Investments in the global energy sector are set to hit a record $3.3 trillion in 2025 despite economic uncertainty and rising geopolitical tensions, the International Energy Agency said.
A total of $2.2 trillion will be invested in renewables, nuclear energy, grids, storage, low-emissions fuels, efficiency and electrification, with $1.1 trillion to go into oil, natural gas and coal, the Paris-based IEA said in its World Energy Investment 2025 report on Thursday. The total is up about 2 per cent in real terms compared with 2024.
"Open questions about the economic and trade outlook means that some investors are adopting a wait-and-see approach to new project approvals, but we have yet to see significant implications for spending on existing projects," it said.
Part of the growth is fuelled by rapidly rising requirements for artificial intelligence-powered data centres around the world. Spending in the electricity industry, the main power source for data centres, is set to reach $1.5 trillion this year, the IEA said.
"Rapid growth in spending on energy transitions over the past five years was kicked off by post-pandemic recovery packages and then sustained by a variety of economic, technology, industrial and energy security considerations, not only by climate policies," the agency added.
The increased activity will be complemented by the doubling of investments into low-emissions power generation, the IEA said. Spending in the solar industry, in particular, is projected to hit $450 billion in 2025, making it the largest single item in the IEA's inventory of global investments, the report said.
"Fierce competition among suppliers and ultra-low costs are seeing imported solar panels, often paired with batteries, become an important driver of energy investment in many emerging and developing economies," it added.
Conversely, upstream oil investments are projected to be under $570 billion in 2025. That would be a 6 per cent decline, marking the first annual drop since the Covid-induced slide in 2020 and the largest since 2016, the IEA said. Global refinery investment is set to hit its lowest level in a decade.
The decrease is being attributed to lower oil prices and demand expectations, amid economic uncertainties. Opec+, led by Saudi Arabia and Russia, has sought to prop up the market with last week's announcement of a third straight month of output increases in July.
"Our initial expectation for 2025, based on company announcements, was that upstream oil and gas spending would be flat, but sentiment has since become more downbeat as oil prices came under pressure," the report said.
Despite the expected record spending this year, the industry is still adopting a wait-and-see approach on new energy project approvals. The IEA acknowledged it has yet to identify "significant implications for spending on existing projects", executive director Fatih Birol said.
Global tariffs, initiated by the administration of US President Donald Trump, would also be felt in America's oil and gas industry, as higher levies on imported steel and aluminium may put cost pressures on the sector, the IEA said.
"Tariffs and inflation are affecting production costs – especially for basic materials," the report said.
Experts have said that countries should realign their strategies to attain energy independence, which will help them cope with future uncertainties. "Today’s energy decision makers are facing new geopolitical tensions and the risk of energy shocks remains high," the IEA said.
Geographical shift
Additionally, the shifting of energy investment along geographical lines is expected to have long-term implications, the report found.
China remains the biggest global energy investor by a wide margin. Its share of global clean energy investment has risen from a quarter a decade ago to nearly a third at present, the IEA said.
On the other hand, the US ha seen its spending on renewables and low-emissions fuels almost double in the past 10 years, but that is now expected to level off as Washington pulls back on policies that support the clean energy sector to promote the fossil fuel industry.
The Middle East, meanwhile, continues to spend heavily on upstream oil and gas, with the region’s share of global upstream investment set to hit a record 20 per cent this year, the IEA said.
A large portion of this spending is to be used to expand projects for natural gas, including the Jafurah field in Saudi Arabia, the liquefied natural gasfields of Rub Al Khali in the UAE and the North Field developments in Qatar, it added.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Was a middle distance state athletics champion in school
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What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
The Gandhi Murder
- 71 - Years since the death of MK Gandhi, also christened India's Father of the Nation
- 34 - Nationalities featured in the film The Gandhi Murder
- 7 - million dollars, the film's budget
