 6% of the \nworld’s GDP and 4% of world energy consumption. The region’s \npopulation is expected to grow to nearly 800 million by 2050; together \nwith continued economic growth this will have strong implications for \nenergy demand. Investment will determine how this rising demand is \nmet, with implications for security, affordability and alignment with \nsustainability goals. Eight out of 10 countries in the region have \nannounced target dates of carbon neutrality: Singapore, Malaysia \nand four others in 2050; Indonesia in 2060; and Thailand in 2065. \nFor the moment, there are significant gaps between investment \ntrends and the region’s long-term goals. Southeast Asia’s spending \non clean energy represents only about 2% of the global total. Annual \naverage energy investment over the last three years was \nUSD 72 billion, but would need to increase to over USD 130 billion to \nalign with the APS by the end of the decade. There would also need \nto be a shift in the allocation of investment towards cleaner \ntechnologies: clean power would be the largest share of investment \n– nearly 40%.  \nSome countries are signalling a shift in priorities. Viet Nam, for \ninstance, approved its 8th Power Development Plan in 2024, which \nseeks to reshape its energy system, including extensive development \nof renewable technologies as well as the use of low-emissions \nhydrogen and ammonia and a reduction in reliance on unabated coal. \nHowever, the implementation plan is not yet fully clear and over \n10 GW of new coal-fired capacity remains in the pipeline.  \nUpdated \nexpansion \nplans \nfor \nlow-emissions \npower \nand \ninfrastructure, and changes in power purchasing agreements, are an \nimportant signal to investors. However, uncertainties remain in many \ncountries over remuneration mechanisms for renewable output, \nwhich continue to affect risk perceptions and the cost of capital.  \nInternational development finance and support is crucial to Southeast \nAsia’s energy transitions. The Just Energy Transition Partnerships \n(JETPs) launched in 2021 in Indonesia and Viet Nam provide a \nframework to mobilise capital for investments in clean energy and \nsupport the phasing out of coal-fired power generation. The release \nof the Indonesia Comprehensive Investment and Policy Plan in \nNovember 2023 was an important milestone for the JETP and is \nexpected to mobilise USD 97 billion in power sector investments in \nIndonesia. The Asia Zero Emission Community initiative by Japan \nprovides financial support of up to USD 8 billion to 2030 for energy \nprojects in participating countries: Indonesia, Philippines, Thailand \nand Viet Nam. The ASEAN Taxonomy and ASEAN Transition \nFinance Guidance provide a valuable framework for the financial \nindustry to improve credibility and transparency to capital providers.\n\n\nWorld Energy Investment 2024 \n \nPAGE | 207  \nRegional deep dive \nEurasia \n\n\nWorld Energy Investment 2024 \n \nPAGE | 208  \nRegional deep dive \n \nIEA. CC BY 4.0 \nNote: Sovereign bond yields in local currency, reflecting the range of Russia. bps = basis points. 2016-20 investment reflects annual averages over the five years \nbetween 2026 and 2020, similar with other periods. \nSource: Moody’s credit ratings (only Aaa, Aa, A and Baa are considered investment grade), Refinitiv Eikon, World Development Indicators and IEA analysis.\n2023\nGDP per capita (USD)\nShare of the world\nChange in \ngovernment bond \nyield (2023 vs 2020)\nB3 – Baa2\n539 bps\n56%\nSovereign debt \nrating\nCountries with NZE \ncommitments\nEurasia\nWorld\nEconomic and \nfinancial indicators\n4%\n3%\nGrids & storage\nLow-emissions \nelectricity\nClean supply\nFossil fuel power\nEnd-use\nFossil fuel supply\nEnergy investment\n% of GDP\nInvestment per capita \n(USD)\nClean energy investment as a \nshare of global\nRatio of clean energy to fossil fuel \ninvestment\nAPS 2030\nNZE 2030\nNZE 2030\nEnergy investment \nindicators\n25,882 \n20,952 \n2.0%\n1.8%\n525 \n371 \n1%\n0.2 \n1.8 \n0.5 \n4.7 \n2.9 \n10.5 \nPopulation\nGDP\nEnergy investment \ntrends and amounts \nrequired to align \nwith energy & \nclimate goals\n 50\n 100\n 150\n 200\n2016-20\n2021-23\n2024e\n2026-30 APS\n2026-30 NZE\nBillion USD (2023, MER)\n\n\nWorld Energy Investment 2024 \n \nPAGE | 209  \nRegional deep dive \nEurasia navigates a complex energy landscape, characterised by heavy reliance on fossil fuels, \nand an urgent need to ramp up investments in clean energy\nEurasia is a heterogeneous region in energy terms, containing major \nfossil fuel producers and exporters, as well as countries like Georgia, \nTajikistan, and Kyrgyzstan that obtain around 85% of their electricity \nfrom hydro sources. The overall share of natural gas in the energy \nmix is one of the highest in the world, but gas infrastructure is ageing \nand often poorly maintained. \nThe region has been hit hard by energy instability in recent years. \nUkraine’s energy infrastructure has been targeted by Russian forces \nfollowing the 2022 invasion. High prices have had widespread \nimpacts on energy-importing countries and traditional energy \nrelationships between countries have been shaken.  \nLevels of energy investment in Eurasia have stalled in recent years \nat around USD 110 and USD 120 billion per year, with around 80% \nof this going to fossil fuels. At around USD 20 billion, annual clean \nenergy spending in the region is far below its potential, the result of \nsignificant obstacles that include pervasive fossil fuel subsidies and \npolicy frameworks that are generally weak and unclear. \nThe global energy crisis has prompted rising interest in the potential \nfor clean energy. Azerbaijan’s hosting of the COP29 summit in 2024 \npresents an opportunity to give new momentum to energy transitions \nthrough efforts to scale up clean power and to reduce emissions from \nfossil fuels. Five countries in the region have set net zero targets: \nArmenia ,Georgia and the Kyrgyz Republic aim to achieve net zero \nemissions by 2050. Russia and Kazakhstan have set a target of 2060. \nExcept for Russia, all countries in the region have signed the Global \nMethane Pledge.  \nGetting on track to achieve these commitments requires a steady \nincrease in energy investment. In the APS, energy investment is \nprojected to reach around USD 145 billion by 2030, with the share of \nclean energy investment reaching more than one third. \nThe oil and gas investment picture is subject to a high degree of \nuncertainty. Russia is looking to compensate for the loss of European \nmarkets by seeking out new markets in China and South Asia. This \nhas largely succeeded for oil but putting in place new export \ninfrastructure for gas has proved to be much more difficult. Russia \nhas stepped up its bilateral agreements with Eurasian countries, \nhowever, including plans for fossil fuel and nuclear plant projects. In \n2023, Russia signed an agreement with Kyrgyzstan for the \nconstruction of a new coal-fired plant (660 MW). As part of its push \nto open up new markets, Russia has also been seeking oil and gas \nsupply and transit arrangements with Central Asia.\n\n\n World Energy Investment 2023 \n \nPAGE | 210  \nAnnex \nAnnex \n \n\n\n World Energy Investment 2023 \n \nPAGE | 211  \nAnnex \nAcknowledgements \nThis report was prepared by the Energy Investment Unit in the Office \nof the Chief Energy Economist (OCEE) Division of the Directorate of \nSustainability, Technology and Outlooks (STO). It was designed and \ndirected by Tim Gould, Chief Energy Economist, and Cecilia Tam, \nHead of the Energy Investment Unit (acting). Tanguy de Bienassis \nco-ordinated the report and led the section on end use and efficiency. \nEmma Gordon led the section on energy finance; David Fischer and \nAlana Rawlins Bilbao led the analysis of the power sector, along with \nLucila Arboleya, who also designed the regional section. Courtney \nTurich and Jérôme Hilaire were the main authors of the section on \nfuel supply; Simon Bennett led the chapter on R&D and technology \ninnovation. Ryszard Pospiech co-ordinated modelling and data \nacross sectors. Musa Erdogan contributed to the overview and data \nvisualisation. Eleni Tsoukala provided essential administrative \nsupport. \nOther main authors of the report were Paul Grimal (sources of \nfinance, industry), Jeanne-Marie Hays (bioenergy, ccus), Zoe Hemez \n(regional section & grids), Heeweon Hyun (cross-cutting support), \nTae-Yoon Kim (refining & critical minerals), Haneul Kim (sources of \nfinance, buildings & China), Luca Lo Re (carbon markets), Siddharth \nSingh (cross-cutting support), Alessia Stedile (sustainable finance), \nJemima Storey (cross-cutting support), Ryo Yamasaki (sustainable \nfinance), Peter Zeniewski (LNG). \nThe report benefited greatly from contributions from other experts \nwithin the IEA: Yuya Akizuki (upstream), Oskaras Alsauskas \n(transport), Carlos Alvarez (coal), Heymi Bahar (renewables), Jose \nMiguel \nBermudez \nMenendez \n(hydrogen), \nCharlene \nBisch \n(modelling), Tomas Bredariol (methane, coal), Michael Drtil (grids), \nStavroula Evangelopoulou (hydrogen), Mathilde Fajardy (CCUS), \nCarl Greenfield (CCUS),  Ian Hamilton (buildings), Jean-Baptiste Le \nMarois (transport, R&D and technology innovation), Suzy Leprince \n(R&D and technology innovation),  Laura Mari Martinez (renewables), \nJeremy Moorhouse (bioenergy), Aloys Nghiem (R&D and technology \ninnovation), Francesco Pavan (hydrogen), Apostolos Petropoulos \n(transport), Amalia Pizarro (R&D and technology innovation), Max \nSchoenfisch (batteries), Jules Sery (transport), Fabian Voswinkel \n(buildings), Brent Wanner (power), David Wilkinson (power). \nValuable comments and feedback were provided by senior \nmanagement and other colleagues within the IEA, in particular Laura \nCozzi, Brian Motherway, Alessandro Blasi, Toril Bosoni, Christophe \nMcGlade, Nicholas Howarth, David Martin, Rebecca McKimm, Jacob \nMessing,  Vida Rozite, Thomas Spencer and Daniel Wetzel. \nThanks also to Curtis Brainard, Poeli Bojorquez, Astrid Dumond, \nJethro Mullen, and Therese Walsh of the Communications and Digital \nOffice. Nicola Clark edited the manuscript and Lorenzo Squillace \ndesigned the cover.  \n\n\n World Energy Investment 2023 \n \nPAGE | 212  \nAnnex \nThis report could not have been achieved without the support and co-\noperation provided by donors to the IEA Clean Energy Transitions \nProgramme (CETP) notably: Australia, Belgium, Canada, Denmark, \nFrance, Germany, Ireland, Italy, Japan, the Netherlands, Spain, \nSweden, Switzerland, United Kingdom, United States and the \nEuropean Commission, on behalf of the European Union. The \nfinancial assistance of the European Union was provided as part of \nits funding of the Clean Energy Transitions in Emerging Economies \n(CETEE) program within the CETP. \nMany experts from outside of the IEA provided input, commented on \nthe underlying analytical work, and reviewed the report. Their \ncomments and suggestions were of great value. They include: \nAndrei Balazs \nBrookfield \nAntoni Ballabriga \nBBVA \nHarmeet Bawa \nHitachi Energy \nImene Ben Rejeb-Mzah \nBNP Paribas \nGuy Brindley \nWindEurope \nBarbara Buchner \nClimate Policy Initiative \nAnne-Sophie Castelnau \nING \nMichael Chen \nOxford Institute for Energy \nStudies \nDeirdre Cooper \nNinety-One \nJakob Forman \nOrsted \nMasayuki Fujiki \nMUFG Bank \nCharlotte Gardes \nInternational Monetary Fund \nPablo Gonzalez Gascon \nIberdrola \nFrancesca Gostinelli \nENEL \nAdil Hanif \nEBRD \nDavid Hart \nGeorge Mason’s Schar School of \nPolicy and Government \nJames Henderson \nOxford Institute for Energy \nStudies \nRonan Hodge \nGFANZ \nSean Kidney \nClimate Bonds Initiative \nFrancisco Laveron Simavilla \nIberdrola \nEvan Li \nHSBC \nJuan Lopez Diaz \nIberdrola \nAkos Losz \nColumbia University \nPeter Morris \nMinerals Council of Australia  \nArjun Murti \nVeriten \nFatoumata Ngom \nOECD \nNandita Parshad \nEBRD \nStephanie Pfeiffer \nIIGCC \nFilippo Ricchetti \nEni \nSimone Ruiz-Vergote \nMSCI \nToshiyuki Shirai \nMinistry of Economy, Trade and \nIndustry, Japan \nUlrik Stridbaek \nOrsted \nTae Tamura \nMizuho Financial Group \nAkhilesh Tilotia \nNational Investment and \nInfrastructure Fund \n\n\n\n\n World Energy Investment 2023 \n \nPAGE | 213  \nAnnex \nTom Tindall \nBrookfield \nBetsy Winnike \nBoston Counsulting Group \nKelvin Wong \nDBS Bank \n\n\n World Energy Investment 2023 \n \nPAGE | 214  \nAnnex \nAbbreviations and acronyms \nADNOC \nAbu Dhabi National Oil Company \nAPS \nAnnounced Pledges Scenario \nCCGT \nCombined-Cycle Gas Turbine \nCCS \nCarbon Capture and Storage \nCCUS \nCarbon Capture, Utilization and Storage \nCO2 \nCarbon Dioxide \nCVC \nCorporate Venture Capital \nDAC \nDirect Air Capture \nEMDE \nEmerging Markets and Developing Economies \nESG \nEnvironmental, Social, and Governance \nETS \nEmissions Trading Scheme \nEUR \nEuro \nEV \nElectric Vehicle \nFID \nFinal Investment Decision \nFSRU \nFloating Storage Regasification Unit  \nGBP \nBritish Pound Sterling \nGDP \nGross Domestic Product \nGHG \nGreenhouse Gas \nICE \nInternational Combustion Engine \nICT \nInformation and Communications Technology \nIRR \nInternal Rate of Return \nIT \nInformation Technology \nJPY \nJapanese Yen \nkm \nKilometre \nLCOE \nLevelized Cost of Electricity \nLNG \nLiquified Natural Gas \nLNG \nLiquefied Natural Gas \nM&A \nMergers & Acquisition \nMDB \nMultilateral Development Banks \nMENA \nMiddle East and North Africa \nMI \nMission Innovation \nNOC \nNational Oil Company \nNZE \nNet Zero By 2050 Scenario \nOCGT \nOpen-Cycle Gas Turbine \nOECD \nOrganisation For Economic Co-Operation and Development \nOPEC \nOrganization of The Petroleum Exporting Countries \nPACE \nProperty-Assessed Clean Energy \nPV \nPhotovoltaic \nR&D \nResearch and Development \nRD&D \nResearch, Design, and Development \nREE \n Rare Earth Elements \nROIC \nReturn On Invested Capital \nS&P \nStandard & Poors \nSAF \nSustainable Aviation Fuel \nSES \nSolid Energy Systems \nSOE \nState-Owned Entity \nSTEPS \nStated Policies Scenario \nUICI \nUpstream Investment Cost Index \nUSD \nUnited States Dollar \nVC \nVenture Capital \nWACC \nWeighted Average Cost of Capital \nWEI \nWorld Energy Investment \n\n\n World Energy Investment 2023 \nPAGE | 215  \nAnnex \nUnits of measure \ng \nGram \nGW \nGigawatt \nGWh \nGigawatt Hour \nkg \nKilogram \nmb/d \nMillion Barrels of Oil per Day \nkb/d \nThousand Barrels of Oil per Day \nMBtu \nMillion British Thermal Units \nMt \nMillion Tonnes \nMW \nMegawatt \nMWh \nMegawatt Hour \nTWh \nTerawatt Hour","difficulty":"easy","domain":"Single-Document QA","length":"medium","question":"The IEA’s 2024 World Energy Investment report highlights a significant imbalance in clean energy investments between advanced economies and EMDEs (excluding China), with the latter receiving only around 15% of global clean energy spending. In light of this, assume the following conditions:\n\nThe cost of capital in EMDEs is on average twice as high as in advanced economies.\nDevelopment Finance Institutions (DFIs) have limited capacity to mobilize private capital at the scale required to meet COP28 goals.\nGovernments in EMDEs face rising public debt levels, making large-scale public borrowing for clean energy investments politically and economically untenable.\nGiven these constraints, which combination of policies would best optimize the mobilization of private capital, reduce systemic financial risks, and ensure alignment with the energy transition targets outlined in the IEA’s Net Zero Emissions by 2050 Scenario (NZE Scenario)?","sub_domain":"Financial"}

Source: https://huggingface.co/datasets/zai-org/LongBench-v2

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