Forces Shackle Industry Capex Despite Windfall

The oil and gas industry is allocating less than half of its unprecedented cash flow from sky-high oil and gas prices to new supply and only a fraction toward clean technologies, the International Energy Agency (IEA) says in its latest annual industry investment report. As Opec calls for greater upstream investment and the IEA pushes for large cleantech outlays, Big Oil remains focused on capital discipline and shareholder returns. The picture emerging from the agency’s World Energy Investment Report 2023 is of an uneven transition where industry concerns over longer-term demand, inflationary costs and pressure from investors to favor returns over supply growth are all impacting spending plans. Some $2.8 trillion is forecast to be invested globally in energy this year, of which $1.7 trillion is earmarked for clean technologies. Annual clean-energy investment is expected to rise by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% rise in fossil fuel investment over the same period, says the report. “For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one,” said IEA Executive Director Fatih Birol, who pointed to solar investments, which are set to overtake outlays in oil production for the first time.