Energy Investments 2020: A Decline of 400 Billion Dollars

The impact of the coronavirus has led to a significant drop in global energy investment in 2020, with around 20% of planned spending, or some $400 billion, cancelled.

Share:

reinvest

According to theInternational Energy Agency (IEA), the coronavirus is expected to wipe out around 20% of spending plans across all energy sectors this year. Global energy investment is set to fall by a fifth by 2020. This is the biggest drop in history. This will obviously have serious consequences for future fuel security and the transition to a low-carbon economy, according to the International Energy Agency (IEA).

By 2020, energy investment was on track to reach its highest level ever

400 billion less in energy investments by 2020

Around $400 billion is expected to be withdrawn from energy investments this year. The impact of the coronavirus is affecting demand, financing capacities and project logistics. This is prompting companies to scale back their capex plans in order to protect their balance sheets.

Investments in oil and gas will be the hardest hit. But all sectors, from coal to renewable energies and power grids, will be affected by the decline. This decline has been described as staggering in both its scale and speed.

A major turnaround

Prior to the emergence of Covid-19, global energy spending was on track to increase by 2% over 2019, which would have been the highest annual increase in six years. This reversal means that government and corporate revenues will fall by more than $1,000 billion this year.

Falling energy investment may have long-term consequences

Today, falling energy investment means lost jobs and economic opportunities. But short-term cuts in energy investment could have long-term consequences.

Indeed, project postponements and cancellations will result in the loss of energy supplies that we may well need tomorrow when the economy recovers. What’s more, the increase in debt inherited from the post-crisis period will present lasting risks for investment.

It’s also worrying in terms of investment in the energy transition. The slowdown in spending on key clean energy technologies also risks jeopardizing the vital transition to more resilient and sustainable energy systems.

Oil and gas sector to see biggest spending cuts

The oil and gas industry has suffered the most among the energy industries. The main reason is the restriction on travel, which has reduced demand for fuel.

Spending across the sector is expected to fall by almost a third compared with 2019. Big Oil set the tone during a difficult first quarter by announcing budget cuts averaging around 25% of pre-crisis forecasts.

Most of the biggest spending cuts in the oil and gas sector concern the US shale industry. It was already in financial difficulty before the pandemic. It is now forecasting a 50% drop in investment activity by 2020.

The national oil companies (NOC) are also tightening their purse strings. This raises long-term questions about the future finances of developing economies that are heavily dependent on hydrocarbon revenues.

Slower investment in renewable energies jeopardizes transition

In the electricity sector, a general decline in investment of 10% is forecast. This trend will have repercussions on the energy transition. This accelerated before Covid-19 began to spread around the world.

Forecasts estimate that spending on coal will fall by almost a quarter. But China’s awakening from strict confinement may change this trend. China is the main player in coal-related expenditure.

The IEA revealed last week that growth in renewable energy capacity additions is set to slow this year for the first time in two decades. A 13% drop is expected compared with 2019. There are many reasons for this decline. These include supply chain disruptions, project postponements and financing problems.

Energy transition investments are set to fall by around 10% by 2020. This will further slow the pace of the transition to clean energy.

Rooftop solar installations have been hit hard by the market turbulence. There have been numerous calls for clean energy to be integrated into national economic recovery plans. This could give new impetus to decarbonization efforts.

However, the exact shape of the government’s reconstruction plans has yet to be confirmed.

Clear warning signs for power grids

Power grids were an essential pillar of the emergency response to the health crisis. Economic and social activities were able to continue during the closure. These networks need to be resilient and intelligent to guard against future shocks. But also to cope with the growing share of wind and solar power.

Current investment trends are clear warning signs for future electricity security. Network operators faced major challenges. Total network flexibility was required while the world was locked away at home.

An expected 9% drop in investments this year. It comes on top of a 7% cut in 2019. The future resilience of power grids is a major concern raised by the analysis.

Nearly USD92bn will be invested by major American and international groups in new data centres and energy infrastructure, responding to the surge in electricity demand linked to the rise of artificial intelligence.
Nouakchott has endured lengthy power interruptions for several weeks, highlighting the financial and technical limits of the Mauritanian Electricity Company as Mauritania aims to widen access and green its mix by 2030.
Between 2015 and 2024, four multilateral climate funds committed nearly eight bn USD to clean energy, attracting private capital through concessional terms while Africa and Asia absorbed more than half of the volume.
The Global Energy Policies Hub shows that strategic reserves, gas obligations, cybersecurity and critical-mineral policies are expanding rapidly, lifting oil coverage to 98 % of world imports.
According to a report by Ember, the Chinese government’s appliance trade-in campaign could double residential air-conditioner efficiency gains in 2025 and trim up to USD943mn from household electricity spending this year.
Washington is examining sectoral taxes on polysilicon and drones, two supply chains dominated by China, after triggering Section 232 to measure industrial dependency risks.
The 2025-2034 development plan presented by Terna includes strengthening Sicily’s grid, new interconnections, and major projects to support the region’s growing renewable energy capacity.
Terna and NPC Ukrenergo have concluded a three-year partnership in Rome aimed at strengthening the integration of the Ukrainian grid into the pan-European system, with an in-depth exchange of technological and regulatory expertise.
GE Vernova has secured a major contract to modernise the Kühmoos substation in Germany, enhancing grid reliability and integration capacity for power flows between Germany, France and Switzerland.
The National Energy System Operator forecasts electricity demand to rise to 785 TWh by 2050, underlining the need to modernise grids and integrate more clean energy to support the UK’s energy transition.
Terna has signed a guarantee agreement with SACE and the European Investment Bank to finance the Adriatic Link project, totalling approximately €1bn ($1.08bn) and validated as a major transaction under Italian regulations.
India unveils a series of reforms on oil and gas contracts, introducing a fiscal stability clause to enhance the sector’s attractiveness for foreign companies and boost its growth ambitions in upstream energy.
The European Commission is launching a special fund of EUR2.3bn ($2.5bn) to boost Ukraine’s reconstruction and attract private capital to the energy and infrastructure sectors.
Asia dominated global new renewable energy capacity in 2024 with 71% of installations, while Africa recorded limited growth of only 7.2%, according to the latest annual report from IRENA.
US President Donald Trump's One Big Beautiful Bill Act dramatically changes energy investment rules, imposing restrictions on renewables while favouring hydrocarbons, according to a recent report by consultancy firm Wood Mackenzie.
On July 8, 2025, the Senate validated the Gremillet bill, aimed at structuring France's energy transition with clear objectives for nuclear power, renewable energies, and energy renovation.
Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.