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The global investment in energy fell by 12 percent in 2016, while spending on clean energy hit a record high, the International Energy Agency (IEA) said in its report at 22nd World Petroleum Congress on Tuesday.
The spending on energy declined for the second year in a row, as increased spending on energy efficiency and electricity networks was more than offset by a continued drop in upstream oil and gas spending, the IEA said in its annual report.
The IEA report on world energy investment was released in Istanbul at the 22nd World Petroleum Congress which highlights energy's future.
Energy investment around the world amounted to 1.7 trillion U.S. dollars in 2016, accounting for 2.2 percent of global GDP, the report said, noting that spending on the electricity sector worldwide exceeded the combined spending on oil, gas and coal supply for the first time.
"The share of clean-energy spending reached 43 percent of total supply investment, a record high," the report said.
As the world's largest energy investor, China saw a 25 percent decline in coal-fired power investment last year and is increasingly driven by clean electricity generation and networks, as well as energy efficiency investment, said the report.
As to the United States, investment in oil and gas fell sharply as well, accounting for 16 percent of the global spending. India, meanwhile, became the fastest-growing major energy investment market with spending up 7 percent, thanks to a strong government push to modernize and expand the power sector.
"Our analysis shows that smart investment decisions are more critical than ever for maintaining energy security and meeting environmental goals," Dr. Fatih Birol, the IEA's executive director was quoted as saying.
"As the oil and gas industry refocuses on shorter-cycle projects, the need for policymakers to keep an eye on the long-term adequacy of supply is more important," he cautioned.
"Even with ambitious climate-mitigation goals, current investment activity in oil and gas will have to rise from its current slump," he added.
The report expects global upstream oil and gas investment to stabilise in 2017. "However, an upswing in U.S. shale spending contrasts with stagnation in the rest of the world, signaling a two-speed oil market," it noted.
"At the same time, the oil and gas industry overall is transforming itself by delivering large cost savings and focusing more on technology development and efficient project execution," added the report.
The report is expecting China to overtake Europe within a few years in terms of energy-efficiency investment, as the Asian country has replaced Japan as the world's top spender on energy research and development as a share of GDP.
For some chief executives from the energy sector who were attending the Istanbul petroleum congress, technological advances and still greater efficiency hold the key to the sector's future.
Patrick Pouyanne, CEO of France's Total, called for more investment to meet the demand for energy in the decades to come, as he saw the sector being beset by three challenges, namely economic volatility, geopolitical uncertainties and climate change.
He expects to see an energy-mixed revolution in the coming years with technological advancements.
In the view of Decio Oddone, director general of Brazil's National Agency of Petroleum, Natural Gas and Biofuels, the pace of change has quickened with new development and technology in the sector.
"We are living at a time in which we worry about climate change, and as a result we are initiating the transition to a low-carbon economy," he said.
"Transition to a low-carbon economy without the phantom of oil shocks represents good news for the world economy. It signifies smaller risks for the global economic growth," he added.
Shri Dharmendra Pradhan, India's minister of state for petroleum and natural gas, thinks that a big development in electric vehicles can have a far-reaching impact on the oil and gas industry.
While introducing the IEA report to the press in Istanbul, Birol said that when electric cars finally account for half of those on the road, the demand for oil shall be growing still, as "the demand won't come from cars." Enditem