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.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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