Currently investment in energy is about $1.6 trillion per year. Most of today’s investment spending, well over $1 trillion per year, is spent on extracting, transporting, and refining fossil fuels or building coal and gas-fired power plants. Renewables, together with biofuels and nuclear power, account for around 15% of annual investment flows. Investment in power transmission and distribution networks account for another 15%. Annual spending on energy efficiency is about $130 billion today.
The International Energy Agency (IEA) projects that more than $48 trillion in cumulative investment will be required from now through 2035 just to meet the world's increasing energy demand. More than half of the energy-supply investment is needed just to keep production at today’s levels, to make up for declining oil and gas fields and to replace aging power plants and other equipment.
Around $40 trillion is required in energy supply
$23 trillion is in fossil fuel extraction, transport and oil refining
$10 trillion is in power generation
- renewables ($6 trillion)
- nuclear ($1 trillion)
$7 trillion in transmission and distribution.
and $8 trillion is required in energy efficiency.
$7.2 trillion in the transport and buildings sectors.
The current annual investment of $1.6 trillion per year needs to increase to about $2 trillion. Annual spending on energy efficiency needs to rise from $130 billion today to more than $550 billion by 2035. These goals will require attracting private investors and capital. But this investment will not come close to reaching the climate stabilization target of 2 °C.
Achieving 450 ppm CO2 or 2 °C
The IEA estimates that $53 trillion in cumulative investment in energy supply and efficiency is required by 2035 to get the world onto a 2 °C emissions path. This will require a much greater investment estimated at $14 trillion in efficiency to lower 2035 energy consumption by almost 15%. Energy supply investment remains at $40 trillion, but investment shifts from away from fossil fuels to the power sector. The investment in low-carbon energy supply will need to increase to almost $900 billion and spending on energy efficiency will have to exceed $1 trillion per year by 2035.