Global energy investments are set to rebound by nearly 10% this year to $1.9 trillion, reversing the 2020 decline, but the energy transition is moving more funds toward electricity and renewables and away from fossil fuels, according to the International Energy Agency (IEA).

Researchers said investments are returning to pre-crisis levels, with a shift continuing toward electricity. In fact, this year is targeted to be the sixth in a row that investments in the power sector exceed those in traditional oil and gas supply, according to the IEA’s World Energy Investment 2021 report.

The global power sector, which saw flat investments in 2020, is set to see funding this year climb to its highest level ever, up about 5% to more than $820 billion. Renewables are forecast to account...