Based on an analysis of the announced spending plans of large- and medium-sized oil, gas and coal companies, fossil fuel supply investments are set to rise by more than six percent to around $950 billion for 2023, according to the latest World Energy Investment Report by the International Energy Agency (IEA).

For upstream oil and gas, the agency projects spending to increase by seven percent for the year to over $500 billion, matching 2019 levels. However, around half of the increase will likely be absorbed by cost inflation, it said.

Many large oil and gas companies reported record profits in 2022, but most of the revenue has gone into dividends, share buybacks and debt repayment—only large Middle Eastern national oil companies are spending more this year compared to last year, the IEA said. They are the only subset of the industry spending more currently compared to pre-pandemic levels, according to the report.

The oil and gas industry’s capital spending on low-emissions alternatives, including carbon capture technologies, was less than five percent of its upstream spending in 2022, which is equivalent to last year’s percentage, the IEA reported.

Rise in Clean Energy Investment

The volatility in fossil fuel markets brought about by the Russia-Ukraine war has “accelerated momentum” in clean energy technologies, the IEA said.

Although the invasion led to a short-term scramble for oil and gas supplies, the report stated that the projected growth in annual clean energy investment for 2023 would be 24 percent, surpassing the 15 percent increase in 2021. The recovery from the economic slump caused by the Covid-19 pandemic has also provided a significant boost to these investments. However, the increase in clean energy spending is still limited to several countries and regions, led by China, the European Union, the USA and Japan, according to the report.

Of the projected $2.8 trillion investment in energy for the year, more than $1.7 trillion would be put into clean energy, while the rest would go to fossil fuel and power. Of this roughly $1 trillion amount, around 85 percent is expected to be invested in oil and gas, and 15 percent in coal.

Clean energy investments mentioned in the report include renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification. 

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