The agency said the current annual global investment in energy supply of $1.6 trillion needs to increase steadily in the coming decades towards $2 trillion.
Global spending on energy efficiency needs to increase to over $550bn a year, the IEA added.
IEA executive director Maria van der Hoeven said the reliability and sustainability of future energy system relies on investment.
"But this won’t materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance. Neither of these conditions should be taken for granted," Hoeven added
"There is a real risk of shortfalls, with knock-on effects on regional or global energy security, as well as the risk that investments are misdirected because environmental impacts are not properly reflected in prices."
The report said about 15% of annual investments target renewable energy resources, while the bulk of investment, over $1 trillion, is used for fossil fuels.
About $40 trillion of the total $48 trillion of spending needs to be directed into identifying new sources of energy and supply, with the remainder is targeted at achieving better efficiencies.
Of the investment in energy supply, $23 trillion will be required to extract and refine fossil fuels, with a further $10 trillion needs to be spent for power generation, according to the report.
IEA chief economist Fatih Birol said policy makers face increasingly complex choices as they try to achieve progress towards energy security, competitiveness and environmental goals.
"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," Birol added.
IEA said consistent policy signals and new financing vehicles will be essential to see investment in low-carbon energy supply rise to around $900bn and spending on energy efficiency to cross $1 trillion a year by 2035.
Image: The IEA said about 15% of annual investments target renewable energy resources. Photo: Courtesy of franky242/ FreeDigitalPhotos.net.
