This report “World Energy Investment 2024” by IEA provides a full update on the investment picture in 2023 and an initial reading of the emerging picture for 2024. The report provides a global benchmark for tracking capital flows in the energy sector and examines how investors are assessing risks and opportunities across all areas of fuel and electricity supply, critical minerals, efficiency, research and development and energy finance. It highlights several key aspects of the current investment landscape, including persistent cost and interest rates pressures, the new industrial strategies being adopted by major economies to boost clean energy manufacturing, and the policies that support incentives for clean energy spending, notably from the increasingly important viewpoints of energy security and affordability.

The report also includes a new regional section covering 10 major economies and regions. In this extract, we specifically focus on the United States, Latin America and the Caribbean.

United States

The United States, the second largest economy in the world, accounts for 15% of global clean energy investment, and remains a major investor in oil and gas. The United States has taken important steps to scale up investments in clean energy. These investments overtook the spending that went to fossil fuels in 2020 – when oil and gas investments fell sharply – and increased to USD 280 billion in 2023 from USD 200 billion in 2020. The country also invests a significant amount in oil and gas: for every USD 1.4 spent on clean energy in 2023, US investors directed 1 USD to fossil fuels. New legislative vehicles supporting clean energy investment in the United States are the Bipartisan Infrastructure Investment and Jobs Act of 2021, which allocated around USD 550 billion for clean energy and infrastructure, and the US Inflation Reduction Act (IRA) of 2022, which provides an estimated USD 370 billion in funding to promote energy security and combat climate change. These incentives are prompting faster deployment and the development of new clean energy manufacturing capacities. 

By the end of 2023, the Infrastructure Investment and Jobs Act allocated nearly USD 75 billion to clean energy, including projects related to grid improvement and expansion (USD 21.3 billion), clean energy demonstrations (USD 21.5 billion), energy efficiency (USD 6.5 billion) and clean energy manufacturing and workforce development (USD 8.6 billion). Meanwhile, tax credits from the IRA make clean energy projects in the United States more competitive and incentivise investment in vulnerable energy communities. The increase in clean energy investment moves capital flows towards alignment with the long-term goal, announced in 2021, to achieve economy-wide net zero emissions by 2050. However, clean energy investors have faced some headwinds, including high financing costs due to higher benchmark interest rates (that reached over 5.0% since the summer of 2023). Permitting issues and the finalisation of tax credit guidance under the IRA have also meant delays in some cases. 

The United States is the world’s largest oil and gas producer, and its spending on fossil fuel supply – more than USD 200 billion – accounts for around 19% of the global total. The United States is home to around 40% of the wave of new LNG export capacity that is set to come to market in the second half of the decade. US spending on clean fuels is also on the rise, amid a surge of interest in opportunities for low-emissions hydrogen and CCUS. In the IEA’s Announced Pledges Scenario (APS), lower demand for fossil fuels brings a significant reduction in upstream and midstream spending, while investments in low-emissions power double and in energy efficiency nearly triple by 2030. 

Latin America and the Caribbean

Latin America has been a leader in clean energy but needs to step up investment to stay ahead. Latin America and the Caribbean (LAC), a diverse region of more than 30 countries, accounted for 7% of the world’s GDP in 2023, while income per capita is slightly below the world average. LAC countries have generally been prone to high inflation, high debt and fiscal issues, although sovereign credit ratings vary from debt in default (Venezuela) to upper-medium grade (Chile). LAC had a period of slow growth the past decade, where the region’s GDP expanded at about one-third of the average global pace. This partially explains why energy investment has been relatively low. Fossil fuels represent two-thirds of the energy mix, well below the world average of 80%. The use of coal is quite low, but oil use – mainly for transport but also for industry – is relatively high, despite a share of biofuels in road transport that is twice the global average. 

The use of renewable energy has been central to LAC, where renewables represent a 60% share of the power mix. LAC has a legacy of strong use of hydropower for electricity production, with many large dams built long ago. While its growth prospects are limited, hydro remains important for flexibility. There has been strong momentum for clean investments in parts of the region, and spending in fossil fuels has also risen in recent years. LAC’s overall ratio of clean energy to fossil fuels investment just under half the 2023 global average. Energy investment is set to reach USD 185 billion in 2024, a record high. The power sector accounts for over 35%, while fossil fuels supply represents almost 55% and end-use less than 10%. Renewables and storage continue their strong growth, with solar leading on deployment (including small-scale projects), investment in storage accelerating in Chile (to reduce transmission bottlenecks) and even offshore wind picking up in Brazil and Colombia. 

Many countries are also developing long-term hydrogen strategies and implementing pilot projects, especially in Brazil (where a 1.2GW plant obtained environmental permits in late 2023) and Chile. Investment in the end-use sectors is low: Less than a third of LAC countries have minimum energy performance standards for industrial motors or household appliances, for example, and few have implemented mandatory building codes. Almost half of the 33 LAC countries pledged to reach net zero emissions by 2050, including Brazil, Chile, Costa Rica and Colombia. Average annual clean energy investment over the 2026-2030 period needs to increase four-fold compared to the preceding decade in order to get on track for these goals, which would result in fossil fuel consumption peaking this decade. Efforts to reduce the cost of capital will be critical, and will require improving the economic proposition for clean investments while also reducing macroeconomic risks.

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