In 2025, global energy investment is projected to reach a record $3.3 trillion, with clean energy beating fossil fuels, according to the International Energy Agency (IEA). This growth happens even with geopolitical tensions and economic uncertainty. It shows that the world is still focused on energy security and moving to cleaner energy sources.
This article explores the main trends, drivers, and challenges shaping energy investment this year, with the main findings from the IEA’s World Energy Investment 2025 report. It provides a clear picture of where global energy capital is flowing and what challenges lie ahead.
Clean Energy Surges Past Fossil Fuels in Investment Race
In 2025, an expected $3.3 trillion will be invested in global energy generation. Of this, around $2.2 trillion will support renewables, nuclear power, electricity grids, storage, low-emission fuels, energy efficiency, and electrification. This is double the amount set for oil, natural gas, and coal, which will receive around $1.1 trillion.
Clean energy investment surged after the COVID-19 pandemic. This growth continues thanks to technology, economic factors, and policy support, not only climate policies.
Solar Power Leads the Way
Investment in low-emission power has nearly doubled in five years. Solar photovoltaic (PV) technology is driving this growth. By 2025, global spending on solar energy, including utility-scale and rooftop systems, is set to hit $450 billion. This will make it the largest energy investment category.
Solar panels, especially those imported from China, are becoming more affordable and are driving energy investment in many developing countries. For example, Pakistan imported 19 gigawatts (GW) of solar capacity in 2024, about half its total grid-connected capacity.
Growth in Batteries and Nuclear Energy
Spending on batteries for power sector storage will hit $66 billion by 2025. This will help integrate renewable energy sources into electricity grids. Nuclear investment is also rising, with spending on new plants and refurbishments expected to exceed $70 billion this year. Interest in new nuclear technologies, such as small modular reactors (SMRs), is growing, especially in the United States and the Middle East.
Global Giants Drive the Clean Energy Boom
About 70% of the recent increase in clean energy investment comes from countries that import fossil fuels, led by China, Europe, and India. China is investing heavily in reducing its reliance on imported oil and gas and becoming a leader in clean energy technologies.
A separate report by energy think tank Ember also shows the same trend – China takes the lead in clean energy investment in early 2025.
Meanwhile, Europe sped up its investment in renewables and energy efficiency. This change came after Russian gas supplies were disrupted due to the Ukraine invasion. The United States has boosted investment. This is partly to compete with China in the supply chains for new clean technologies.
Emissions reduction is a big reason to invest, but it’s not always the main one for mature and cost-competitive clean technologies. Investors are also influenced by concerns about energy security and the desire to lead in new industries.
Uncertainty in the global economy and trade is making some investors hold off on new project approvals. However, spending on current projects is still strong, especially in the field of rising artificial intelligence (AI) dominance.
AI + Energy: The Data Center Effect
The fast rise of AI and data centers is driving up electricity demand. This trend is also boosting investment in power generation. Annual investment in data centers has risen by 67% over the past two years, and from 2025 to 2030, an additional $4.2 trillion is expected globally.
By 2030, data centers might use 950 terawatt-hours of electricity, doubling their current amount. This could lead to over $170 billion in investments for new generation capacity. Renewables will meet most of this demand, as shown below.
However, interest is rising in next-generation solutions like small modular nuclear reactors. SMRs provide stable power and fit the constant energy needs of data centers.
Technology companies are also exploring geothermal energy partnerships, supported by rising venture capital. Tech giants and energy developers are teaming up for new nuclear and geothermal projects. However, challenges like cost uncertainties and regulatory hurdles for SMRs still exist.
Gridlock Ahead: Infrastructure Struggles to Keep Pace
Investment in the electricity sector is set to reach $1.5 trillion in 2025, about 50% higher than the total spent on bringing oil, natural gas, and coal to market. Spending on electricity grids is around $400 billion each year. But this isn’t enough to match the fast rise in power demand and the growth of renewables.
Delays in permitting, supply chain bottlenecks for components like transformers and cables, and the weak financial health of utilities, especially in developing countries, are slowing progress.
Coal and Gas Remain Significant
Despite the focus on clean energy, coal and gas continue to play a major role in some regions. In 2024, China greenlit nearly 100 GW of new coal-fired power plants. India added another 15 GW. This raised global approvals to their highest since 2015.
In contrast, advanced economies did not order any new coal-fired power plants last year.
Notably, investment in new gas-fired power is rising. The United States and the Middle East make up nearly half of the new project approvals.
Fossil Fuel Investment Trends: Oil and Gas Investment Declines
Oil prices and demand are set to drop, leading to a 6% decrease in investment in upstream oil projects in 2025. This will be the first annual decline since the COVID-19 pandemic in 2020 and the largest since 2016.
Upstream oil and gas investment is expected to drop by around 4%. This brings the total to just under $570 billion. Of this amount, 40% will go toward maintaining production at current fields. Investment in oil refineries is also set to reach its lowest level in a decade.
Spending on new LNG facilities is rising despite some delays and cost overruns. Projects in the United States, Qatar, and Canada are getting ready to start. From 2026 to 2028, the world may experience huge yearly jumps in LNG capacity, with the United States set to nearly double its export capacity.
Meanwhile, investment in coal supply is expected to increase by 4% in 2025, continuing a trend of steady growth over the past five years. This reflects ongoing demand in parts of Asia, even as advanced economies move away from coal.
The Outlook for 2025 and Beyond
The global energy investment scene is changing fast, as reported by the IEA. Clean energy technologies are drawing more money and interest. Fossil fuels are still important in some areas. However, the trend is shifting.
More investment is going into renewables, electrification, and energy efficiency. This transition is being shaped by technology advances, economic factors, and the need for energy security, as well as by climate policies.
To meet rising electricity demand and ensure energy security, investment in grids and storage should accelerate. As such, continued support for innovation and infrastructure will be crucial for a successful energy transition in the years ahead.
The post Clean Energy Beats Fossil Fuel in Historic $3.3T Global Energy Investment in 2025, IEA Report appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
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