- Tracking COP28 Progress
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Close dialogIEA (2024), World Energy Investment 2024, IEA, Paris https://www.iea.org/reports/world-energy-investment-2024, Licence: CC BY 4.0
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Past and future energy investment in the European Union in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario, 2016-2030
Clean energy investment in the European Union has risen as governments respond to the global energy crisis and the cut in Russian gas supplies
The European Union (EU) is one of the leading regions for clean energy deployment and policy momentum has intensified in many countries, and at EU level, due to the global energy crisis that followed Russia’s invasion of Ukraine and its subsequent cut in gas deliveries. In large part because of its reliance on imported fuels, the European Union stands out as one of the regions that has the highest clean energy to fossil fuels investment ratios: it spends more than USD 10 on clean energy for every USD 1 invested in fossil fuels.
In 2023, investment in renewables generation totalled almost USD 110 billion, an increase of more than 6% from the previous year. Although the cost of capital for renewables has seen a slight rise due to supply chain and inflation pressures, renewable investments remain very cost-competitive. Denmark and Germany remain at the forefront of the wind power sector in Europe, despite ongoing profitability challenges. Spain has led the surge in solar adoption and has seen wholesale electricity prices fall to record lows during periods of high solar output – bringing some benefits for consumers but also a warning sign for some investor revenue streams and the prospects for future investment.
A good balance of investment across generation, grids, storage and demand-side flexibility is key. Investment in power grids rose by more than 20% in 2023, nearly reaching USD 65 billion, a very positive development that reflects the need for more grid interconnection, especially to facilitate power flows to central European markets.
Meanwhile, there was also ongoing growth in oil and gas investments, which reached over USD 30 billion in 2023. Investment in liquified natural gas (LNG) reached nearly 7 billion, while Europe added more than 50 bcm/year of extra LNG import capacity to switch away from Russian gas, mainly via Floating Storage Regasification Units (FSRUs). The Netherlands, Italy, Finland, Greece and Germany have all acquired or leased FSRUs.
The European Union has set a target to reduce net greenhouse gas emissions by at least 55% by 2030, relative to 1990 levels, and to reach climate neutrality by mid-century. Alongside a range of policies and targets focused on increased deployment of renewables and energy efficiency, there is also a focus on the diversity and resilience of clean energy supply chains, both for manufacturing and for critical minerals. The European Commission adopted the Net Zero Industry Act in June 2024, to bolster the manufacturing of clean technologies, with the objective of meeting 40% of the EU’s deployment needs by 2030 and reducing today’s reliance on imports. Overall clean energy investment trends are broadly aligned with the EU’s energy and climate goals.
