Record-Breaking Energy Transition Investments in 2024: A Step Forward but Not Enough
In an unprecedented move, global investments in energy transition technologies soared to $2.1 trillion in 2024, according to BloombergNEF. This marks an 11% increase from the previous year, driven by advancements in electric vehicles (EVs), renewable energy sources, and modernized grid infrastructure. Despite these promising numbers, experts maintain that the current investment levels are inadequate to meet the ambitious global climate targets.
As part of their strategy to combat climate change, nations are significantly boosting their investments in low-carbon energy. However, this increase is still insufficient to achieve the Paris Agreement goals. Bloomberg’s Energy Transition Investment Trends report indicates that global investment must triple to $5.6 trillion annually from 2025 to 2030 to reach net-zero emissions by 2050.
Understanding the Role of Energy Transition Investments
With the energy sector responsible for approximately 75% of global greenhouse gas emissions, its transformation is critical for climate change mitigation. Rising global temperatures underscore the urgency for a shift to clean energy sources. Countries aim to sustainably reduce emissions, striving to keep global temperature rise below 2°C and ideally at 1.5°C. Achieving these targets necessitates the energy sector’s transition to net-zero emissions by 2050.
Transitioning involves systematically phasing out fossil fuels and eliminating inefficient subsidies that obstruct the shift to renewable energy.
Addressing the Funding Challenge
While investments in sustainable solutions like EVs and renewable energy provide hope for a low-carbon economy, a significant funding gap remains. The $2.1 trillion investment in 2024 represents only 37% of the $5.6 trillion required annually from 2025 to 2030 to meet net-zero goals.
Closing this gap demands not only increased funding but also decisive policies and enhanced international cooperation. Governments must act boldly to scale up efforts, eliminate barriers, and foster innovation within energy sectors. Accelerated progress in renewable energy, electrified transport, and grid modernization is essential.
Leading Sectors in Energy Investment
Electrified transport was the standout sector in 2024, attracting $757 billion in funding. Investments included electric cars, commercial EV fleets, public charging networks, and fuel cell vehicles. This surge underscores a global shift towards cleaner mobility solutions.
Renewable energy also saw significant investments, with $728 billion directed towards wind, solar, biofuels, and other green power sources. Power grid modernization followed, securing $390 billion for upgrades, while nuclear investment remained flat at $34.2 billion.
Conversely, emerging technologies like electrified heat, hydrogen, carbon capture and storage (CCS), nuclear, clean industry, and clean shipping attracted only $155 billion—a 23% decline from the previous year. Challenges such as affordability and scalability hindered further investment in these areas.
Mature vs. Emerging Technologies in Clean Energy
Bloomberg’s report classifies energy investments into “mature” and “emerging” sectors. Mature technologies, including renewables, energy storage, EVs, and power grids, attracted $1.93 trillion, dominating global energy transition funding. Emerging sectors, such as hydrogen and CCS, received only $154 billion, representing 7% of total investments.
Mature technologies continue to see growth despite challenges like higher interest rates and shifting policies, thanks to their proven scalability and established business models. In contrast, emerging technologies struggle with high costs and unproven scalability, resulting in a 23% decline in investment.
China’s Dominance in Energy Investments
In 2024, mainland China led the global energy transition investment race, contributing $818 billion—a 20% increase from the previous year. This growth accounted for two-thirds of the global increase, with sectors like renewables, energy storage, nuclear, EVs, and power grids experiencing robust development. China’s investment surpassed the combined efforts of the US, EU, and UK.
China’s energy investment now equates to 4.5% of its GDP, outpacing other countries like the US and EU. The US ranks as the second-largest market with $338 billion, followed by Germany with $109 billion in clean energy investments. India and Canada also contributed to global growth, increasing their investments by 13% and 19%, respectively.
Future Projections for Clean Energy Spending
Bloomberg’s forecast anticipates a sharp rise in clean energy spending post-2030. Between 2031 and 2035, annual investments are expected to reach $7.6 trillion—3.6 times higher than 2024 levels and a 37% increase from the expected annual spending between 2025 and 2030.
Electrified transport, encompassing EVs and charging infrastructure, will continue to lead investments as demand for clean mobility grows. This trend supports the transition to a low-carbon future.
As the world navigates uncertain political priorities and economic conditions, the trajectory of clean energy funding remains a critical area to watch.
Original Story at carboncredits.com