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As UK Prime Minister Sir Keir Starmer heads to Beijing today, his country’s biggest household energy supplier is calling for Britain to embrace Chinese technology in its green growth push.
Foreign concerns about Chinese domination of the clean tech supply chain are a big complicating factor for the low-carbon transition. But the latest data shows that global green investment levels are still growing strongly — despite a rare fall in China itself.
An evolving growth model
For much of the past decade, the prevailing narrative around green investment has had China going gangbusters while the rest of the world flails in its wake. Last year, the story got a bit more complicated.
Chinese investment in the energy transition fell by 4 per cent last year, the first decline since 2013, according to a report this week by research group BloombergNEF. But the rest of the world — especially Europe — more than picked up the slack, driving the overall global investment number up 8 per cent to a new record of $2.3tn.
This hardly signals a threat to China’s status as the biggest beast in the green energy jungle. Its investment numbers last year accounted for a third of the global total, more than the next six countries combined. It does, however, suggest that the world’s low-carbon investment may be moving towards broader-based growth, less reliant on a single market to keep driving expansion.
BNEF’s definition of “energy transition investment” goes beyond low-carbon power to encompass investment in electricity grids, electric transport, and reducing emissions from industry and buildings.
Last year’s Chinese downturn was concentrated in the renewable energy sector, as the government moved to rein in a few years of helter-skelter growth that had resulted in large amounts of wind and solar-generated electricity going to waste, and solar panel manufacturing capacity that far exceeded current demand.
Beijing scrapped a system under which renewable power plants receive fixed tariffs at a premium price for the power they provide. The rate of new plant deployment has plunged as the sector adjusts to the shock.
Investment in solar panel manufacturing has also slumped — partly in response to government pressure, but largely as a result of market forces after overcapacity resulted in a bloody price war.
Last year’s China numbers look more like a blip than the start of a downturn. In September Xi Jinping vowed the country would more than double its installed wind and solar capacity to 3,600 gigawatts by 2035. The next five-year plan, to be unveiled in March, will give crucial detail on how this target will be pursued.
In the meantime, green investment in most of the rest of the world continued to grow last year — notably in Europe, where the REPowerEU initiative to wean the bloc off Russian gas is bearing fruit. EU investment in renewable energy rose 12 per cent to $126bn, with wider “energy transition” investment growing 18 per cent to $455bn. Electric cars outsold petrol-powered ones in Europe for the first time in December, according to industry data this week.
That broad measure of low-carbon investment kept growing in other big economies, at rates of 44, 36, 15 and 6 per cent in Japan, the UK, India and Brazil respectively. The rate for emerging markets excluding China was 19 per cent. Even the US posted growth of 3.5 per cent, despite various anti-green moves from the Trump administration.
While the world might be getting less reliant on Chinese capital deployment to keep driving green investment growth, this outlay in other countries still depends heavily on inputs from Chinese companies, which control huge swaths of the low-carbon supply chain.
And all this green energy investment is good news for carbon emissions only insofar as it’s squeezing fossil fuels out of the world’s energy mix. The question of whether we are living through an energy addition, rather than a transition, is real.
The new data provides fresh evidence of the stubborn global hunger for fossil energy. Ten years on from the Paris agreement, the world invested $1.19tn in fossil fuel supplies, making the accord’s goal of limiting global warming to less than 2C look ever less feasible. Optimists will, however, note signs that the curve may be starting to bend.
As well as its overall “transition investment” figures, BNEF provided figures for investment in clean energy supply, comprising green power sources, energy storage and grid investment, sectors that it calls “the backbone of a decarbonised power system”.
For the second year running, investment in clean energy supply exceeded the fossil-fuel figure, which declined marginally from 2024. For the first time, clean energy investment outpaced fossil energy investment in North America, despite Trump’s efforts to unleash a surge of oil production and kill the “green new scam”. The movement of this ratio in the next few years will have powerful implications for the global economy, and the planet.