Global investment in renewable energy decreased by 7% last year, with recent policy changes made by the Chinese government risking a further slowdown in 2018.
That is according to data from the International Energy Agency (IEA), which reveals that fossil fuels increased their share of energy supply investments for the first time since 2014.
In contrast, combined funding for renewables and energy efficiency decreased by 3% worldwide in 2017 following several years of growth.
“Such a decline in global investment for renewables and energy efficiency combined is worrying,” said IEA executive director, Dr Fatih Birol. “It is disappointing to find that it might be falling this year.
“This could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals.”
This comes after China, which accounts for 40% of global investment in solar PV, announced earlier this year that it would curtail subsidies for new solar power stations.
The IEA said the decision highlights the “critical” importance of policies driving investment in renewable energy.
It was found that more than 95% of power sector investments are now based on regulation or contracts for remuneration, with energy efficiency particularly linked to government policy.
The findings also show that state-backed investments are accounting for a rising share of global energy financing, increasing over the past five years to more than 40% in 2017.
In total, worldwide energy investment declined by 2% in real terms to $1.8trn (£1.4trn) last year, with more than $750bn spent on the electricity sector, and $715bn going towards oil and gas supply.
However, investment in conventional oil projects, which are responsible for the bulk of global supply, remains subdued, and is expected to plunge in 2018 to about one-third of the total.
This is in sharp contrast to the US shale industry, which has almost halved its breakeven price, and looks on track to achieve positive free cash flow for the first time ever this year.
“The US shale industry is at turning point after a long period of operating on a fragile financial basis, turning into a more mature and financially solid industry while production is growing at its fastest pace ever,” Birol added.
Image credit: iStock
