International. According to the International Energy Agency's latest annual review, global energy investment stabilized in 2018, ending three consecutive years of decline, as capital spending on oil supply, gas and coal recovered, while investment stagnated in energy efficiency and renewables.
The findings of the World Energy Investment 2019 report point to a growing mismatch between current trends and pathways to meet the Paris Agreement and other sustainable development goals.
Global energy investment totaled more than $1.8 trillion in 2018, a similar level to 2017. For the third year in a row, the power sector attracted more investment than the oil and gas industry. The biggest jump in total energy investment occurred in the United States, where it was driven by higher spending on upstream supply, particularly shale, but also on power grids. The increase narrowed the gap between the United States and China, which remains the world's largest investment destination.
Still, even as investments stabilized, approvals for new conventional oil and gas projects fell short of what would be needed to meet the continued solid growth in global energy demand. At the same time, there are few signs of the substantial reallocation of capital towards energy efficiency and cleaner sources of supply that are needed to align investments 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 in 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 looking to better manage risks in a changing energy system, and also improved project management and lowered costs for shorter-cycle assets such as solar PV, onshore wind, and U.S. shale.
Even as decisions to invest in coal-fired power plants declined to their lowest level this century and pensions increased, the global coal fleet continued to expand, particularly in developing Asian countries.
Continued investments in coal plants, which have a long life cycle, appear to be aimed at filling a growing gap between growing energy demand and a levelling of expected generation from low-carbon investments (renewable and nuclear). Without carbon capture technology or incentives for early retirements, coal power, and the high CO2 emissions it produces, will remain part of the global energy system for many years to come. At the same time, to meet sustainability goals, investment in energy efficiency should accelerate, while spending on renewable energy will double by 2030.
Source: International Energy Agency.
