The International Energy Agency's (IEA) first annual investment report stresses that the rate of progress in renewable generation and energy efficiency remains well short of that needed to meet commitments under the Paris Agreement on climate change despite record growth in renewable capacity.
Overall, the report finds that global energy investment in 2015, at $1.8 trillion, was down 8% in real terms from 2014.
This mostly resulted from a sharp fall in upstream oil and gas investment in the US. A key factor has also been a fall in energy demand as the Chinese economy slows.
But there has also been a continued weakening of the link between GDP and carbon intensity due to growing energy efficiency, an increasing share of renewable generation, and a closure programme for coal generation in China.
Renewable generation in 2015 reached record levels of more than 350TWh due to declines in cost and technological improvements, with capacity and generation 40% and 33% higher, respectively, than 2011. This, the report notes, was sufficient to cover increased demand globally.
Hoewever, these cost improvements, increasingly demanded by policymakers, also meant that investment in renewable generation in 2015, at $288 billion, was now down to levels last seen in 2011. Despite this, renewable projects accounted for nearly 70% of the $420 billion invested in global generation.
Wind power continued to dominate renewable generation spend in 2015 at 37%, followed by solar PV at 34%, hydropower at more than 20%, while bioenergy, solar thermal and geothermal made up nearly 10%.
Even so, fossil fuels are still the largest recipient of energy investment, accounting for 45%.
To ensure progress towards Paris goals, the report calls for stable policy and support frameworks for renewable energy and energy efficiency. But it also notes a growing portfolio of debt and equity financing that has lowered the cost of borrowing in times of scarce public subsidies.