Clean energy spend rising but fossil fuels still dominate

Dominika Zarzycka/NurPhoto via Reuters

• Middle East clean energy spend up
• $175bn investment expected in 2024
• Global energy spend to exceed $3trn

Investment in clean energy is rising in the Middle East but spending on hydrocarbon production still dominates, the International Energy Agency (IEA) has said.

In its World Energy Investment report published on Thursday, the Paris-based watchdog said that for every $1 invested in fossil fuels in the region, only 20 cents was allocated to clean energy investment. 

Global energy investment will exceed $3 trillion for the first time in 2024, with $2 trillion going to renewable technologies and infrastructure. 

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Investment in green energy has accelerated by more than 50 percent since 2020, despite pressures on financing, as supply chains improved and costs for clean technologies lowered, said the IEA. China will drive investment in 2024, reaching an estimated $675 billion. Europe and the US follow, with $370 billion and $315 billion of spending respectively.

“The rise in clean energy spending is underpinned by strong economics, continued cost reductions and considerations of energy security,” Fatih Birol, IEA executive director, said in a statement.

“But there is a strong element of industrial policy too, as major economies compete for advantage in new clean energy supply chains.”

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In 2023 oil and gas companies invested $30 billion in clean energy, which represented only 4 percent of their overall capital spending.

The IEA expects energy investment in the Middle East to reach approximately $175 billion in 2024, with greener power accounting for about 15 percent of the total investment. 

Five countries in the region have set net zero emission targets. The UAE and Oman aim to achieve net zero emissions by 2050, while Saudi Arabia, Bahrain and Kuwait have set a target of 2060. 

The UAE has committed to reducing emissions by 19 percent from 2019 levels by 2030. It also pledged $30 billion for a climate-focused investment initiative at Cop28. 

Opportunity for change

The IEA says the region has an opportunity to reduce its reliance on oil and gas with fast-growing greener alternatives such as solar power and hydrogen.

Globally, solar panel costs have decreased by 30 percent over the last two years. Investment in hydrogen electrolysers has risen to around $3 billion annually. However, it remains constrained by uncertainty about demand.

Globally, upstream oil and gas investment is expected to increase by 7 percent this year and reach $570 billion after a 9 percent increase in 2023.

Investment is led by Middle Eastern and Asian national oil companies, which have increased their investments in oil and gas by over 50 percent since 2017.