Oil & gas investment rising but outpaced by clean energy - IEA

Global upstream oil and gas investment is expected to increase by 7% in 2024 to reach US$570bn, following a similar rise in 2023, according to the IEA’s latest World Energy Investment report

The growth in oil and gas spending in 2023 and 2024 is dominated by national oil companies in the Middle East and Asia. NOCs are set to provide over 40% of global upstream spending in 2024, compared with less than 25% in 2015, and NOCs in the Middle East and Asia have been responsible for nearly all the increase in investment in 2023 and 2024. This includes investment by PetroChina to explore for conventional resources and develop tight liquids and gas basins, Saudi Aramco’s push to meet its expanded gas production target, and new sour gas field developments in the UAE. 

A significant wave of new investment is expected in LNG in the coming years as new liquefaction plants are built, mainly in the USA and Qatar.

Clean energy investment by oil and gas companies reached US$30bn in 2023, accounting for only 4% of the industry’s overall capital spending, according to the report.

Global clean energy investment growing strongly

However, global investment in clean energy is set to be almost double the amount going to fossil fuels in 2024, helped by improving supply chains and lower costs for clean technologies. Total energy investment worldwide is expected to exceed US$3trillion in 2024, with some US$2 trillion set to go toward clean technologies, according to the report. In 2024, investment in solar PV is set to grow to US$500bn, boosted by the fall in module prices.

China is set to account for the largest share of clean energy investment in 2024, reaching an estimated US$675bn, followed by Europe and the USA, with clean energy investment of US$370bn and US$315bn respectively. The new report highlights however the low level of clean energy spending in emerging and developing economies (outside China), with the high cost of capital being a key constraint.

“Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy. For every dollar going to fossil fuels today, almost two dollars are invested in clean energy,” said IEA executive director Fatih Birol.

“More must be done to ensure that investment reaches the places where it is needed most, in particular the developing economies where access to affordable, sustainable and secure energy is severely lacking today.”

Energy investment in the Middle East is expected to reach approximately US$175bn in 2024, with fossil fuels predominating and clean energy accounting for only around 15% of total investment.

“The region’s power sector holds a distinct opportunity for increasing investment in clean energy technologies, notably for solar PV,” the report notes.