Global energy investment fell for the second year in a row in 2016 as oil and gas spending continues to fall, according to a new report.
Despite increased spending on energy efficiency and electricity networks, a continued drop in the upstream oil and gas sector caused global energy investment to fall by 12 per cent, a report by the International Energy Agency (IEA) said.
In 2016, $1.7 trillion (£1.3 trillion), or 2.2 per cent of the global GDP, was invested in global energy.
Spending on the electricity sector surpassed the combined spending on oil, gas and coal supply for the first time last year. The share of clean energy spending reached 43 per cent of total supply investment, a record high.
"Our analysis shows that smart investment decisions are more critical than ever for maintaining energy security and meeting environmental goals," said Dr Fatih Birol, the IEA's executive director.
As the oil and gas industry refocuses on shorter-cycle projects, the need for policymakers to keep an eye on the long-term adequacy of supply is more important. Even with ambitious climate-mitigation goals, current investment activity in oil and gas will have to rise from its current slump.
Birol added: "The good news is that in spite of low energy prices, energy efficiency spending is rising thanks to strong government policies in key markets."
Global upstream oil and gas investment is expected to stabilise in 2017 after two years of decline.
However, ramped up spending on US shale contrasts with stagnation in the rest of the world, signalling a two-speed oil market, the IEA said.
The industry as a whole is also transforming itself by delivering large cost savings and focusing more on technology development and efficient project execution.