In 2024, annual investment in energy transition technologies passed $2 trillion for the first time.
Since 2020, investments have more than doubled, according to BloombergNEF’s annual report, published today. But the total is still only 37% of what’s required annually to keep the world on track for net zero by 2050.
“Annual clean spend needs to average $5.6 trillion between 2025 and 2030…a 168% increase from 2024’s figure,” the report found.
Additionally, growth slowed down compared to previous years, to just 10.7% in 2024 — versus between 24% and 29% in each of the three previous years.
A divide between established and emerging sectors
Some sectors have been faring better than others.
Electric transport and renewable energy — at $757 billion and $728 billion respectively — and power grids, at $390 billion, all set new records, accounting for 90% of the total investment. That said, while electrified transportation is the largest investment category, it’s also the one that has the most ground to make up. In order to reach 2050 targets, investments in the sector should total $3 trillion for the rest of this decade, BNEF found.
Meanwhile, energy storage saw a 36% growth, reaching $53.9 billion. However, just this week, the U.S. Solar Energy Industries Association made public an aggressive goal for storage deployment: 700 gigawatt-hours on the grid by 2030, or 55% higher than most current forecasts.
These are all mature sectors, with de-risked, proven technologies, and well-established and scalable business models. On the emerging technologies front, though, things are less rosy.
“Emerging” sectors — clean industry, electrified heat, clean shipping, hydrogen, carbon capture, and nuclear — together attracted only 7% of the $2 trillion, or $154 billion. And the group actually saw a decline in investment of over 20% since 2023.
Nuclear investment specifically remained flat at $34.2 billion, despite the enthusiasm over artificial intelligence’s need for clean firm power — and the resulting talk of a potential nuclear resurgence. Investments in hydrogen declined by more than 40%, and investments in carbon capture technologies declined by half.
China’s continued, and renewed, dominance
This time last year, China was investing more in energy transition technologies than any other economy in the world — but nonetheless the gap between China and the West was narrowing. That’s not the case anymore.
The country accounted “for two-thirds of the global increase seen last year,” with $818 billion in investments, more than double the $338 billion of the US, and a 20% year-on-year growth.
“Normalizing for the size of economy gives the same result, with mainland China’s investment equivalent to 4.5% of its GDP — a much higher share than the EU-27 (2.0%), the US (1.2%),” the report notes.
Given that 2023’s narrowing of the investment gap between China and the rest of the world was driven largely by incentives provided by the Inflation Reduction Act, President Donald Trump’s pause on deploying IRA funds is likely to be a blow to the U.S. industry’s prospects, at least in the short term. China, in comparison, shows no signs of slowing down.
