The share of clean-energy spending rose to a record 43% of total energy-related investment in 2016, the International Energy Agency’s (IEA’s) yearly World Energy Investment report shows.

Global energy investment fell by 12% to $1.7-trillion last year, the second consecutive year of decline. However, for the first time, spending on the electricity sector exceeded the combined spending on oil, gas and coal supply. “Oil and gas represent two-fifths of global energy investment, despite a fall of 38% in capital spending in that sector between 2014 and 2016. As a result, the low-carbon components, including electricity networks, grew their share of total supply-side investment by 12 percentage points to 43% over the same period.”

Global electricity investment was flat at $718-billion, with growing network spending offset, mostly, by fewer coal-fired power additions. “Investment in coal-fired plants fell sharply, with nearly 20 GW less commissioned, reflecting concerns about local air pollution and the emergence of overcapacity in some markets, notably China, though investment grew in India. The investment decisions taken in 2016, totalling a mere 40 GW globally, signal a more dramatic slowdown ahead for coal power investment once the current wave of construction comes to an end.”

Even investment in renewables-based power capacity, the largest area of electricity spending, fell 3% to $297-billion. Renewable-energy investment was also 3% lower, compared with five years ago, but the IEA said the plants would generate 35% more power, owing to cost declines and technology improvements in solar photovoltaic (PV) and wind.

The IEA reported that 10 GW of nuclear power capacity came on line in 2016, which was the highest in over 15 years. However, construction of only 3 GW of new nuclear capacity was started, mostly in China, which was 60% lower than the average of the previous decade.

The report also found that carbon emissions stagnated in 2016 for the third year. However, it argued that investment in clean electricity generation was not keeping pace with demand growth.

“Growth in new wind and solar PV generation is almost entirely offset by a slowdown in final investment decisions for new nuclear and hydropower expected in the coming years. “Consequently, investment in new low-carbon generation needs to accelerate just to keep pace with electricity demand growth.”

With well over 90% of electricity sector investments funded with regulated pricing or contracts to manage revenue risks, government policies and new business models would play a pre-eminent role in attracting more financing, the IEA said.

Energy efficiency investment, meanwhile, rose 9% to $231-billion, with China emerging as the fastest-growing region for such investments, accounting for 27% of the total last year.

The IEA says that, at this rate, China could soon eclipse Europe as the largest spender on energy efficiency. More than half of the global investment in energy efficiency went to buildings, including efficient appliances, which account for a third of the world’s total energy demand.

China was also the world’s largest energy investor overall in 2016, notwithstanding a 25% decline in coal-fired power investment. The IEA says clean electricity generation and networks, as well as energy efficiency investment, are increasingly driving the country’s investment.

The US, meanwhile, recorded a sharp decline in oil and gas investment, and accounted for 16% of global spending. India was the fastest-growing major energy investment market, with spending up 7% as a result of a strong government push to modernise and expand the power sector.

After two years of “unprecedented” decline, global upstream oil and gas investment is expected to stabilise this year.

“However, an upswing in US shale spending contrasts with stagnation in the rest of the world, signalling a two-speed oil market. “At the same time, the oil and gas industry overall is transforming itself by delivering large cost savings and focusing more on technology development and efficient project execution,” the IEA stated.