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Mar 04, 2022
Global energy sector capex poised for a strong rebound
Global energy sector capex was over $1.5 trillion in 2021 as economic activity increased following the global downturn in 2020. Energy spend was directed mostly toward transmission and distribution at $363 billion, upstream oil and gas at $341 billion, and renewable energy at $315 billion. Over the five-year period from 2021-2025, cumulative global energy sector capex is projected to increase by 18% compared to the 2016-2020 period. In 2021-2025, transmission and distribution spending is projected to increase by $433 billion, followed by renewables at $367 billion and oil and gas spending at $209 billion.
The global economic downturn in 2020 led to a fall in global capex
spending, but capex rebounded in 2021 as investment flowed back to
the energy sector. Fossil fuel capex took the largest hit in 2020
and upstream capex is unlikely to reach 2019 levels until 2023.
Renewable energy spending rose by $40 billion in 2020 and another
$29 billion in 2021. Growth in wind power was particularly strong
as companies took advantage of expiring subsidy schemes. Renewable
energy spending is likely to remain relatively even in 2022
compared to 2021, hovering around $315 billion. Supply chain issues
could lead to rising costs and higher spending levels in 2022.
Global energy sector spend is forecast for 18% growth in 2021-2025
compared to the previous five-year period. Fossil fuel capex is
projected to garner the most spend totaling $2.2 trillion in
2021-2025. Total upstream spending is expected to be 21% higher
than transmission and distribution and outpace renewable spending
by 36% in 2021-2025. Clean energy is the likely beneficiary of the
global energy transition with almost every category of non-fossil
energy experiencing growth in capex spending over the next five
years. Spending will be needed to connect disparate forms of
electricity to the grid, leading to a rise in transmission and
distribution capex. Spending on transmission and distribution will
also help mitigate weather-related risks, as well as meet growing
demand for electric vehicles.
This is an extract from a new Energy Sector Capex Spending report that covers energy sector investments, specifically capital expenditures focused on energy supply of all types, including power transmission and distribution.
The Energy Sector Capex Spending report is available to our Connect subscribers
Learn more about our oil and gas supply chain coverage
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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