Global energy investment stabilises, says new report

BY Fraser Tennant

Global energy investment stabilised in 2018 following three consecutive years of decline – spending on oil, gas and coal supply revived, while energy efficiency and renewables investment stalled – according to a new International Energy Agency (IEA) report.

In its ‘World Energy Investment 2019’ report, the IEA notes that energy investment totalled more than $1.8 trillion in 2018, a level similar to 2017. Furthermore, for the third year in a row, the power sector attracted more investment than the oil and gas industry.

The biggest jump in overall energy investment was in the US, where it was boosted by higher spending in upstream supply, particularly shale, but also electricity networks. The increase narrowed the gap between the US and China, which remained the world’s largest investment destination.

“Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies,” said Dr Fatih Birol, executive director at IEA. “But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner energy technologies to change course. Whichever way you look, we are storing up risks for the future.”

Among major jurisdictions, India had the second largest jump in energy investment in 2018 after the US. At the other end of the scale, the poorest regions of the world, such as sub-Saharan Africa, face persistent financing risks. Such regions only received around 15 percent of investment in 2018 according to the IEA, even though they account for 40 percent of the global population.

The IEA report also found that public spending on energy research, development and demonstration (RD&D) falls far short of what is needed. And while public energy RD&D spending rose modestly in 2018, led by the US and China, its share of gross domestic product remained flat and most countries are not spending more of their economic output on energy research.

“Current investment trends show the need for bolder decisions required to make the energy system more sustainable,” concludes Dr Birol. “Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track.”

Report: World Energy Investment 2019

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