Global Energy Innovation Between Growth and Emerging Challenges: The Latest IEA Report

Image source: IEA

The International Energy Agency has released a new study that paints a detailed picture of global energy innovation; the range of technologies under development is greater than ever before, a sign of widespread and promising dynamism.

However, the analysis signals a slowdown in funding , with national priorities changing.

An innovation in full evolution, but with contrasting signals

Global spending on energy research and development has averaged 6% growth per year in recent years, reflecting growing interest in innovative solutions to support the energy transition. However, some advanced economies are starting to show a slowdown in the pace of investment growth in 2024, due, according to the IEA, to a combination of factors:

• Interest rate hike;
• Redefining national priorities;
• Increased costs related to energy management.

This trend risks compromising the consolidation of new technologies, especially in the most delicate phases of their development.

Currently, sectors such as automotive, electrification and renewable energy are confirmed as drivers of investments, also thanks to incentive policies and the growing demand for low-emission solutions. On the contrary, strategic sectors that are difficult to decarbonize - such as cement and steel production, or maritime and air transport - struggle to attract resources, lagging behind both in terms of technological innovation and industrial scalability.

Global Perspectives and Strategies to Bridging the Gap

Venture capital has supported numerous energy start-ups , with investments peaking between 2015 and 2022. However, the following two years saw a clear reversal of the trend, aided by a less favorable financial context.

Artificial intelligence was the only sector to maintain a positive trend, attracting resources that, in part, moved away from the energy sector. Meanwhile, at a global level, innovation is becoming increasingly distributed: China is now the first country for a number of energy patents, Europe is focusing on large engineering projects and the USA maintains a varied portfolio.

However, structural gaps persist. Public funding for energy R&D in IEA countries is now less than half of the levels of the 1980s. To overcome this critical phase, the report recommends targeted actions: increasing public spending, supporting the development cycles of emerging technologies and fostering international cooperation. Innovation, in fact, will be crucial to addressing the energy and climate challenges of the coming decades.