Progress, Shortfalls and Emerging Opportunities in Energy Transition Investment

2.4 trillion dollars was invested in the energy transition in 2024 – a record high and a 20% increase from the average annual levels of 2022/23.

The latest report shows that investment in energy transition technologies continues to rise sharply, yet at slower pace compared to previous years.

About one-third of energy transition investment in 2024 was directed towards renewable energy technologies, pushing renewable energy investment to USD 807 billion.

96% of renewable energy investments went to the power sector, continuing a long-term trend. Solar PV hit a record 49% increase, with USD 554 billion invested in 2024.

The investments across key energy transition technologies still fall short of the level required to align with IRENA’s Outlook outlined in the Delivering on the UAE Consensus progress report on tripling renewable power capacity by 2030.

The largest increase is required for investment in energy efficiency. Investment in green hydrogen, and carbon capture and storage (CCS) declined in 2024, and must increase sharply. Although battery storage investments sustained strong growth through 2024, they still need to triple.

Beyond solar, investment across other renewable technologies, including onshore and offshore wind, marine energy, geothermal power, bioenergy and hydropower, remains far below what is needed to achieve the tripling renewable power target by 2030.

Dedicated policy support and tailored financing solutions are needed for each technology and context to address the global investment shortfall.

Investments in renewable power, grids and battery storage, essential to meet the pledge to triple renewable power capacity by 2030, exceeded fossil fuel investments in 2024.

Yet, fossil fuel spending is on the rise. Public finance plays a pivotal role in energy transition and public financial flows should lead the shift away from fossil fuels and be used to steer much larger private investments.

Significant disparity persists in the distribution of renewable energy investments that remain concentrated in China and advanced economies who have access to sufficient and affordable finance.

Only 2% of the record USD 807 billion invested in renewables in 2024 reached the least developed countries. This chronic lack of investment continues despite pressing energy needs, with over 666 million people still remaining without electricity.

The distribution of renewable energy investments remains disproportionate, especially relative to regional shares of the global population. Per capita, China, Europe, North America and Oceania receive around 15 times more investment than Sub-Saharan Africa.

The continued reliance on private profit-driven capital is leaving some countries behind. The public sector must drive the transition in contexts where private capital is not available.

Impact-driven finance, including concessional loans with low interest rates and long repayment periods, will be crucial to avoid exacerbating debt burdens particularly in emerging markets and developing countries.

Investment decisions should be based on additional factors that encompass climate, environmental, socio-economic and development goals in addition to profit potential. Moreover, transparent and robust frameworks are needed to channel impact-driven financing such as grants into renewable energy projects.