Investments in fossil fuel supply will rise more than six percent to about $950 billion by 2023, according to an analysis of announced spending plans from large and medium-sized oil, gas and coal companies, according to the last world investment in energy. Report of the International Energy Agency (IEA).
For upstream oil and gas, the agency expects spending to rise seven percent for the year to more than $500 billion, the same as 2019 levels. However, about half of the increase will likely be absorbed by cost inflation, he said.
Many major oil and gas companies posted record profits in 2022, but most of the proceeds have gone to dividends, share buybacks and debt repayments; only the major domestic oil companies in the Middle East are spending more this year compared to last year, the IEA said. According to the report, they are the only subset of the industry that is currently spending more compared to pre-pandemic levels.
The oil and gas industry’s capital spending on low-emissions alternatives, including carbon capture technologies, was less than five percent of its upstream spending in 2022, which is equivalent to the percentage of the year past, the IEA reported.
Increased investment in clean energy
Volatility in fossil fuel markets caused by the war between Russia and Ukraine has “accelerated the momentum” of clean energy technologies, the IEA said.
While the invasion led to a short-term scramble for oil and gas supplies, the report said annual clean energy investment growth is expected to be 24% by 2023, beating the 15% increase in 2021. The recovery from the economic downturn caused The Covid-19 pandemic has also given a significant boost to these investments. However, the increase in clean energy spending is still limited to several countries and regions, led by China, the European Union, the US and Japan, according to the report.
Of the projected $2.8 trillion in energy investment for the year, more than $1.7 trillion would go to clean energy, while the rest would go to fossil fuels and power. Of that roughly $1 trillion, about 85 percent is expected to be invested in oil and gas, and 15 percent in coal.
Clean energy investments mentioned in the report include renewable energy, nuclear, grids, storage, low-emission fuels, efficiency improvements, and renewables and end-use electrification.
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