Average upstream oil and gas spending will rise from $580 billion a year between today and 2025 to $740 billion a year from 2025 to 2040, according to the New Policies Scenario of the International Energy Agency (IEA).
Renewables continue to take the largest share of investment in power generation, with an average annual spend of $350 billion, according to the report.
In this scenario, energy investment amounts to $2.2 trillion on average each year between 2018 and 2025, and $2.8 trillion a year thereafter.
"Global energy investment registered a slight decline in 2017 to $1.8 trillion, its third consecutive decline. Higher investment in several sectors, including energy efficiency and upstream oil and gas, were more than offset by lower power-sector investment. China was the main destination for energy investment, totalling more than a fifth of the total. As it did in 2016, the largest share of global investment went to the electricity sector, reflecting the growing role of electricity in the energy system," said the agency.
IEA believes that in the New Policies Scenario, a pick-up in oil and gas investment to balance the near-term market, together with a slight rise in costs, mean that the share of spending on fossil fuels once again overtakes electricity in total supply investments.
The United States accounts for almost 20 percent of total upstream oil and gas investment globally, followed by the Middle East with almost 15 percent, says the report.
IEA predicts that renewables continue to attract the largest share of investment in power generation. "Continued declines in costs mean that a constant investment in dollar terms buys a steadily increasing amount of capacity."
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