The International Energy Agency has warned a lack of energy investment over the past three years could lead to electricity and oil shortages, after spending dropped for the second-consecutive year in 2016.
The IEA, an OECD-based intergovernmental organisation, released its second annual benchmark analysis this week.
It found global energy investment fell by 12% in 2016, to US$1.7 trillion.
“As the oil and gas industry refocuses on shorter-cycle projects, the need for policymakers to keep an eye on the long-term adequacy of supply is more important,” IEA executive director Dr Faith Birol said.
“Even with ambitious climate-mitigation goals, current investment activity in oil and gas will have to rise from its current slump.”
The message from the international body appears to be that while cleaner and more efficient energy is a good thing, it cannot come at the cost of secure, affordable energy supply.
“While carbon emissions stagnated in 2016 for the third year, investment in clean energy generation was not keeping pace with demand growth,” the IEA said.
“Growth in new wind and solar PV generation growth is almost entirely offset by a slowdown in final investment decisions for new nuclear and hydropower expected in the coming years.
“Consequently, investment in new low-carbon generation needs to accelerate just to jeep pace with electricity demand growth.”
According to the IEA’s research, spending in China – the world’s largest energy investor – has become increasingly driven by clean electricity generation and networks, as well as energy efficiency investment, resulting in a 25% decline in coal-fired power investment in 2016.
The same trend has been seen in the United States, where a sharp decline was seen in oil and gas investments.
Meanwhile, India was the fastest-growing major energy investment market, with spending up 7% thanks to a strong government push to modernize and expand the power sector.