World energy investment: The facts

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

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/04062014/iea_energy_investment_report_facts/