A drop in oil and gas spending caused global energy investment to drop 8 percent last year, to $1.8 trillion, even while investment in renewable energy, electricity markets, and energy efficiency increased, the International Energy Agency announced Wednesday in its World Energy Investment 2016 report. “We see a broad shift of spending toward cleaner energy, often as a result of government policies,” IEA Executive Director Fatih Birol said in a press release. “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.”
While oil and gas investment on the whole is down from 2014, it still represents the largest single category of global energy investment, over 45 percent of the total in 2015.
Coal demand has declined as investment moves toward low-carbon generation, the report says. However, “[g]lobally, energy investment is not yet consistent with the transition to a low-carbon energy system envisaged in the Paris Climate Agreement reached at the end of 2015.”
Investments in wind, solar, and electric vehicles are nearly on track to reach the Paris Agreement goal of limiting global temperature rise to 2 degrees Celsius, but other low-carbon technologies have been pushed to the wayside. “In several countries, nuclear capacity is ageing with little investment going to replacement capacity, and renewables are struggling to compensate for reduced nuclear output. Large-scale investment in CCS has yet to take off,” the report says.