Global Energy Transition Investment Hit a Record $2.3 Trillion in 2025
This week on the podcast, Peter and Jackie review some of the latest developments in clean energy and the broader energy transition — including a discussion of terminology, with Peter advocating for a return to the older term “alternative energy”.
They begin by discussing Bloomberg New Energy Finance’s latest “Energy Transition Investment Trends (2026)”, which finds that global investment in the energy transition reached a record $2.3 trillion in 2025, up 8 % from 2024.
Next, they review a set of charts from a 200-slide deck released by Nat Bullard, an annual presentation on the state of decarbonization. Nat describes himself as a “climate-focused keynote speaker, board-level strategist, consultant, and advisor.” His side deck provides a comprehensive overview of the latest data across a wide range of energy types.
Finally, the hosts discuss a couple of new papers by Peter Tertzakian: one titled “Venezuela’s Fiscal Competitiveness” and another called “Oil, Mercantilism, and the Return of Gunboat Economics”. In this segment, they debate the impact of Venezuela’s high government take, which has contributed to declining production, and consider recent reforms to the country’s oil and gas sector aimed at attracting foreign investment.
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Episode 312 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Welcome back. So much going on as usual. We spoke last week about carbon policy, carbon tax, got some feedback, some positives, some negatives on balance. Overall, good comments.
Jackie Forrest:
Yeah, although I think there’s a few clarifications that we can make. I think some people that were listening got the sense that we weren’t supportive of clean energy. Because the one thing we didn’t acknowledge is that the carbon tax system that we have basically transfers wealth from the emitting industries to the non-emitting industries. And by saying that we want a lower carbon price, some people took it as if we’re not supportive of clean energy, and that’s not the case. I actually think that clean energy needs to grow in this country and the emitting sectors need to grow. We need all the projects to do well. We have to find that sweet spot we both can do well.
Peter Tertzakian:
Right. As we’ve said in past podcasts, we’re in a world of dilemmas and we have to make difficult choices. But backing up in terms of how people interpret our podcasts, and we’ve said this on podcasts before, I certainly view our role as being a color commentator on energy matters. And certainly some people may not want to hear the color commentary if it’s not going their way, whatever part of the energy landscape they may be in. But it’s our job to say, “Okay, these are the facts, this is what’s happening.”
And of course we’re all human, so we’ll intersperse opinion here and there, much as a hockey commentator would opine on the hockey game. But at the end of the day, it’s our job to say, “Hey, this is the issue here. The world is changing. There’s no question, and we’re going to talk about it in today’s podcast, that clean energy, renewable energy, alternative energy, whatever you want to call it, alternative energy systems definitely have a lot of momentum. But that’s only one part of the overall series of overlays, whether they’re geopolitical, geoeconomic, technological, societal. There’s just so many variables here, and it’s our job to commentate on all that.
Jackie Forrest:
Right. And I think we have to acknowledge that there has been a change in Canada where now there’s a goal to be a superpower in both clean energy and traditional oil and gas. And we have examples even in the last week of Minister Hodgson, our natural resources minister, going to India, talking about sending more oil and gas to places like India. And we just had the trip to China as well. And so we need to create the circumstances that we can grow the oil and gas industry and that it competes for capital with other places. At the same time but I think we need to grow our clean energy and our energy transition sectors as well.
And I actually think in Canada with the investment tax credits that we’ve put in place, which by the way weren’t in place when we first started talking about carbon tax, we actually look pretty good as a clean energy investment place to come. Because we offer these very stable certain investment tax credits. And even at a lower carbon price, all things the same, we have some pretty good subsidies here. And especially when you compare across the border to the US where they rolled back a lot of the supports for clean energy.
Peter Tertzakian:
So when you say clean energy, investment tax credits, is it all encompassing in terms of the landscape all the way from solar and wind, which are able to compete on their own merit now to other things that are not yet sustainable from a profitability perspective because they’re too high cost relative to incumbents. So is it the whole full suite…
Jackie Forrest:
Yeah, there’s a whole suite of them now, but they include things like on green hydrogen, carbon capture storage, but also traditional wind and solar and any kind of clean generation of non-emitting generation. And so I actually think we could revisit that carbon price because now we have these other incentives. And a lower carbon price I think still will drive a ton of investment. And I think there’s a ton of opportunity for Canada to grow into both energy types.
Peter Tertzakian:
Okay. So what’s going on? You’ve got a bunch of data here, Jackie, that you’ve assembled for our podcast today. When I first started following what we call today clean energy, it was in the 1990s, and back then it was called alternative energy because it was alternatives to the incumbents, which were oil, gas, coal, and nuclear, and of course hydro. So in terms of thinking about it that way as a whole suite of alternatives, because nuclear, some people don’t think it’s clean and clean gets intertwined with non-emitting, let’s just call it sort of like the class of alternatives to the traditional incumbents. And so what are we seeing?
Jackie Forrest:
Well, one more comment there. We could call it energy transition because we are going to talk about Bloomberg New Energy Finances report. We’re going to talk about our annual energy transition investment trends. And that includes things that are renewable, but like I said, carbon capture, stored hydrogen, alternative energies, as you say.
Peter Tertzakian:
Okay. So we transitioned from DVDs a long time ago now, it seems, to streaming. So we transitioned from incumbents to a newer class of energy systems, although the data would actually show that it’s more of a diversification and creating a whole new class of alternative energy systems. So let’s call it whatever you want. Call it transition if you want. This class of non-incumbent energy systems, what’s going on?
Jackie Forrest:
Okay. Well, according to Bloomberg, we will put a link to the report. They have a full report for subscribers to Bloomberg New Energy Finance, but they also offer a summary version for anyone, and we’ll put a link to the summary free version. But they report that $2.3 trillion was invested in energy transition in 2025, which was an 8% growth year-on-year. Now this has slowed. Remember 2021 was like a crazy peak year for energy transition technologies. And at that year, it was a 27% growth. So it’s really slowing down, but still there’s still growth. And the vast majority of the growth is happening in the mature areas, the EVs, the power grids, renewable energy. Just as a data point, about 655 gigawatts of new global solar installations were made in 2025. That’s large, that’s really, really big. So still growing, but it’s in those mature areas mostly where we’re seeing the big growth.
Peter Tertzakian:
Yeah. The market has discriminated between the systems, dominantly wind, solar, batteries, EVs, that are actually able to now compete with the incumbents on cost, right?
Jackie Forrest:
Exactly. Yeah.
Peter Tertzakian:
Without a lot of subsidization and help. But one of the things that I want to get out of this, and I’m not sure we can, is the $2.3 trillion is commingled with the mega-trend associated with AI. In other words, it’s not really part of the trend that historically we would’ve called climate related emission reduction. It’s just born out of the necessity to upgrade the power grids. And oh, by the way, we now have quite competitive new systems, relatively new with wind, solar batteries that are coming in. So what I’m getting at is what are the drivers of this $2.3 trillion? Because the drivers are, in my opinion, not so much anymore. The whole climate debate and agenda, it’s actually being driven by the AI agenda.
Jackie Forrest:
Right. And we’re actually seeing that for the climate tech financing was up 54% year-on-year in 2025. This is according to the same report. Now that seems great, 54%, but just to put that in perspective, it’s still two times smaller than in 2021. So it’s up a lot from its lows, but still nothing like the heydays of 2021 when everyone was jumping into clean energy. But when you look at where the financing was, it was really related to electricity, clean power, energy storage were a big part of the gain. There was also a fair amount raised around Chinese EV automakers because there’s a growing view now that that’s where the future of EV technology is going to be out of those Chinese companies. And so yeah, it was really related to electricity. In fact, if you look at that 2.3 trillion, and you include electric cars in that, more than 90% of it is related to electricity themes.
Peter Tertzakian:
Yeah. So electricity themes, there’s vehicles, but then in terms of the power grids and the sources of generation, which include heavily now wind and solar and batteries on the front end, on the upstream, that the drivers of that, and this is important to recognize because if we think about what are the drivers of clean energy, transition, whatever you want to call it going forward, it’s piggybacking more on a trend that is driven by commercial momentum rather than strictly policy momentum.
Jackie Forrest:
Right. And the other thing that renewables has going for it at this moment is that you can actually get supply. You can build these plants quickly. You can get the batteries. We’re actually oversupplied right now in terms of the manufacturing capacity globally for solar and for batteries. And so unlike natural gas, which is another area that’s growing and to meet the growing need for electricity, but the problem with natural gas is right now, and we’ll get into some other slides that come from an analyst called Nat Bullard, but he puts out a 200 slide deck each year and he shows data that says that right now the backlog or the people that want to get natural gas turbines is 100 gigawatts of requests, when they can only generate or make about 60 gigawatts of turbines a year.
Well, renewables has the advantage of there is some slack in the capacity. And so I think you’re going to see wind and solar play a big part in terms of meeting this growing need for demand. Yes, they’re intermittent, but when you can back them up with batteries and other things, they could at least provide electrons. And there’s a real shortage and growing concerns that we’re going to have greater shortages of electrons as we go out the next several years.
Peter Tertzakian:
And so the sources of primary energy that power electricity are all of the above. Again, in the spirit of color commentating, you look at the coal stocks and the coal consumption, it’s not going down.
Jackie Forrest:
And natural gas demand is going to grow. If we’re going to be building 60 gigawatts of new turbines and installing them each year, there is a view, you’re either for clean energy or you’re for oil and gas. But actually if you look at the data and we’ve been growing in all areas and I think the next five years is going to be no different. Because all energy’s going to be important. And so we actually need to see growth in all areas if we’re going to meet this very near term demand.
Peter Tertzakian:
So historically, and historically is not that long ago, our expectation was that policy support, things like carbon taxes and what have you would be the drivers of I’ll call it electrification as a broad based category, right? But now we have actually seen wind, solar, batteries, EVs, et cetera, drive down the cost and further scaling up, scale and manufacturing efficiency are likely to drive the costs even lower. And so the ability for that class of energy system to penetrate into the market gets even greater.
Jackie Forrest:
Yeah. As you get up to the scale that we’re at right now, and the other thing that’s very different with renewable energy right now and even batteries is that we have spare capacity. Well, let’s switch to Nat Bullards. He released his 2026 annual presentation. I will put a link to it in the show notes. And there’s 200 slides, as I said. So I find it really fun to go through. I just wanted to talk about a few things that caught my eye. Slide 14, he talks about the age of electrification here, where electricity now provides more end use energy than any other type of energy. Of course, they’re all still growing, you’ll notice on the chart, oil is not far behind electricity and gas are still growing. But electricity is now the dominant source.
Peter Tertzakian:
Well, the crossover was about 10 years ago, right? It seems to me or 10 or 15 years ago.
Jackie Forrest:
But it keeps going up at a-
Peter Tertzakian:
And I think it continually will, given what we’re seeing in electrification. Delivering energy and converting it to end use is most efficiently done with electricity. Combustion is an inefficient way of delivering if it’s combustion to drive mechanical equipment.
Jackie Forrest:
Because it’s like 80% of the energy is lost to heat. It doesn’t go towards actually driving the wheels or doing…
Peter Tertzakian:
Yeah, depends on the application, but generally speaking, anywhere from 55 to 80% is lost to heat, whereas with electrical motors, for example, are much more efficient. But at the end of the day, the electricity has to come from somewhere. So there’s a little bit of co-mingling in this chart…
Jackie Forrest:
Yeah, because the electricity has a source.
Peter Tertzakian:
Where is the electricity coming from?
Jackie Forrest:
I see what you’re saying, because the electricity line is supported by a whole host of technologies, some of which are using natural gas and oil, and this chart is just looking at end use. So only the oil that’s used in transportation or shipping, gas is probably the gas used for heating or industrial applications. And so-
Peter Tertzakian:
Yeah, In this regard, I find this chart has the potential to be misleading because it’s confusing primary energy sources, which I view as being the ones that you get from earthly sources or wind and sun versus electricity, which is really a carrier of energy. So it has the potential to be misinterpreted.
Jackie Forrest:
Right, because some of that electricity does depend on the oil and gas and coal. Well, let’s go to another slide, slide 32. This is using data from JP Morgan Asset and Wealth Management, but what they did is looked at the CapEx being spent on IT tech right now and these data centers as a percentage of GDP. And they compared it to other big CapEx booms, like when we built out broadband in the 2000s or the interstate highways in the US in the 1960s, the Apollo project in 1964. And it just shows you that there is a huge amount of CapEx spending going on. And it really surpasses any other kind of CapEx peak that we’ve seen historically in the United States.
Peter Tertzakian:
Well, this is what we talked about at the end of last year in 2025 is that a lot of these AI companies and the hyperscalers are allocating not billions, but hundreds of billions, and in aggregate, probably trillions over the course of the next 10, 15 years on this AI tech play. So actually the allocation of that CapEx and that peak is yet to probably grow even more because that money will be spent in ’26 and ’27.
Jackie Forrest:
I would took it the other way that it’s probably not going to be that high that some of these projects won’t go because if you look historically, it’s about 30% higher than the broadband peak, which was the highest ever. So maybe it’s just not possible to build at that pace.
Peter Tertzakian:
You’re right. I mean, it’s definitely labor dependent and dependent on a lot of other things like copper, for example. And the price of copper is going through the roof again and all sorts of things. But I would say that broadband, I don’t want to oversimplify things, but it’s just like laying fiber cable, whereas this tech CapEx, the infrastructural buildings and copper and just the-
Jackie Forrest:
All the generation behind it.
Peter Tertzakian:
… the energy requirements, as we said in a prior podcast late last year, a data center is basically a heater because all of the energy that goes into a semiconductor gets converted to heat. Information is an abstract quantity from an energy perspective. These data centers are heaters and they require another 20% on top of that just to cool them so they don’t burn out. So the infrastructure to build out the tech sphere is far greater than just the broadband sphere.
Jackie Forrest:
Yeah. It all screams too probably you’re right that it will be higher than the broadband CapEx.
Peter Tertzakian:
For sure. But there are limitations, I think is what you’re saying and I agree.
Jackie Forrest:
Yeah, because we’ve never seen a CapEx build quite like that in the US. All right, well, let’s switch over to China, some interesting charts around China and just how they’re dominating EV transportation. Just as a reminder to everyone globally, EVs are now one quarter of global auto sales in 2025, but in China, they’re about half of all cars. And also China’s exporting a whole bunch of cars and about half of those are electric as well. And I don’t know if you’ve seen the pictures of those crazy ships that they’ve built just to deliver all these autonomous electric cars to South America. So they’re exporting electric technology to other parts of the world. But the interesting thing that I didn’t know that caught my eye, slide 122, is we’re starting to see a big increase in truck sales with over 25% of Chinese medium duty trucks and 10% of heavy duty trucks being electric powered.
So we always talked about electric technology is limited for hauling trucks because they need so much energy density and you can’t get that all on board with batteries. But it seems like the Chinese are moving into medium and heavy duty and significantly 25% and 10% of those new car sales.
Peter Tertzakian:
Well, what’s happening there is amazing. And I’ve been to China many times. I know you’ve been. And the last time I was there, again, I look around and the electrical grids are about five times the size of ours to get a sense of scale. It’s just incredible, the electrification investment that’s been made by China over the last quarter-century. And so what I’m trying to get at here is that not every country is like China. China is, I don’t know, it’s like 15 to 20% of the world’s population. Of course, it’s huge economy. But my point is that I don’t think every country in the world is going to be able to do electrification and drive electric vehicles without the infrastructure. And most countries do not have that kind of infrastructure, including our own.
Jackie Forrest:
Well, and it does build because these heavy and medium duty trucks are going to need massive fast charging at very high rates. So I think the technical ability to do light duty vehicles, small light duty vehicles is pretty doable maybe in a lot of countries. But to go to the level of heavy duty trucks, it’s going to take some serious infrastructure and-
Peter Tertzakian:
Well, the Chinese have been masters at their long range planning and making sure that all the pieces of the infrastructure combined with the trucks and upstream, midstream, downstream, has been built up synchronously. But that’s not the case for most countries.
Jackie Forrest:
Yeah. So we’ll see, because I do think the light duty probably, you’ll see it. It’s a much easier thing to do, but to get into the heavy duty, it’d be interesting to see how the Chinese evolve the technology, because things can change too, right? They can create longer distance batteries, they can create even faster charging, and maybe some of that technology will reduce the burden for some of these other countries eventually. The next one I found kind of interesting, and something I already knew, but sometimes we forget about it. The surge of electricity demand is not just from AI, but it’s demand from a lot of other things too.
So slide 35 shows all the growth of electricity. And AI is about 10% of the share of growth in electricity over the next six years. Other things are also quite large, things like EVs, appliances, space cooling. Industry is actually the largest growth, 30%. And even water and space heating is almost in the same size of growth as AI. So there already was this view that electricity was going to grow so fast. And AI is just added to that, but it’s not the only source of growth. So I think that’s a good reminder too.
Peter Tertzakian:
Yeah. Okay. So moving on, we’ve got this gas turbines orders.
Jackie Forrest:
Yes. So I mentioned that earlier when you were talking about all the sources of electricity will be needed. But yeah, it’s something we’ve already talked about in terms of this growth. In fact, we are early to this.
Peter Tertzakian:
We had Arnie from Siemens join us on the podcast.
Jackie Forrest:
Yeah. And this was before people really were thinking too much about this, but what this is showing is that there’s about 102 gigawatts of people that want new turbines and only the ability to create about 60 gigawatts. The interesting thing is Nat is showing another chart where the pricing is starting to go up in terms of if people want to buy a combined cycle turbine and have it delivered in the early 2030s. They’re going to be paying almost twice what they paid for people that bought it this year or got it delivered this year. And you’re seeing that for the combined cycles, which are the really efficient big natural gas turbines, but there’s also these simple cycle, which are a lot less efficient and more high costs to run, but they’ve also gone up in the range of 50% if you want a delivery in the early 2030s.
And just recently, the reciprocating, so I thought you’d find this interesting, Peter, you talked a little bit about all types of power are going to be needed for this growth and electricity. And these reciprocating engines are quite expensive to operate and actually quite expensive in a capital cost basis as well. They’re more expensive per kilowatt of electricity that you can generate than the other two choices, but they’re also starting to see a bit of an uptick.
Peter Tertzakian:
Right. So these are the piston fired reciprocating internal combustion engines. And this is interesting, but in the bigger picture context, we have an AI race. We talked about that in last year’s podcast, the race towards general artificial intelligence between the US and China and the AI companies have raised, as we said earlier, billions and billions of dollars. And I want my electricity. I want it now. I don’t care how you get it. So I’m not sure these are all that material is what I’m saying is I need it now. I don’t care where you get it from, just give it to me. I actually expect that the cost of these things is going to go even higher given what we’re seeing is the emergence of this commodity supercycle with all these metal. The metal markets are on fire, even notwithstanding the recent drop, the prices are still really high. So stay tuned in terms of what that means.
Jackie Forrest:
Well, and on top of that, this CapEx peak, building like no other sort of period in the US in terms of the CapEx as a percentage of GDP. Hey, as we wrap up the podcast, we did have some great feedback on the Venezuela podcast that we did at the beginning of the year. I did want people to know that you’ve written a couple of papers on the Venezuela situation. And there’s also been some news, so maybe we’ll just finish off with that.
Peter Tertzakian:
Yeah. The news is not surprisingly further to the second piece that we wrote, which was talking about the fiscal regime. In other words, the royalty and tax structure of Venezuela really is the problematic point. Royalties in Venezuela, including extraction taxes is about 33%, corporate income taxes are about 50%. These are really high compared to places like the United States and Canada. So when ExxonMobil CEO Darren Woods says, “This is uninvestible.” that’s one of the reasons why. The news is, not surprisingly, the Americans have gone in and basically said, “Okay, we’re going to fix the fiscal regime.” Stay tuned, we’ll be talking about it more because it is consequential. It’s consequential to the question of whether or not companies will go in, be able to make a buck to justify going into Venezuela and whether or not production will go up as a consequence and compete with Canadian sources of oil.
Jackie Forrest:
Yeah. So I’ll put a link to the paper that you talk about because you really showed how we always use that fiscal chart to show the money going into the industry and then how much comes out. And in the case of Venezuela, too much was coming out all going to the government and not leaving enough capital to sustain the production. That’s why it was declining. But things are changing quickly. So this new rule will allow private companies to produce and sell oil before PDVSA had a monopoly on that. So that’s a big change. It’ll allow the courts outside of Venezuela to adjudicate disputes.
So that really helps guard against them just taking your assets as what’s happened in the past. And the Treasury Department in the US at the same time that Venezuela signed this new law into being, they actually started to ease the sanctions on Venezuelan oil entering the United States. So I think we will see in the coming months more Venezuelan oil hitting the US Gulf Coast. And the government take is being modified, but some of the media reports talk about a 30% royalty and the ability for the executive branch to lower it. If they think for a specific project, it should be lower. So I think that they could potentially get into the realm of being investible just from the fiscal takes perspective.
Peter Tertzakian:
They could in theory. One of the things that’s not documented, but somewhat obvious if you read the second paper, there’s a lot of hands in a barrel of oil taking money out, and there’s a lot of corruption. And so when the kleptocracy stops getting paid, we’ll see what happens, especially at $60. There isn’t a lot of money in a barrel of oil for a lot of hands to be going in there. When you have 30 years of corruption and very high taxes and royalties, it’s going to take more than just a piece of paper that says, okay, the fiscal terms have changed to change actual systems and behavior and institutions within the country.
Jackie Forrest:
Yeah. Well, and how are they going to pay their bills, right? They’re used to that revenue to help them within Venezuela pay their bills, and that’ll be a loss too. I’m sure there’ll be more updates on that as the year goes on.
Peter Tertzakian:
Right. Okay. Well, covered a lot of stuff as usual.
Jackie Forrest:
Yeah, we have. So hey, thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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