World Energy Investment 2019

In 2018, global energy investment stabilised at over USD 1.8 trillion after three years of decline. More spending on oil, gas and coal supply was offset by lower spend on fossil-fuel based generation and renewable power. Efficiency spending was unchanged. Power still attracted the most investment, exceeding oil and gas for a third year in a row. China was the largest market for energy investment in 2018, but its lead narrowed. The United States and India increased the most over the past three years, but other regions have been less dynamic, reflecting lower oil prices (Middle East), rebalancing between old and new parts of the system (Europe) and financing risks (subSaharan Africa). Energy supply spending has shifted broadly towards projects with shorter lead times, partly reflecting investor preferences for better managing capital at risk amid uncertainties over the future direction of the energy system. Investment purchasing power has risen over time in some sectors. Adjusting for cost declines, renewable power investment is up 55% since 2010, and cost changes have damped the impact of less oil and gas spending since 2014. Benchmarking today’s trends against future needs suggests stepping up energy supply investment in any scenario. But the opportunities and risks vary greatly, depending on the pathway that the world follows. Today’s investment trends are misaligned with where the world appears to be heading. Notably, approvals of new conventional oil and gas projects fall short of what would be needed to meet continued robust demand growth. There are few signs in the data of a major reallocation of capital required to bring investment in line with the Paris Agreement and other sustainable development goals. Even as costs fall in some areas, investment activity in low-carbon supply and demand is stalling, in part due to insufficient policy focus to address persistent risks. In the Sustainable Development Scenario, the share of low-carbon investment rises to 65% by 2030, but advancing from today’s share of 35% would require a step-change in policy focus, new financing solutions at consumer and bulk power levels and faster technological progress, including more RD&D, amid sustained spend on electricity grids.