Global energy investment, after a three-year slide, stabilized in 2018, the IEA says

Energize Weekly, May 29, 2019

After a three-year slide, global energy investment stabilized in 2018 at just more than $1.8 trillion dollars—as spending on oil, natural gas and coal increased, the International Energy Agency (IEA) said.

Investments in renewable generation and energy efficiency, however, stalled in 2018, according to the IEA’s World Energy Investment 2019 report.

There was a 4 percent increase in oil and gas drilling investment and a 2 percent increase in coal supply investments, the first rise since 2012, but these were offset by lower spending in the power sector on coal-fired and renewable generation.

“Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies,” Fatih Birol, IEA executive director, said in a statement. “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.”

IEA’s estimated global upstream oil investment in 2019 at $505 billion, a 4 percent increase in real terms over 2018. That figure, however, is nearly $300 billion lower than the 2014 peak.

The IEA said that approvals for new conventional oil and gas projects “fell short of what would be needed to meet continued robust growth in global energy demand.”

The U.S. had the biggest jump in overall energy investment to about $350 billion led by higher spending in oil and gas drilling, particularly in shale regions, as well as in the power sector. Energy investment was also up in India for the year at about $375 billion, but investments are down 7 percent over the last three years, primarily due less spending on coal-fired power plants.

Coal-fired power plant initiatives globally declined to their lowest level this century and retirements rose. Still, the global coal power fleet continued to expand, particularly in developing Asian countries, the IEA said.

Even with a 1 percent decline over 2017 spending, the power sector drew the bulk of investment dollars, just less than $800 billion. Adjusting for cost declines, power sector investment is up 55 percent since 2010.

While European energy investment is down 7 percent during the past three years, the share of spending on low-carbon energy is up almost 60 percent. Sub-Sahara Africa also saw a 15 percent investment decline over the same period with a small increase in renewable energy investments.

Nevertheless, the IEA said, “There are few signs of the substantial reallocation of capital towards energy efficiency and cleaner supply sources that is needed to bring investments in line with the Paris Agreement and other sustainable development goals.”

After 17 years of growth in renewable energy generation capacity, additions of new wind, solar and other renewable sources stalled in 2018 with 180 gigawatts of new capacity, about the same as in 2017, the IEA said in a report earlier this month.

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