Countries are increasing energy spending driven by a need for electricity and diversification in response to recent energy crises, including the ongoing situation in the Middle East. A new report from the IEA shows that these crises are changing how countries view energy security, pushing them to rethink investments and explore new trade routes, as well as rely more on local energy resources. This shift follows the energy disruption caused by Russia’s invasion of Ukraine in 2022 and the current challenges with the Strait of Hormuz, which greatly affect shipping.
The IEA’s World Energy Investment report for 2026 outlines that global energy investment is projected to hit $3.4 trillion by 2026, with $2.2 trillion focused on improving grids, storage, low-emission fuels, nuclear, renewables, and energy efficiency. In contrast, investments in oil, natural gas, and coal are expected to total around $1.2 trillion. Oil investment is predicted to decline for the third straight year, going below $500 billion, due to various uncertainties and constraints. However, natural gas investment is expected to rise to $330 billion, mainly driven by new liquefied natural gas (LNG) projects.
Fuel-importing countries are showing more interest in harnessing domestic energy sources, including renewables and nuclear power. Investments in renewable energy projects are estimated to be around $665 billion, with solar power taking $365 billion alone. Nuclear power is stabilizing, with investments exceeding $80 billion and many new projects being developed globally. Meanwhile, coal investments are expected to rise to $180 billion, supported largely by spending in China.
The report also points out that previous energy crises have led to increased focus on improving energy efficiency. Around $350 billion is spent annually on efficiency improvements, but gaps remain in policy coverage. Due to the Middle East conflict, financing for energy projects is becoming more complicated, with market volatility impacting investment decisions and raising financing costs, especially in less developed countries.
Electricity-related investments continue to dominate the energy spending landscape, projected to reach nearly $1.6 trillion in 2026. This includes nearly $550 billion for electricity grids and over $100 billion for battery storage. The growing needs of data centers and artificial intelligence are also influencing energy investment trends, particularly in the U. S., where demand for gas-fired power plants has surged due to data center requirements.
