Global investments in energy dropped 12% to $1.7 trillion in 2016, representing 2% of global GDP. Energy efficiency and electricity networks spending grew 9% and 6%, respectively, but were offset by low spending in the oil and gas sector, which dropped over 25%, as well as in the power generation sector, which fell 5%. This was largely due to a drop in unit capital costs in upstream oil and gas, with a reduction in drilling and fossil fuel-based power capacity contributing.

For the first time in history, the electricity sector led energy investments in 2016, but oil and gas still represented 40% of worldwide energy supply investment, even with a 38% decrease in capital spending between in 2016. Electricity investment slipped 1% to $718 billion; renewables-based power-capacity investment (which includes electricity, transport and heat) was the largest area of spending within this, despite its 3% decrease to $297 billion. Investment in energy efficiency reached $231 billion in 2016, with the vast majority of the investment at $133 billion going towards the buildings sector, accounting for approximately 33% of total energy demand.

By region, China led global energy investments, accounting for 21%, while energy investment in India increased 7%. The share of US energy investments rose 16% largely due to renewables, while Europe’s share declined 10%.

R&D spending in the energy sector generally remained flat, with an estimated $47 billion spent on energy R&D in 2015. Europe and the US were the biggest energy R&D spenders, representing 28% of global R&D investment each, while China is the largest spender on energy R&D as a share of GDP. In 2016, governments or state-owned enterprises contributed 42% to energy investments, while the private sector and households, communities and self-consumption represented 47% and 11%, respectively. The majority of private energy R&D is directed towards oil, gas and thermal power generation, while most public energy R&D goes to clean energy technologies.

Source: International Energy Agency