World Energy Investment 2022 – High prices, rising costs, economic uncertainty, energy security concerns and climate imperatives amount to a powerful cocktail of factors bearing on global energy investment.
Investment is central to tackling the multiple strands of today’s energy crisis: to relieve pressure on consumers, to get the world on a net zero pathway, to spur economic recovery, and – for Europe in particular – to reduce reliance on Russia following its invasion of Ukraine. Governments, companies and investors face a complex situation as they decide which energy projects to back, with urgent short-term needs not automatically aligned with long-term goals. A lot is riding on these choices.
Our updated tracking, across all sectors, technologies and regions, suggests that world energy investment is set to rise over 8% in 2022 to reach a total of USD 2.4 trillion, well above pre-Covid levels. Investment is increasing in all parts of the energy sector, but the main boost in recent years has come from the power sector – mainly in renewables and grids – and from increased spending on end-use efficiency. Investment in oil, gas, coal and low-carbon fuel supply is the only area that, in aggregate, remains below the levels seen prior to the pandemic in 2019. This is despite sky-high fuel prices that are generating an unprecedented windfall for suppliers: net income for the world’s oil and gas producers is set to double in 2022 to an unprecedented USD 4 trillion.
Almost half of the additional USD 200 billion in capital investment in 2022 is likely to be eaten up by higher costs, rather than bringing additional energy supply capacity or savings. Costs are rising due to multiple supply chain pressures, tight markets for specialised labour and services, and the effect of higher energy prices on essential construction materials like steel and cement.