ENERGY

The global energy sector is currently at a crossroads amid the significant shift towards clean-energy investments, even as the global economy remains heavily reliant on fossil fuels. The recovery from the Covid-19 pandemic and the response to the European energy crisis have provided a major boost to global clean-energy investment. In 2023, it is estimated that around USD2.8trn will be invested in energy, with more than USD1.7trn going to clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification. The remainder, slightly over USD1trn, would go to unabated fossil-fuel supply and power, of which around 15% is to coal and the rest to oil and gas.

Clean-energy investments have been boosted by a variety of factors, including improved economics at a time of high and volatile fossil fuel prices; enhanced policy support through instruments like the US Inflation Reduction Act and new initiatives in Europe, Japan, China and elsewhere; a strong alignment of climate and energy-security goals, especially in import-dependent economies and a focus on industrial strategy as countries seek to strengthen their footholds in the emerging clean-energy economy.

Regarding oil & gas, global oil demand is projected to reach over 100mn barrels per day (mb/d) in 2024, up from 91.2 mb/d in 2020, driven by higher consumption in developing economies, especially in Asia.

Because of fluctuating oil prices, geopolitical tensions and the ongoing energy transition, the outlook for global oil and gas remains uncertain. However, the sector remains profitable, with the global oil and gas industry earning around USD4trn in 2022. However, the profitability of firms in the sector is heavily reliant on oil prices.