Tectonic shifts across the global energy sector created by the U.S. Shale Revolution have placed energy investment decisions in the driver’s seat when it comes to the future of environmental sustainability and global security.
Finance and energy industry leaders assembled in Paris at the IEA’s first World Energy Investment Roundtable in early February to discuss just that – highlighting three emerging trends in global energy investment that are rapidly transforming our global energy arena.
Oil and Gas Capital Requirements Driving Unprecedented Energy Investment Shifts
In 2015, the global energy sector amassed $1.8 trillion in investments, including spending on energy efficiency, oil and gas resources, pipelines, clean-burning vehicles, petro-materials and electricity storage. Global oil and gas capital requirements are reaching record highs. Investments in global oil and gas are expected to exceed $30 trillion by 2050.
More than 40 finance and energy industry leaders from across the world attended the IEA’s first World Energy Investment Roundtable last month to discuss the unprecedented shifts occurring in energy investment today.
Here are three rising trends shaping global energy investment, to be further explored in IEA’s World Energy Investment 2017 July report:
1. Energy Sector Advancements Altering Competition among Fuels
Technological advancements across the past 3-5 years have pulled down the costs of both renewable infrastructure and conventional upstream oil and gas infrastructure. Investments in digital technologies, electricity grids and similar network infrastructure is now defining energy investment needs and the investments themselves are determining the direction of future technological advancement.
2. Historic Energy Sector Transitions Driving Unpredictable Adaptations
Facing unprecedented, historical developments in energy sector technologies, business models and investment cycles, it is difficult to predict how investors and companies will react. How will the shorter-term investment cycles of shale oil compete or overlap with long-term traditional upstream oil and gas investment cycles?
We are looking at uncharted territory when it comes to predicting how rapidly evolving industry technologies will influence energy investment.
3. Energy Investment Financing Increasingly Routed Through Regulatory Channels
Along with rapid growth in energy technology, frequent policy shifts regarding natural gas, coal-driven electricity generation and renewables are also presenting market uncertainties. As more and more energy investments must be funneled through regulatory measures, innovative and unconventional financing methods continue to emerge, presenting new and unforeseen energy investment choices.
With the growing global demand for oil and gas over the next three decades, billions of dollars in capital investment are required to fund intelligent technology advancement and new infrastructure.
Innovative energy sector investment methods, including venture capital, new private equity avenues and yield-based investments, are free for the taking and offer massive opportunity to supply the capital we require to rebuild American infrastructure and navigate the unexplored future of energy investment.