12 July 2017
IEA Reports Record High Investments in Renewables Amid Global Energy Investment Slump
UN Photo/Ariane Rummery
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The IEA study finds that the biggest driver of that decline was a 25% reduction in investment in coal and upstream oil and gas development.

It indicates that for the first time, combined investments in energy networks, renewable energies and thermal energy sources exceeded investments in fossil fuel supply.

While the report points to an accelerating shift towards clean energy investment, it also raises concerns that the continued decline in total investment can lead to future energy security risks.

11 July 2017: The International Energy Agency (IEA) has released its second annual report, which provides a benchmark analysis of global energy investment. Titled ‘World Energy Investment 2017,’ the reports indicates that, in 2016, total energy investments fell to US$ 1.7 trillion, marking the second consecutive year of decline.

The report finds that the biggest driver of that decline was a 25% reduction in investment in coal and upstream oil and gas development. In 2016, investments totaled US$40 billion, half the average yearly spending during the 2011-2015 period, and less than a third of average annual investments between 2006 and 2010. It indicates that for the first time, combined investments in energy networks, renewable energies and thermal energy sources exceeded investments in fossil fuel supply. According to the report, investments in energy efficiency increased by 9% accounting for 13.6% of total spending. The share of clean energy investment reached a record high of 43% of total supply investment.

In terms of the regional distribution of the energy investments, the IEA indicates that China continues to be the biggest energy investor, accounting for 21% of the total. The country also experiences the fastest growth in energy efficiency investment making up 27% of the total increase. The report highlights that China now invests almost as much in energy efficiency as Europe, which remained the region with the highest share of energy efficiency investment.

While the report points to an accelerating shift towards clean energy investment, it also raises concerns that the continued decline in total investment can lead to future energy security risks. The IEA warns that the extended slowdown in upstream oil and gas investment could create shortages as many sectors of demand have barely began to transition towards new energy fuels.

Furthermore, the report notes that while the decline in investment in fossil fuel provision and coal-fired power generation is to some extent compensated by rising investments in renewables and energy efficiency, investment in clean power is not keeping pace with demand. It further underlines that despite falling prices of wind and solar energy generation, current investments in clean power only account for two thirds of new energy demand. In addition, according to the IEA, investments in nuclear and hydro energy have stalled, which means that some new electricity demand must be met with new low-carbon generation. The study therefore calls for continued investments in new low-carbon generation, and recommends boosting funding for research and development on clean energy and energy electricity networks, which has been stable at around US$37 billion per year since 2012. [IEA Press Release] [World Energy Investment 2017] [Executive Summary] [Investment Trends in 2017]

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