The United States has taken important steps to scale up investments in clean energy. These investments overtook the spending that went to fossil fuels in 2020 – when oil and gas investments fell sharply – and increased to USD 280 billion in 2023 from USD 200 billion in 2020. The country also invests a significant amount in oil and gas: for every USD 1.4 spent on clean energy in 2023, US investors directed 1 USD to fossil fuels. (That is slightly below the global average of USD 1.8.)

New legislative vehicles supporting clean energy investment in the United States are the Bipartisan Infrastructure Investment and Jobs Act of 2021, which allocated around USD 550 billion for clean energy and infrastructure, and the US Inflation Reduction Act (IRA) of 2022, which provides an estimated USD 370 billion in funding to promote energy security and combat climate change.

These incentives are prompting faster deployment and the development of new clean energy manufacturing capacities. By the end of 2023, the Infrastructure Investment and Jobs Act allocated nearly USD 75 billion to clean energy, including projects related to grid improvement and expansion (USD 21.3 billion), clean energy demonstrations (USD 21.5 billion), energy efficiency (USD 6.5 billion) and clean energy manufacturing and workforce development (USD 8.6 billion). Meanwhile, tax credits from the IRA make clean energy projects in the United States more competitive and incentivise investment in vulnerable energy communities.

The increase in clean energy investment moves capital flows towards alignment with the long-term goal, announced in 2021, to achieve economy-wide net-zero emissions by 2050. However, clean energy investors have faced some headwinds, including high financing costs due to higher benchmark interest rates (that reached over 5.0% since the summer of 2023). Permitting issues and the finalization of tax credit guidance under the IRA have also meant delays in some cases.

The United States is the world’s largest oil and gas producer, and its spending on fossil fuel supply – more than USD 200 billion – accounts for around 19% of the global total. The United States is home to around 40% of the wave of new LNG export capacity that is set to come to market in the second half of the decade. US spending on clean fuels is also on the rise, amid a surge of interest in opportunities for low-emissions hydrogen and CCUS.

In the IEA’s Announced Pledges Scenario (APS), lower demand for fossil fuels brings a significant reduction in upstream and midstream spending, while investments in low-emissions power double and in energy efficiency nearly triple by 2030.