Syllabus:
GS2: Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.
Context: Recently, the International Energy Agency (IEA) released the 10th edition of its Global Energy Investment Report 2025.
More on the News
- The report highlighted that global clean energy investments are projected to reach $2.2 trillion in 2025, double the investment in oil, natural gas, and coal combined.
- Clean energy technologies encompass renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification.
- The IEA report underscored that annual investments must double to achieve a tripling of installed renewable capacity by 2030 as agreed in COP28.
- IEA urged that world should include the cost of capital problem in ‘the Baku to Belem Roadmap’, launched at COP29 last year.
- The roadmap aims to mobilise at least $1.3 trillion in finance for low-emissions projects in developing economies like India by 2035.
Key Findings of the Report
- China is set to account for over 25 percent of global energy investment in 2025.
- China has led the global investment surge, more than doubling its clean energy spending to over $625 billion since 2015.
- Over the past decade, its share of global clean energy spending grew from 25% to nearly 33%, driven by investments in solar, wind, hydro, nuclear, batteries, and electric vehicles.
- In 2024, it approved nearly 100 GW of new coal plants, marking the highest global coal approvals since 2015.
- China’s total energy investments equal United States and European Union combined.
- Today it is the number one investor in fossil fuels and clean energy infrastructure.
- However, Africa’s energy investments are set to drop by a third in 2025 from 2015 levels, mainly due to reduced oil and gas spending, only partly balanced by growth in renewables.
- The continent accounts for only two percent of clean energy investment despite supporting 20 percent of the world population, the report highlighted.
- Africa’s fossil fuel investments dropped from $125 billion in 2015 to $54 billion in 2025, while renewable energy investments saw a slight rise from $13 billion to $21 billion during the same period.
- Globally, renewable energy gets around $1 trillion yearly, but grid infrastructure lags with just $400 billion, especially in developing countries.
- Several factors hinder investments in the grid which include lengthy permitting procedures, tight supply chains for transformers and cables, and the poor financial condition of many utilities, especially in developing economies.
India’s Scenario:
- India has significantly increased its investments in renewable power, from $13 billion in 2015 to $37 billion in 2025.
- Over the same decade, its fossil fuel investments also rose, from $41 billion to $49 billion.
- India faces hurdles as its cost of capital for grid-scale renewables is 80% higher than in advanced economies.
- This raises financing costs, making it harder to secure good returns for capital-heavy clean technologies.
- India’s investment in grids and storage has declined since 2015, falling from $31 billion to an expected $25 billion in 2025.
- India is promoting investment in renewables and nuclear to diversify its energy mix and to meet its rising electricity demand.
- The country’s spending on nuclear and other clean energy source was $1 billion in 2015, increasing to $6 billion in 2025.
- These steps are being taken to reduce fossil fuel import reliance, suggesting that energy security has played a role in its investment.
- Over the past five years, India’s investment in solar photovoltaic generation has averaged USD 16 billion per year, which is 70% higher than the average of the previous five years.
- The country has also committed USD 245 million to nuclear projects for the current financial year to increase nuclear capacity to 100 GW by 2047 — up from less than 10 GW today.
International Energy Agency (IEA)
- The IEA was established in 1974, in the wake of the 1973-1974 oil crisis, to help its members respond to major oil supply disruptions, a role it continues to fulfil today.
- IEA’s mandate has expanded over time to include tracking and analysing global key energy trends, promoting sound energy policy, and fostering multinational energy technology cooperation.
- The IEA’s energy analyses, international data collection, and coordinated collective emergency response capabilities are unique and highly regarded.
- The IEA publishes a wide range of publications, with some of the most prominent including the World Energy Outlook (WEO), Net Zero by 2050, Energy Technology Perspectives (ETP), Global EV Outlook (GEVO), Global Energy Investment, and various market reports.