• China tops combined US, EU investments
• Africa remains trapped in capital quandary

Sopuruchi Onwuka

Despite the deceleration of demand migration from fossil fuels amid supply uncertainties from new energy sources, investors have continued to express strong confidence in the future of green energy which now commands global investment decisions.

And China which currently leads energy demand in the international markets has gone bullish with investments in its energy future, overtaking combined investments from rival Europe and United States as the world’s single largest investor in energy.

The new trend of investments which has been reported by multiple industry advisory groups confirm rising realization among nations, energy industry players and consumers that changes in the current energy choices and paterns in effective demand have become urgent as the world contents with extreme weather conditions associated with climate change.

The Oracle Today reports that demand for just and equitable energy transition by petroleum producers and developing economies in Africa, Middle East and Asia (AMEA) continue to align with the energy policies of the Trump administration of the United States and advance counter-narratives against prevailing global movement for energy transition.

But it does appear that the United Nations Framework Convention on Climate Change (UNFCCC) has already set off irreversible implementation of global accords which commits nearly every member country to climate action which mainly entails gradual phase out of fossil energy consumption while rapidly developing renewable energy sources that cause minimal global warming.

A report by the International Energy Agency (IEA) shows that while hydrocarbon energy industry continues to attract huge investments to meet prevailing surge in demand, changing energy policies enuciated by governments as well as investment patterns by commercial players in the energy industry continue to demonstrate gravitation towards sustainable energy development.

In a report released this weekend, the IEA declared that over 67 percent or $2.2 trillion of $3.3 trillion global energy investments in 2025 will be in clean energy solutions.

According to the agency which provides industry advisory services to world’s most industrialized countries that form the Organization of Economic Cooperation and Development (OECD), a third of the total investments earmarked for 2025 will come from clean energy technologies, including renewables, nuclear and energy storage, and solar which is projected to attract the biggest cash deployment.

The agency observes that despite headwinds from elevated geopolitical tensions and economic uncertainty, 2025 is set to witness surge in global energy investment, with clean energy technologies attracting twice as much capital as fossil fuels.

The report noted that investment in renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification remains on course to hit a record $2.2 trillion. It pointed out that the emphasis on clean energy sources reflects not only efforts to reduce emissions but also the growing influence of industrial policy, energy security concerns and the cost competitiveness of electricity-based solutions.

The IEA also stated in the 2025 edition of its annual World Energy Investment report that oil, natural gas and coal would still command significant $1.1 trillion; indicating that fossil energy, especially oil and gas, still presents considerable commercial incentives for players.

In addition to a comprehensive assessment of the current investment landscape across fuels, technologies and regions, this 10th edition of the World Energy Investment report evaluated some of the major changes over the past decade.

Executive Director of IEA, Fatih Birol, declared: “Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment this year to a record $3.3 trillion as countries and companies seek to insulate themselves from a wide range of risks.”

She stated that “the fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects.”

“When the IEA published the first ever edition of its World Energy Investment report nearly ten years ago, it showed energy investment in China in 2015 just edging ahead of that of the United States.

“Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union – and almost as much as the EU and United States combined,” Dr Birol added.

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

Today’s investment trends clearly show a new Age of Electricity is drawing nearer, the report stated.

A decade ago, investments in fossil fuels were 30% higher than those in electricity generation, grids and storage. This year, according to IEA, electricity investments are set to be some 50% higher than the total amount being spent to bring oil, natural gas and coal to market.

Globally, spending on low-emissions power generation has almost doubled over the past five years, led by solar PV. Investment in solar, both utility-scale and rooftop, is expected to reach $450 billion in 2025, making it the single largest item in the global energy investment inventory. Battery storage investments are also climbing rapidly, surging above $65 billion in the year.

The IEA also stated that capital flows to nuclear power have grown by 50% over the past five years and are on course to reach around $75 billion in 2025. It added that rapid growth in electricity demand also underpins continued investment in coal supply, mainly in China and India.

In 2024, China started construction on nearly 100 gigawatts of new coal-fired power plants, pushing global approvals of coal-fired plants to their highest level since 2015.

In a worrying sign for electricity security, investment in grids, now at $400 billion per year, is failing to keep pace with spending on generation and electrification.

The IEA noted in the report that maintaining electricity security would require investment in grids to rise towards parity with generation spending by the early 2030s; adding that “this is being held back by lengthy permitting procedures and tight supply chains for transformers and cables.”

Lower oil prices and demand expectations are set to result in the first year-on-year fall in upstream oil investment since the Covid slump in 2020, according to the report.

The agency noted that the expected 6.0 % drop is driven mainly by a sharp decline in spending on US tight oil. By contrast, it observed, investment in new liquefied natural gas (LNG) facilities is on a strong upward trajectory as new projects in the United States, Qatar, Canada and elsewhere prepare to come online.

“Between 2026 and 2028, the global LNG market is set to experience its largest ever capacity growth,” the IEA stated.

The Oracle Today reports that the recognition of natural gas as clean energy has helped unlock regulatory and funding opportunities for new petroleum development especially in Africa where clean energy developments have been quite low.

The IEA also noted that spending patterns would remain very uneven globally, with many developing economies, especially in Africa, struggling to mobilize capital for energy infrastructure.

“Today, Africa accounts for just 2% of global clean energy investment. Despite being home to 20% of the world’s population and rapidly growing energy demand, total investment across the continent has fallen by a third over the past decade due to declining fossil fuel spending and insufficient growth in clean energy,” according to the IEA report.

 To close the financing gap in African countries and other emerging and developing economies, the agency stated that international public finance needs to be scaled up and used strategically to bring in larger volumes of private capital.