Global energy and infrastructure investment is surging to record highs despite geopolitical tensions, with annual capital expenditure on track to exceed $3.8 trillion by 2030, Wood Mackenzie strategists said in a note on Monday.
However, the analysts said the energy transition faces a critical decade marked by "financing gaps" and shifting priorities as policymakers balance the drive for net-zero emissions with immediate energy security needs.
Wood Mackenzie said the shift to cleaner energy could require cumulative investment of between $130 trillion and $175 trillion by 2060, with annual spending opportunities of $3 trillion to $6 trillion.
The consultancy models four potential transition scenarios, each with different investment implications. The base case, titled "energy evolution," sees renewables expanding but meeting incremental demand, putting the world on track for about 2.6 degrees Celsius of warming.
The consultancy said at the other end of the spectrum, a rapid "energy innovation" pathway, aligned with net-zero ambitions, would cap warming at 1.5 degrees Celsius but demand a wholesale transformation of the global energy system.
Wood Mackenzie analysts said about half of total capital spending would need to be directed toward electrification and supporting infrastructure, such as grids, in that scenario.
The delayed transition scenario lies between those poles, where energy security risks prolong the use of fossil fuels, and a "country pledges" pathway reflecting current policy commitments.
Though renewable power generation continues to attract the largest share of capital, Wood Mackenzie said investment in enabling infrastructure is lagging.
Electricity grids, storage systems, and electric vehicle charging networks represent the most acute funding gaps over the next decade. Wood Mackenzie analysts said that without them, even the rapid deployment of renewables risks being constrained.
The consultancy said momentum in some areas of the transition is slowing. Spending on electric vehicles has been downgraded from earlier expectations, while oil and gas investment is rising to meet near-term demand amid growing energy security concerns.
Meanwhile, equity capital is projected to play a central role, particularly in scaling early-stage technologies such as green hydrogen and carbon capture. The sectors remain commercially immature, requiring risk-tolerant investors willing to navigate policy uncertainty and longer return horizons.
For more established technologies, including solar, wind, and battery storage, the focus is shifting toward cost efficiency and stable returns, making them attractive to institutional investors seeking predictable cash flows.
Wood Mackenzie said investment is concentrated in large economies, with China, Europe and the US expected to account for about 70% of global capital expenditure through 2040.
China alone is projected to account for about 30% of total spending, with a focus on expanding power systems, electrification, and efficiency to lower costs and improve supply security.
Policies such as subsidies and carbon pricing in developed markets are driving the adoption of lower-carbon technologies. However, tackling remaining emissions will require more expensive, early-stage solutions.