‘Clean energy investment to be twice that of fossil fuels'
Agencies
A surge in clean energy spending is expected to drive a record $3.3 trillion in global energy investment in 2025, despite economic uncertainty and geopolitical tensions, the International Energy Agency (IEA) said on Thursday.
Clean energy technologies, including renewables, nuclear, and energy storage, are set to attract $2.2 trillion in investment, twice the amount expected for fossil fuels, the IEA said in its annual World Energy Investment report.
'The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects,' IEA Executive Director Fatih Birol said.
Solar power is expected to be the biggest beneficiary, with investment forecast to reach $450 billion in 2025, while spending on battery storage is predicted to surge to around $66 billion, the report said.
Batteries are seen as a way to mitigate the intermittency of renewable energy projects, by storing power during peak supply and discharging during peak demand, but investments in the technology have lagged behind solar and wind power.
In contrast, investment in oil and gas is expected to decline, with upstream oil investment set to fall by 6% in 2025, driven by lower oil prices and demand expectations and the first drop since the COVID crisis in 2020.
The IEA also warned that investment in grids of $400 billion per year is lower than spending on generation and electrification, which could pose a risk to electricitysecurity.
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Qatar Tribune
6 hours ago
- Qatar Tribune
‘Clean energy investment to be twice that of fossil fuels'
Agencies A surge in clean energy spending is expected to drive a record $3.3 trillion in global energy investment in 2025, despite economic uncertainty and geopolitical tensions, the International Energy Agency (IEA) said on Thursday. Clean energy technologies, including renewables, nuclear, and energy storage, are set to attract $2.2 trillion in investment, twice the amount expected for fossil fuels, the IEA said in its annual World Energy Investment report. 'The fast-evolving economic and trade picture means that some investors are adopting a wait-and-see approach to new energy project approvals, but in most areas we have yet to see significant implications for existing projects,' IEA Executive Director Fatih Birol said. Solar power is expected to be the biggest beneficiary, with investment forecast to reach $450 billion in 2025, while spending on battery storage is predicted to surge to around $66 billion, the report said. Batteries are seen as a way to mitigate the intermittency of renewable energy projects, by storing power during peak supply and discharging during peak demand, but investments in the technology have lagged behind solar and wind power. In contrast, investment in oil and gas is expected to decline, with upstream oil investment set to fall by 6% in 2025, driven by lower oil prices and demand expectations and the first drop since the COVID crisis in 2020. The IEA also warned that investment in grids of $400 billion per year is lower than spending on generation and electrification, which could pose a risk to electricitysecurity.
Qatar Tribune
6 hours ago
- Qatar Tribune
Is there further upside for gold prices?
Gold occupies a unique role in modern investing. It generates no cash flow, incurs storage costs, and has limited industrial utility – yet it continues to hold enduring appeal among households, sovereigns, and institutional investors. Gold's historical legacy as a monetary anchor has recently intersected with a more contemporary function: risk mitigation. This demand for gold has been supported by the idea that the yellow metal provides a key utility as a portfolio diversifier protecting against inflation, financial crisis, international conflicts and civil strife. Importantly, gold's resilience in the face of economic shocks, such as the Great Financial Crisis (GFC) of 2008-09 or the Covid-19 pandemic, underscores its role as a hedge against systemic risks and macroeconomic instability. In recent years, gold has rallied significantly, a process that has accelerated over the last few months. In fact, before the most recent pullback, gold prices reached $3,500 per ounce, making sequential all-time highs for months. After such significant rally, which amounts to 114 percent in price appreciation since the pandemic and 92 percent since the Russo-Ukrainian conflict began, it is natural that analysts and investors would question whether there is still more upside for gold over the coming years. In fact, gold has decisively outperformed all major asset classes, challenging the perception that it merely serves as a defensive hedge. A sustained outperformance highlights that gold, while traditionally valued for its safety during crisis, can also generate robust returns under different macroeconomic conditions. Gold's consistent gains relative to equities, bonds, and commodities since early 2020 suggest that it merits consideration not only as protective allocation but as strategic, return-enhancing asset within a diversified portfolio. This dual characteristic – providing resilience during uncertainty while also delivering meaningful capital appreciation during periods of higher investor risk appetite – further strengthens the case for gold as a core holding. This is especially valid for environments of elevated inflation, currency de-basement, foreign exchange depreciation, or systematic market volatility. In our view, despite the surge in prices, there is still further upside for prices over the medium-term, as global macro conditions are favourable for gold. Two main factors sustain our position. First, gold's appeal has been further bolstered by secular or long-term geopolitical trends, including the intensifying economic rivalry between West and East, a decline in international cooperation, escalating trade disputes, increasing political polarization, and the 'weaponization' of economic relations via sanctions. This has particularly intensified after the Russo-Ukrainian conflict and the US-driven 'trade wars.' In an era marked by more geopolitical instability, gold's status as a tangible, jurisdictionally neutral asset that can serve as collateral in various markets becomes increasingly significant. Reflecting this movement, central banks globally have been accumulating gold at a rate unseen in generations. According to the World Gold Council, after the Russo-Ukrainian conflict in 2022, central bank additional demand for gold more than doubled from 450 tons per year to more than one thousand tons per year. Surprisingly, despite the increase in official demand for gold from central banks, there is still a lot of room for a much longer process of gold accumulation or portfolio rebalancing towards the precious metal. While large advanced economies tend to hold around 25 percent of their foreign exchange (FX) reserves in gold, large EM-based central banks hold only less than 8 percent of their FX reserves in gold. Given that these EM-based central banks hold around $6 trillion in FX reserves, there is scope for a continued multi-year process of portfolio rebalancing from these reserve managers. This supports a steady long-term institutional demand for gold. Second, foreign exchange (FX) movements are poised to lend additional support to gold prices. Historically, gold has shown a strong inverse correlation with the USD – typically rising when the USD weakens and falling when it strengthens. The USD has already depreciated by more than 6.9 percent against a basket of major currencies so far this year. Moreover, despite this sharp depreciation, currency valuations still suggest that the USD remains overvalued by more than 15 percent, indicating further room for depreciation ahead. A softer USD is likely to support gold prices going forward, as it enhances global purchasing power for USD-denominated commodities like gold, stimulating demand and providing an additional tailwind for prices. Moreover, as investors seek protection against the erosion of purchasing power associated with USD depreciation, they often turn to gold as an alternative store of value. Consequently, a declining USD typically drives higher demand and upward price momentum for gold. All in all, despite sharp rally in recent months, there is still further upside for gold over the medium-term. This is supported by strong momentum across different macro regimes, long-term geopolitical trends with central bank portfolio rebalancing, and FX movements. — By QNB Economics
Qatar Tribune
2 days ago
- Qatar Tribune
Global energy investment set to rise to $3.3 trillion in 2025: IEA
Satyendra Pathak Doha Global energy investment is projected to reach a record $3.3 trillion in 2025, with clean energy technologies attracting twice as much capital as fossil fuels, according to the International Energy Agency (IEA). This surge is driven by strong economic fundamentals, declining technology costs, and energy security considerations, despite ongoing geopolitical tensions and economic uncertainties Global investment in clean energy technologies—including renewables, nuclear, power grids, energy storage, low-emissions fuels, energy efficiency, and electrification—is projected to reach a record $2.2 trillion in 2025, according to the latest edition of the IEA's World Energy Investmentreport. This surge not only underscores efforts to reduce carbon emissions but also highlights the growing impact of industrial policies, heightened energy security concerns, and the increasing cost competitiveness of electricity-based solutions. In contrast, investment in oil, natural gas, and coal is expected to total $1.1 trillion, reflecting a continued but comparatively limited capital flow into fossil fuels. In addition to offering a comprehensive analysis of current investment trends across various fuels, technologies, and regions, the 10th edition of the World Energy Investment report also reflects on key shifts over the past decade. 'Amid the geopolitical and economic uncertainties clouding the global energy outlook, energy security has emerged as a major driver of the record $3.3 trillion in global investment this year, as countries and companies work to shield themselves from a broad spectrum of risks,' said IEA Executive Director Fatih Birol. 'While the rapidly changing economic and trade environment is prompting some investors to delay approvals for new energy projects, most existing projects remain largelyunaffected.' 'When the IEA published the first ever edition of its World Energy Investment report nearly ten years ago, it showed energy investment in China in 2015 just edging ahead of that of the United States,' Birol added. 'Today, China is by far the largest energy investor globally, spending twice as much on energy as the European Union – and almost as much as the EU and United Statescombined.' Over the past decade, China's share of global clean energy spending has risen from a quarter to almost a third, underpinned by strategic investments in a wide range of technologies, including solar, wind, hydropower, nuclear, batteries and EVs. At the same time, global spending on upstream oil and gas is gravitatingtowards the Middle East. Today's investment trends clearly show a new Age of Electricity is drawing nearer. A decade ago, investments in fossil fuels were 30 percent higher than those in electricity generation, grids and storage. This year, electricity investments are set to be some 50 percent higher than the total amount being spent bringing oil, natural gas and coal to market. Globally, spending on low-emissions power generation has almost doubled over the past five years, led by solar PV. Investment in solar, both utility-scale and rooftop, is expected to reach $450 billion in 2025, making it the single largest item in the global energy investment inventory. Battery storage investments are also climbing rapidly, surging above $65 billion this year. Capital flows to nuclear power have grown by 50 percent over the past five years and are on course to reach around $75 billion in 2025. Rapid growth in electricity demand also underpins continued investment in coal supply, mainly in China and India. In 2024, China started construction on nearly 100 gigawatts of new coal-fired power plants, pushing global approvals of coal-fired plants to their highest level since 2015. In a worrying sign for electricity security, investment in grids, now at $400 billion per year, is failing to keep pace with spending on generation and electrification. Maintaining electricity security would require investment in grids to rise towards parity with generation spending by the early 2030s. However, this is being held back by lengthy permitting procedures and tight supply chains for transformers and cables. Lower oil prices and demand expectations are set to result in the first year-on-year fall in upstream oil investment since the Covid slump in 2020, according to the report. The expected 6% drop is driven mainly by a sharp decline in spending on US tight oil. By contrast, investment in new liquefied natural gas (LNG) facilities is on a strong upward trajectory as new projects in the United States, Qatar, Canada and elsewhere prepare to come online. Between 2026 and 2028, the global LNG market is set to experience its largest ever capacity growth. Spending patterns remain very uneven globally – with many developing economies, especially in Africa, struggling to mobilise capital for energy infrastructure, the report finds. Today, Africa accounts for just 2 percent of global clean energy investment. Despite being home to 20 percent of the world's population and rapidly growing energy demand, total investment across the continent has fallen by a third over the past decade due to declining fossil fuel spending and insufficient growth in clean energy. To close the financing gap in African countries and other emerging and developing economies, international public finance needs to be scaled up and used strategically to bring in larger volumes of private capital, according to the report. This year's edition of the World Energy Investment report features an interactive data explorer that enables users to compare energy investments across multiple sectors, fuels and technologies between the periods 2016–2020 and 2021–2025, covering global trends as well as data for 19 individual countries and regions.
