Global investment into renewable resources and other technologies to tackle climate change reached $391bn in 2014, 18 per cent up compared to 2013.
Private investors around the world provided $243bn in support of renewable energy projects while governments contributed at least $148bn, according to an annual report from the Climate Policy Initiative (CPI).
The private sector drive was especially strong in China, where record numbers of photovoltaics and onshore wind turbines have been installed.
The report’s findings, published ahead of the UN Climate Chance Conference to take place in Paris later this month, are encouraging as they show an increase in investment after the decline of 2013.
The private sector investment, for example, increased by 26 per cent compared to the year before.
"Two weeks out from the international climate negotiations in Paris, our analysis demonstrates that countries around the world are investing to drive their own economic growth and development," said Barbara Buchner, senior director of the CPI and lead author of the study.
Around three quarters of total investment and over 90 per cent of private finance was raised and spent in the same country, the report noted.
However, the report said the current level of spending is still not enough to meet the international target, which aims for the global average temperatures not to exceed 2°C compared to pre-industrial levels by 2100.
The report noted that around $16.5tn would be required between 2015 and 2030 to shift the global energy system in line with the 2 degree goal.
"(Climate spending) is going in the right direction but more needs to happen, and clearly on the adaptation side as well," Buchner told the Thomson Reuters Foundation.
More will be needed to curb emissions from deforestation and help societies and economies adapt to more extreme weather and rising seas, the report stated.
Funding for climate change adaptation - which includes protecting infrastructure from damage, switching to more resilient crops and improving weather information services - stayed flat in 2014, at $25bn or 17 per cent of all public climate finance, the report showed.