Global highs for energy investment despite Trumponomics

In this week’s Power Playbook: The IEA says that clean energy investment will reach $2.2 trillion this year globally; KPMG research finds that energy transition investments in 2024 hit $2 trillion. All of this continues to tag along the adage of ‘despite economic uncertainty’ stemming in part from Trump’s policy and economic changes.

Trump’s economic strategy – whether his Big Beautiful Bill, or his tariffs that have started implementation – continues to dominate energy sector headlines.

Despite this, clean energy investments globally continue to soar.

Promising numbers

According to the International Energy Agency (IEA) in its World Energy Investment 2025 report, energy investments this year are set to reach $3.3 trillion, including for fossil fuels.

Said the IEA’s Fatih Birol today during a press conference: “The entire budget of our global energy system this year we expect to reach $3.3 trillion. It is a 2.2% increase to last year.

“$1.1 trillion goes to investments for fossil fuels and $2.2 trillion to the rest.”

Indeed, the report specifies that two-thirds of this global spend is going towards clean tech, including renewables, nuclear, grids, storage, low-emission fuels, efficiency and electrification.

Surely, this is something to laud. And data from KPMG sings a similar tune.

According to the global accounting firm in their report, Energy transition investment outlook: 2025 and beyond, investment in clean energy assets surpassed $2 trillion in 2024, up from $1.2 trillion in 2020.

Over the past two years, finds KPMG’s survey, investors put their money mostly into energy efficiency (including electrification) (64%), followed by renewables and low carbon tech (56%), storage/grids (54%), and transportation (51%). These technologies formed the bulk of the $2 trillion.

Based on this, KPMG’s survey highlights that investors in the sector are looking at everything from solar and wind farms to batteries, power grids, raw materials, synthetic fuels, green hydrogen and electric vehicle infrastructure. Dozens of emerging technologies — like floating offshore wind, direct air carbon capture and synthetic fuels — are also on the radars of some energy transition investors.

A risky policy landscape

KPMG’s report finds that 72% of investors believe that investment in energy transition assets is increasing rapidly. Similar in tone to the IEA, the report says that, even after a period of high interest rates and geopolitical volatility, investors are committed to pursuing investments in clean energy technologies and projects.

The report finds that regulatory or policy risks are the top barrier to investing in energy transition assets. Specifically, they say how recent years have shown that even the most careful planning can be upended by shocks and surprises.

This has left a lingering uncertainty, especially around the influence of geopolitics. Commenting in KPMG’s report was James Suglia, global head of asset management, KPMG International:

“These risks are difficult for investors to manage, and the resulting uncertainty can delay or prevent capital flows from reaching energy transition initiatives. Stable, transparent and consistent regulatory environments can enhance long-term investment opportunities in clean energy and infrastructure.”

Despite the positive numbers from both the IEA and KPMG, to say that policy and the trade landscape have been changing would be an immense understatement.

Said the IEA’s Birol in a release: “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.”

Indeed, we are in a waiting game, but I suspect that things may change fast.

Trump’s tariffs have come into effect and his ‘Big Beautiful Bill’, which has been talk of the town, was denounced by Elon Musk – formerly a massive Trump advocate, supporter and DOGE leader – as a “massive, outrageous, pork-filled Congressional spending bill … a disgusting abomination.”

The Trump-Musk ‘divorce’ seems to be souring quickly, with Musk taking to X (formerly Twitter) to share his dismay about the economic reforms proposed in the Bill.

And that was all just this week! The Bill’s timeline is tight; it needs to be ready ahead of the July 4 holiday, and I wouldn’t be surprised if the row between Trump and Musk will further heat the debate, adding to the volatile trade and investment environment.

Interestingly enough, according to reportage by Paul Gerke over on Factor This, Trump’s bill, if turned into law, would be a huge blow to competitiveness in the US.

In fact, a knock-on would be the tides turning more in favour for the Chinese, who are already a leader in energy investments.

On their leadership, Birol says: “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.

“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 States combined.”

Over the past decade, says the IEA, 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.

All of this begs the question: to what extent will China’s dominance be exacerbated by the current trade war? And moreover, how would the European Union, which KPMG cites as a dominant spender in the sector, fare?

What do you think?

Reach out and let me know so that I can feature your thoughts in the Power Playbook.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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