Global investments in the energy transition reached a new record of $2.4 trillion in 2024—a 20% increase compared to the average annual levels of 2022–23. About one-third of this amount was directed to renewable energy technologies, bringing investment in renewables to $807 billion, according to the International Renewable Energy Agency (IRENA).
Despite this milestone, the annual growth rate of renewables slowed significantly, with annual investments increasing 7.3% in 2024, compared to 32% the previous year, according to a new report by IRENA and the Climate Policy Initiative (CPI).
The report, Global Energy Transition Finance Outlook 2025, released ahead of the UN Climate Conference COP30 in Belém, Brazil, aims to inform global financial dialogue and support delegations by tracking investments in renewable energy technologies and their supply chains, analyzing regional trends, sources, and financial instruments.
Key findings include that 96% of renewable energy investments were directed to the power generation sector, continuing a long-term trend. Meanwhile, global investment in solar photovoltaic energy reached a record $554 billion in 2024, a 49% increase.
Investment in renewables, grids, and battery storage surpassed fossil fuel investment in 2024, although spending on fossil fuels continues to rise. Investments in energy transition technologies grew globally, but 90% remained concentrated in advanced economies and China, leaving emerging and developing countries behind.
IRENA Director-General Francesco La Camera stated that investments in the energy transition “continue to grow, but not at the pace needed to meet the global goal of tripling renewable capacity by 2030. Financing for renewables is increasing, but remains highly concentrated in advanced economies. As nations gather at COP30 to advance the Baku-to-Belém Roadmap for $1.3 trillion, it is essential to increase funding for emerging and developing countries to make the transition truly inclusive and global.”
Advanced Economies vs. Low-Income Countries
IRENA’s report shows that advanced economies can rely on domestic financial resources to fund their energy transitions. In contrast, low-income countries depend on external support due to underdeveloped financial markets, limited fiscal capacity, high capital costs, and debt vulnerabilities, among other challenges.
Rising Debt Burdens and Risks for Low-Income Countries
Globally, nearly half of total investment in 2024 was provided as debt, mostly at market rates. The remainder came through equity investments, with subsidies accounting for less than 1%. The urgent need to mobilize investments, combined with a shortage of low-cost, impact-oriented capital such as concessional debt and grants, risks exacerbating debt burdens.
La Camera emphasized, “IRENA has long advocated smarter use of public funds to unlock private investment through risk mitigation tools. However, strong reliance on profit-driven capital is leaving developing countries behind. Where private finance does not flow, the public sector must lead, supported by stronger multilateral and bilateral cooperation and scaled-up climate finance.”
The report also highlights that investment in supply chains and manufacturing for the energy transition remains essential but highly concentrated. China accounted for 80% of global investment in manufacturing facilities for solar, wind, battery, and hydrogen technologies between 2018 and 2024. Positively, new factories are emerging outside advanced economies, and China is expanding energy security and socio-economic benefits of the transition to other developing economies.
Overall, global investment in factories producing equipment for solar, wind, batteries, and hydrogen fell 21% to $102 billion in 2024, driven by a significant decline in solar PV supply chain investments. Conversely, investment in battery factories nearly doubled to $74 billion, reflecting growing demand for grid storage, electric vehicles, and data centers.
Foreign direct investment through joint ventures, technology partnerships, and knowledge sharing will be vital to strengthen international cooperation and expand energy transition manufacturing in emerging and developing economies, including through South-South collaboration.
Moreover, targeted policies are needed to ensure these activities are socially and environmentally sustainable and that their benefits are equitably shared.
Source: Diário Económico
