Bolder decisions are required from goverments across the globe to make the energy system more sustainable and meet the Paris climate goal.
That’s the view of the International Energy Agency (IEA), which says global energy investment is falling short of what would be needed to meet continued robust growth in the world’s energy demand.
Its latest report reveals energy investment stabilised in 2018 at $1.85 trillion (£1.4tn), after three years of decline.
Investment was driven by higher upstream oil and gas as well as coal spending but power exceeded oil and gas supply as the largest investment sector for a third year in a row.
While partly due to shifting costs in both sectors, it also reflects the growing importance of electricity, whose demand growth last year was nearly twice as fast as overall energy demand, according to the IEA.
The biggest jump in overall energy investment was in the US, where it was boosted by higher spending in upstream supply, particularly shale, but also power networks.
Investment in coal supply increased by 2% – the first such rise since 2012 – although the total remains a long way below the peak levels reached at the start of the decade, the report adds.
While decisions to invest in coal-fired power plants declined to their lowest level this century and retirements rose, the global coal fleet continued to expand, particularly in developing Asian countries.
Investment in energy efficiency was “relatively stable” for the second year in a row, with “limited progress” in expanding policy coverage and despite soaring sales of electric vehicles (EVs), transport efficiency stagnated, while spending in buildings dipped.
Renewable energy spending also edged down last year, with global green capacity growth stalling for the first time since 2001.
The report also found public spending on energy research, development and demonstration projects is “far short” of what is needed.
Dr Fatih Birol, IEA Executive Director said: “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 technologies to change course. Whichever way you look, we are storing up risks for the future.
“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.”
Technologies for energy users that can help them reduce costs and emissions will be among those on display at The Energy Solutions Show (TESS) on June 5th at Millennium Point, Birmingham.