Global investment into energy systems dropped by 8 percent in 2015 reaching US$1.8 trillion, down from $2 trillion in 2014, the International Energy Agency said in its first World Energy Investment report.
IEA noted that the drop in oil and gas upstream spending outweighed the continued investment in renewables, electricity networks and energy efficiency.
The report shows that the “energy system is undergoing broad reorientation toward low-carbon energy and efficiency”, however, it calls for further investment in clean energy technology.
IEA executive director Fatih Birol says the shift to clean energy spending comes as a result of government policies, with the report showing that such measures have an effect on energy transition. However, further clarity and certainty are needed from policy makers, as well as a higher commitment to reaching energy security and climate goals.
Global gas-fired power generation investment declined by nearly 40 percent, according to the report. Asian markets continued to favour investment in coal power. Investment activity in European gas power remained muted despite large retirements anticipated in the next decade.
Investment in renewable energy reached $313 billion accounting for nearly a fifth of total investment in 2015.
China was the largest energy investor with $350 billion spent in 2015 as the country pushes for low-carbon power generation and electricity networks.
The United States investment in energy supply dropped to $28 billion in 2105, some $75 billion lower compared to previous year, which was attributed to low oil prices and cost deflation.
The report shows that the Middle East and Russia remained the most resilient regions to spending cuts due to lower production costs and currency movement.
Investment in smart grids was boosted by technology innovations which are expected to have a major role in the integration of wind and solar power.
Energy efficiency spending rose 6 percent in 2015, however, in certain countries, lower prices curbed the trend towards more fuel-efficient vehicles.