Can COP30 deal with the global energy investment gap?

In this week’s Power Playbook: COP30 kicks off in Brazil on Monday, marking 10 years since the Paris Agreement was adopted. Insights from Wood Mackenzie and Bloomberg NEF paint a complex picture of how energy investment has been rolled out globally and what more is needed to reach net zero targets.

Last year’s COP29 in Baku, Azerbaijan, was meant to be the ‘finance COP’. The scale of capital needed to secure 1.5°C – trillions of dollars - is immense, and there was hope prior to the summit that consensus would be reached as to who foots the bill and that the money would be placed on the table.

Instead, it ended in unfortunate yet familiar gridlock. Indeed, many have looked at the previous summit as a ‘collective failure’ to secure the investment needed to decarbonise globally.

Now, as negotiators plan their expeditions to Brazil and countries review their NDPs, pressure is building for outcomes that move beyond pledges to delivery since this summit is billed as the ‘implementation’ COP.

But how has energy sector financing fared since the Paris Agreement was signed, how much more is yet needed, and how do developing and major economies compare in reaching their climate targets?

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Major economies: Scale without speed

In major economies, the challenge isn’t ambition—it’s execution. 

According to Wood Mackenzie’s Energy Transition Outlook 2025–2026, surging power demand, driven by electrification, AI, and data centre expansion, has put 2050 net zero goals out of reach. The world is now tracking toward 2.6°C of global warming, says the company, even as renewable capacity surges.

The report projects that keeping warming below 2°C would require annual energy investment of $4.3 trillion between 2025 and 2060—a 30% increase on today’s levels. 

That would mean raising energy sector spending from 2.5% of global GDP to 3.35% within a decade. For now, no major G7 economy is on track to meet 2030 targets.

The United States faces the steepest climb, they say. To reach net zero, annual investment would need to rise 76%—from $388 billion today to nearly $700 billion. Europe’s gap is smaller but still significant, requiring a 36% increase to get on track. China, by contrast, needs just under 30% more investment to align with net zero by mid-century and is already taking the lead in solar, EVs, and critical minerals.

The pattern is clear. Major economies, including China, have scale but are struggling to accelerate. 

Additionally, says Wood Mackenzie, variable renewables will surge from 20% of generation today to 60% by 2050, with solar alone doubling by 2030 and overtaking gas in 2033 and coal in 2034. But energy security still hinges on fossil fuels. 

Oil demand has now been pushed back to peak in 2032, reflecting sluggish EV sales in the US and Europe, and continued momentum in petrochemicals. AI surge supports gas across all scenarios, pushing demand up by 180 bcm by 2050, compared to a prior outlook from Wood Mackenzie.

As Prakash Sharma, Wood Mackenzie's Head of Scenarios and Technologies, puts it, “the energy system is becoming more complex, interconnected, and volatile.” 

Indeed, AI’s electricity demand alone—expected to hit 700TWh this year and double by 2030—is now outpacing that of EVs. The rapid buildout of data centres is straining power grids that were never designed for 24/7 digital load profiles. 

In this environment, governments are forced to balance energy security with decarbonisation. 

The result is progress on renewables, but at a pace that can’t yet match growing demand.

Said Sharma: “As power demand surges due to the expansion of technologies such as AI and electrification, what was once a mostly aspirational shift towards decarbonisation is now facing the hard trade-offs of scale, system integration, capital allocation and geopolitics.

“The share of solar and wind in global power supply has grown from 5% to 20% over the past decade and the surge is expected to continue. But accelerating from deployment to a deeply decarbonised, resilient energy system is proving far more complex than simply adding megawatts.”

Developing economies: Progress but not parity 

In emerging markets, the progress is positive but uneven. 

BloombergNEF’s Climatescope 2025 report shows renewable energy investment in emerging markets—excluding mainland China—has nearly tripled since 2015, rising from $49 billion to $140 billion in 2024.

Yet, despite this progress, developing economies have captured just 18% of global clean energy spending over the past decade.

By comparison, developed economies and China accounted for 42% and 40% of total funding, respectively. 

Less than 1% of the $4 trillion invested in renewables globally over the past decade reached low-income countries. 

The problem? Capital costs. According to the report, capital into emerging economies is concentrated, and upper-middle- and high-income economies have received 62% of the total.

Still, the growth story is real. 

Solar has been the main driver of renewable investment growth in emerging markets, accounting for nearly three-quarters of total investment flows in 2024, with small-scale solar projects a particular standout. Over 47% of the investment in emerging markets was driven by small-scale solar last year, compared with just 5% in 2015. 

This small-scale solar boom has been underpinned by decentralised solutions and favourable policies for distributed generation. The share of emerging economies with net-metering or distributed-generation frameworks also rose dramatically, from 21% in 2015 to 73% in early 2025. 

BNEF’s Sofia Maia, Head of Country Transition Research and Climatescope Project Manager, summed it up: “A decade after the Paris Agreement, our findings show clear advances with enduring imbalances in global clean energy investment. 

“While emerging markets have built stronger policy foundations and scaled renewable deployment, heightened progress hinges on consistent market environments and lower capital costs.”

BNEF’s Climatescope assessment also ranked emerging markets in terms of attractiveness for clean energy investment. 

For the third year in a row, India received the highest score. The market boasts a stable policy framework and well-structured auctions, supporting a 30% year-on-year increase in clean energy investment, from $17 billion in 2023 to $23 billion in 2024.

Despite India’s repeat performance, this year’s top 10 list saw many new entrants outperforming traditional leaders like mainland China and Brazil.

Romania climbed to second place for the first time, driven by a new national energy strategy and power-sector reforms backed by the European Union and the European Investment Bank. Chile returned to the top three, following progress in its grid planning, and Pakistan entered the top five for the first time, spurred by a surge in solar installations.

Financing friction ahead of COP30

This progress will be tested in the year ahead.

COP30, being billed as the implementation COP, only means something if the financing issue finds a fix, but COP29’s stalemate over who pays remains unresolved.

The 10-year mark since the Paris Agreement should have been a moment of consolidation. Instead, it’s a reminder of imbalance.

I do think, however, that there is potential for COP30 to succeed, although it will need to move past the politics of blame and into the mechanics of delivery—debt restructuring, blended finance, and risk-sharing mechanisms that can make private investment viable in frontier markets. 

It’s clear that there is a lot of momentum in the sector to build on, considering the immense renewable investments globally and the proliferation of clean technology, but it seems that the pace at which things are happening now is not yet fast enough.

Also worth keeping in mind, as nicely put by Wood Mackenzie’s Sharma, is that a new climate leadership is emerging:

“As the US doubles down on fossil fuels, pushing allies to buy its LNG, China is seizing the low-carbon mantle through EV and solar dominance, plus aggressive renewables deployment. Europe maintains the strongest net zero ambitions, viewing clean technologies as essential for economic and energy security.

“While a faster transition appears more expensive in the near-term due to compressed investment timelines, delaying it carries the risk of significantly higher costs longer term towards climate adaptation.  The decade ahead presents critical climate checkpoints that will determine whether meaningful decarbonisation remains achievable with significant investment increases.”

But what do you think? Reach out and let me know so that I can feature your thoughts in the Power Playbook.

Cheers,
Yusuf Latief