Global energy investment continues to grow and is expected to reach $3.3 trillion by 2025. This is the estimate provided by the International Energy Agency in its tenth annual report. Although most of the funds will be allocated to clean technologies, worrisome imbalances persist.
According to the report, more than two-thirds of global investments will be directed towards renewable sources, energy efficiency, storage, and electrification. In total, a record figure of $2.2 trillion is expected to be invested in these sectors. China will lead the spending, with an investment almost equal to that of Europe and the United States combined.
Solar energy will be the main recipient of funds, with around $450 billion. Financing for storage with batteries and energy efficiency will also increase. In contrast, investment in fossil fuels will be half that amount, around $1.1 trillion.
However, there is a critical point: electric grids are not receiving the same boost. With only $400 billion foreseen, they are far behind the needs to absorb all the projected clean energy.
A Structural Challenge for the Transition to Clean Energies
For the shift towards clean energies to be successful, safe transportation and distribution of the new renewable generation is necessary. However, current grids, especially in developing countries, are not prepared for such a massive transformation.
The report warns that if investment in grids is not equal to that in generation by the early next decade, serious bottlenecks could arise. Administrative processes’ slowness and limitations in supply chains further complicate the situation.
Moreover, inequality in resource distribution is evident. Africa, home to 20% of the world’s population, will receive only 2% of the investment in clean energies. In contrast, China increases its participation year after year, especially in solar, wind, and electric vehicles.
On the other hand, financing for polluting technologies still persists. Nuclear energy will receive more than double the investment it did before the pandemic in 2025. While investment in oil exploration will decrease slightly, liquefied natural gas shows sustained growth.
Sustainability Also Requires Infrastructure
The report concludes that achieving a fair, clean, and resilient energy system not only requires a focus on renewables but also ensuring that energy can circulate efficiently. Therefore, accelerating the construction of modern and flexible networks is crucial.
The current drive towards clean sources is encouraging, but without adequate transmission infrastructure, the energy transition risks being truncated. The climate urgency demands faster action and a balanced approach between generation and distribution.
The Economic Challenges of the Energy Transition
One of the main obstacles to an effective energy transition is the high initial cost associated with many clean technologies. While they are more sustainable and economical in the long term, the initial investment in infrastructure, research, and development poses a significant barrier for many countries, especially those with developing economies.
Furthermore, existing subsidies for fossil fuels hinder the competitiveness of renewable energies. In many cases, maintaining oil, gas, or coal is immediately cheaper, discouraging the shift to cleaner sources despite their environmental and social benefits.
The lack of accessible financing and international support mechanisms also limits progress. Without a global financial commitment and public policies that reduce investment risks, the energy transition could be delayed, perpetuating dependence on polluting sources.
