Energy sector investment to rise 10% in 2021, including in oil and gas

London, (Quantum Commodity Intelligence) - Investment in the global energy sector is set to hit $1.9 trillion this year, a jump of 10% on 2020 when the world was hit by the Covid-19 pandemic, as global leaders focus on infrastructure projects, according to a new report by the IEA.

However, spending on clean energy technologies is falling "well short" of what is needed to combat climate change, the agency said.

"The $750 billion that is expected to be spent on clean energy technologies and efficiency worldwide in 2021 remains far below what is required in climate-driven scenarios," the IEA said.

It added clean energy investment needs to double in the 2020s to maintain global temperatures below a 2C rise and avoid the worst impact of climate change.

To effect that governments need to adopt new policies to encourage investment in early-stage technologies, the report said.

In terms of figures for investment in global energy supply, renewable power will see a 5% increase to $367 billion, up $8 billion on the year and outstripping the $351 billion that will be spent on upstream oil and gas, which in itself is up $25 billion on the year.

In general, though, spending on oil and gas by companies in the private sector is expected to stay flat, but as a share of total spending, it will fall to 25% in 2021 versus 40% just 5-6 years ago.

After staying flat in 2020, global power sector investment is set to increase by around 5% in 2021 to more than $820 billion, with renewables accounting for 70% of 2021's $530 billion on all new generation capacity.

"Overall, the overwhelming bulk of fuel supply investment in 2020 went into fossil fuels – 84% to oil and gas and 14.5% to coal (which is a much less capital-intensive sector)," the report said.

"Around 1.3% was spent on low-carbon fuels. Today's investment spending on fuels appears caught between two worlds: neither strong enough to satisfy current fossil fuel consumption trends nor diversified enough to meet tomorrow's clean energy goals," it added.