The findings of the World Energy Investment 2019 report signal a growing mismatch between current trends and the paths to meeting the Paris Agreement and other sustainable development goals.

Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies. 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,

...said Dr. Fatih Birol, the IEA’s Executive Director.

Key findings

  • Despite a downtick, power was again the largest sector for investment,
  • Investment was driven by higher upstream oil & gas and coal supply spending while that in energy efficiency was stable and renewables spending edged down
  • Changing costs have reshaped the investment landscape in some areas
  • Lower costs dampened the impact of less upstream spending since 2014, while adjusted for costs, renewables investment is up 55% since 2010
  • There has been a broad a shift towards projects with shorter lead times, as industry seeks to limit long-term risks in a changing energy system
  • The United States accounted for most growth in energy supply investment this decade
  • China remained the largest market for total energy investment in 2018
  • Investment in India has grown the most over the past three years
  • China, the United States & India are driving some key investment trends, but each region has its own story, often one of lower spending
  • A step-change in policy focus, financing solutions and technology progress would be required to get investment onto a sustainable pathway.

Still, even as investments stabilized, approvals for new conventional oil and gas projects fell short of what would be needed to meet continued robust growth in global energy demand.

At the same time, 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.

The world is witnessing a shift in investments towards energy supply projects that have shorter lead times. In power generation and the upstream oil and gas sector, the industry is bringing capacity to market more than 20% faster than at the beginning of the decade.

This reflects industry and investors seeking to better manage risks in a changing energy system, and also improved project management and lower costs for shorter-cycle assets such as solar PV, onshore wind and US shale.

Even though decisions to invest in coal-fired power plants declined to their lowest level this century and retirements rose, the global coal power fleet continued to expand, particularly in developing Asian countries.

The continuing investments in coal plants, which have a long lifecycle, appear to be aimed at filling a growing gap between soaring demand for power and a leveling off of expected generation from low-carbon investments (renewables and nuclear).

Without carbon capture technology or incentives for earlier retirements, coal power and the high CO2 emissions it produces would remain part of the global energy system for many years to come.

At the same time, to meet sustainability goals, investment in energy efficiency would need to accelerate while spending on renewable power doubles by 2030.

The report also found that public spending on energy research, development and demonstration (RD&D) is far short of what is needed.

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. 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,

... Dr. Birol added.

 

The key findings of the report can be found herebelow: