How will we pay for the energy transition? Here's a quick guide

The global energy transition faces a $2.2 trillion annual financing gap despite clean energy investment doubling since 2020. To address this, the guide suggests utilizing consumer-level tax incentives, performance-based contracts, and power purchase agreements, such as the $1 billion raised by Frontier Climate for carbon removal. It highlights a projected $14.3 trillion shortfall for global electric grid upgrades by 2050 and notes that private sector deals, like Microsoft's agreement with Constellation to restart a nuclear plant, can rejuvenate infrastructure. In emerging markets across Latin America, Africa, and South-East Asia, the document emphasizes the role of multilateral development banks and the World Bank's Scaling Solar initiative in mitigating political and currency risks to attract private capital.

• There is a significant funding deficit for the global energy transition, with an annual gap of $2.2 trillion between current investments and the amount required to realize future energy systems, despite clean energy investment more than doubling since 2020.
• Various financing mechanisms are being used to drive innovation and deployment, including consumer tax incentives for electric vehicles and solar panels, and power purchase agreements. In Europe, these agreements funded 19 gigawatts of new capacity in 2024. Additionally, the Frontier Climate advanced market commitment, founded by companies including Alphabet, Meta, and Stripe, has raised over $1 billion since 2022 to fund carbon removal projects.
• Global electric grid expansion and upgrades face a projected investment shortfall of $14.3 trillion by 2050. To address infrastructure needs, private sector arrangements are emerging, such as a deal where Microsoft committed to purchasing energy over 20 years from a decommissioned nuclear power plant being restarted by Constellation.
• In emerging markets—specifically Latin America, Africa, and South-East Asia—investments are hindered by perceived risks such as political instability and fluctuating currencies. Multilateral development banks mitigate these risks through initiatives like the World Bank's Scaling Solar in Senegal, Zambia, and Uzbekistan, and the International Finance Corporation's use of green bonds and pooled support.

APA

Forum, E. C. V. S. W. E. (2025). How will we pay for the energy transition? Here's a quick guide. World Economic Forum. https://www.weforum.org/stories/energy-transition/how-to-pay-for-energy-transition/

Chicago

Forum, Erik Crouch, Volker Sick, World Economic. How will we pay for the energy transition? Here's a quick guide. World Economic Forum, 2025. https://www.weforum.org/stories/energy-transition/how-to-pay-for-energy-transition/.

Wikipedia

{{cite report |last1=Forum |first1=Erik Crouch, Volker Sick, World Economic |title=How will we pay for the energy transition? Here's a quick guide |publisher=World Economic Forum |date=18 December 2025 |url=https://www.weforum.org/stories/energy-transition/how-to-pay-for-energy-transition/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{forum2025how, author = {Forum, Erik Crouch, Volker Sick, World Economic}, title = {{How will we pay for the energy transition? Here's a quick guide}}, institution = {World Economic Forum}, year = {2025}, month = dec, url = {https://www.weforum.org/stories/energy-transition/how-to-pay-for-energy-transition/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }