Meeting the world’s growing need for energy will require more than $48 trillion in investment over the period to 2035, according to The World Energy Investment Outlook, a special report released by the International Energy Agency (IEA).

The report also warns that credible policy frameworks as well as a stable access to long-term sources of finance are both necessary to achieve this investment to materialise.

Of the cumulative global investment bill to 2035, around $40 trillion is in energy supply and the remainder in energy efficiency. Of the investment in energy supply, $23 trillion is in fossil fuel extraction, transport and oil refining; almost $10 trillion is in power generation, principally renewables ($6 trillion) and nuclear ($1 trillion); and a further $7 trillion is in transmission and distribution, IEA says.

A higher sum of $53 trillion would be needed under a different scenario to give the world a chance of meetings its 2°C climate change target, according to the report.

Since 2000 annual investment in new fuel and electricity supply has more than doubled in real terms, reaching $1.6 trillion in 2013. This figure is expected to rise steadily over the coming decades towards $2 trillion per year in 2035, says IEA.

Renewables, together with biofuels and nuclear power, account for around 15% of annual investment flows, with a similar share also going to the power transmission and distribution network. But a large majority of today’s investment spending, well over $1 trillion, is related to fossil fuels.

"The reliability and sustainability of our future energy system depends on investment," said IEA Executive Director Maria van der Hoeven. "But this won’t materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance."

Investment decisions are increasingly being shaped by government policy measures and incentives, IEA says, noting that while many governments have retained direct influence over energy sector investment, some that stepped away from this role when opening energy markets to competition have now stepped back in, typically to promote the deployment of low-carbon sources of electricity.

"Policy makers face increasingly complex choices as they try to achieve progress towards energy security, competitiveness and environmental goals," said IEA Chief Economist Fatih Birol. "These goals won’t be achieved without mobilising private investors and capital, but if governments change the rules of the game in unpredictable ways, it becomes very difficult for investors to play."

The World Energy Investment Outlook, published on 3 June is available online.