General energy investment
- Following on from the release of the World Energy Investment Outlook 2014, the IEA has released a factsheet illustrating the report’s key points. Here are some of the most prominent.
- More than US$ 1.6 trillion was invested last year in energy supply, a figure that has more than doubled in real terms since 2000, and a further US$ 130 billion to improve energy efficiency.
- To 2035, annual investment needs, according to the report’s New Policies Scenario, rise steadily towards US$ 2 trillion, while annual spending on energy efficiency increases US$ 550 billion.
- Less than half of the US$ 40 trillion investment in energy supply goes to meet growth in demand.
- Nearly two thirds of energy supply investment takes place in emerging economies.
- Decisions to commit capital to the energy sector are increasingly shaped by government policy measures and incentives, rather than by signals coming from competitive markets.
- New types of investors in the energy sector are emerging, but the supply of long term finance on suitable terms is still far from guaranteed.
- Annual capital expenditure on oil, gas and coal extraction, transportation and on oil refining has more than doubled in real terms since 2000 to surpass US$ 950 billion in 2013.
- Importers of fossil fuels rely for secure supply on the adequacy of investment in resource rich countries.
- The EU, North America and China together account for two thirds of total investment.
Oil and gas investment
- Annual investment in upstream oil and gas rises in the report’s New Policies Scenario by a quarter to more than US$ 850 billion by 2035, with gas accounting for most of the increase.
- Gradual depletion of the most accessible reserves forces companies to move to develop more challenging fields.
- Meeting long term oil demand growth depends increasingly on the Middle East, once the current rise in non-OPEC supply starts to run out of steam in the 2020s.
- High transportation costs for gas, compared with other fuels, are a constraint on the prospect of more globalised gas markets.
Environmental investment
- Getting the world on a 2 °C emissions path would mean a different investment landscape.
- Even with widespread deployment of CCS technology, the report’s 450 Scenario sees a significant fall in the share of fossil fuels in the global energy mix, from the current 82% to 65% in 2035, compared with 76% in 2035 in the report’s New Policies Scenario.
- Financing the transition to a low carbon energy system is a major challenge, requiring strong policy and price signals to ensure that low carbon and energy efficiency investments offer a sufficiently attractive risk adjusted return.
- Decarbonising the power sector to meet global climate targets requires cumulative investment of US$ 19.3 trillion, 18% more than in the report’s New Policies Scenario.
- Current investment to improve energy efficiency over 2012 levels is estimated at US$ 130 billion.
- Annual spending on energy efficiency quadruples to US$ 550 billion towards 2035 with 62% being spend in the transport sector, 29% in buildings and 9% in industry.
- Currently, approximately 60% of efficiency investments rely on self financing with most of the rest financed through loans.
- A decarbonisation of the energy sector sees energy efficiency investment increase to US$ 1.1 trillion in 2035, double the amount seen in the report’s main scenario.
Infrastructure
- In Europe, cumulative investment of US$ 2.3 trillion is needed to replace ageing infrastructure and meet decarbonisation goals.
- In India, the state owns most installed capacity networks, but private capital will play a larger role in the US$ 1.6 trillion of power sector investment to 2035.
Coal
- Investment in coal supply is much less expensive per equivalent unit of output than oil or gas.
Adapted for web by Claira Lloyd