Global energy investment is set to exceed $3 trillion for the first time, led by spending on clean energy technologies and infrastructure, the IEA said on Thursday.

Its new World Energy Investment report estimates that $2 billion will be invested this year in clean energy tech and infrastructure, double the amount going to fossil fuels. This investment growth comes despite higher financing costs hindering new projects in developing economies.  

Unsurprisingly, China accounts for the largest share of clean energy investment this year at $675 billion, thanks to spending on solar, lithium batteries and electric vehicles. This investment is expected in Europe at $370 billion and in the US at $325 billion.

The report shows that investment in critical minerals increased 10% in 2023, which is smaller than the 30% growth registered in 2022. That’s because mineral price declines weighed on the financial capacity of producers. Lithium prices, for example, slumped 75% last year.

Yet, exploration investment for this critical battery material increased 15%, with Canada and Australia registering the largest increases, followed closely by Africa. In fact, investments in lithium rose 50% last year, with spending on lithium exploration jumping 80%.  

Despite demand growth, the Paris-based agency notes that the market size for critical minerals contracted by 10% to $325 billion last year.

Another clean energy area of interest is hydrogen. The IEA forecast investment in electrolysers will surge more than 140% globally this year to $5 billion. The growth will be led by projects to replace existing hydrogen demand in industry and refining with green hydrogen. China, again, leads the ranking, followed by Europe and then the US.

The growth in spending reflects new capacity additions, but also includes cost inflation and higher equipment prices and financing costs. In China, electrolyser investment will rise 140%, accounting for 40% of all the money invested in electrolysers worldwide.

Europe’s spending will grow 120% on-year to nearly one-third of total spending, while in the US investments in electrolysers will increase 120%, but only account for 15% of the global investment.

“Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy,” says IEA executive director Fatih Birol. “For every dollar going to fossil fuels today, almost two dollars are invested in clean energy.”

The rise in clean energy spending reflects strong economics due to continued cost reductions; and considerations of energy security and industrial policy, he adds.

However, the executive warns that “more must be done to ensure that investment reaches the places where it is needed most, in particular the developing economies where access to affordable, sustainable and secure energy is severely lacking today.”