The report, compiled by the International Energy Agency (IEA), states that the global energy investment fell by 8% in 2015, with a drop in oil and gas upstream spending outweighing continued investment in renewables, electricity networks and energy efficiency.
World Energy Investment report indicated that the energy system is undergoing a broad reorientation toward low-carbon energy and efficiency; however investment in key clean energy technologies needs to increase to put the world economy on track for climate stabilisation. [ESMIG supports release of EU Clean Energy Package]
IEA executive director Fatih Birol stated: “We see a broad shift of spending toward cleaner energy, often as a result of government policies.
“Our report clearly shows that such government measures can work, and are key to a successful energy transition. But while some progress has been achieved, investors need clarity and certainty from policy makers. Governments must not only maintain but heighten their commitment to achieve energy security and climate goals.”
Investment by region
China is ranked highest, with energy supply spending of $315 billion, owing to efforts in building up low-carbon generation and electricity networks, as well as implementing energy efficiency policies.
[quote] Investment in the United States’ energy supply declined to about $280 billion in 2015, falling nearly $75 billion, due to low oil prices and cost deflation, representing half of the total decline in global energy spending.
The IEA notes that the Middle East and Russia emerged as the most resilient regions to spending cuts, thanks respectively to lower production costs and currency movements. As a result, national oil companies accounted for 44% of overall upstream investments, an all-time high.
Renewable energy investments of $313 billion accounted for nearly a fifth of total energy spending last year, establishing renewables as the largest source of power investment. [Unpredictability affects clean energy market growth]
Furthermore, technology innovations spurred investment in smart grids and storage, which are expected to play a key role in integrating large shares of wind and solar.
While grid-scale battery storage investment expanded tenfold since 2010, their value is predominantly to complement the grid, which continues to absorb much larger investment, finds the World Energy Investment 2016 report.