North American shale remains the largest area for energy investment, but at $138 billion, upstream funding withered to less than half the size it was two years ago.

The oil and gas downturn has caused upheaval in how money is flowing into projects, according to the World Energy Investment 2016 report by the International Energy Agency (IEA). That includes a sizeable uptick in spending on renewable energy.

Globally, the upstream oil and gas industry was the largest sector for energy investment in 2015, with spending of $583 billion. However, spending fell by 25% in 2015 and a further 24% drop is estimated for 2016—the first two-year drop in three decades.

Upstream spending is projected to remain stable or decline slightly in 2017. Three consecutive years of decline would be unprecedented, IEA said. Notably, declining extraction-related costs have offset $300 billion in lost investment between 2014 and 2016.

Fossil fuels continue to dominate energy supply, but the shift of investment toward other forms of energy production is beginning to be felt.

The shift is mostly seen in investment toward low-carbon sources of power generation. Spending on all renewable energy sources, including biofuels and solar thermal heat installations, totaled $313 billion as low-carbon energy sources either become more economical or are required by regulation.

Between 2011 and 2015, renewable power capacity spending was relatively flat, but investment yielded 40% greater capacity additions. Renewables now generate one-third more power due to improved, cheaper wind and solar technology and deployment in markets with better resources.

“We see a broad shift of spending toward cleaner energy, often as a result of government policies,” said Fatih Birol, IEA executive director. “Our report clearly shows that such government measures can work and are key to a successful energy transition. But while some progress has been achieved, investors need clarity and certainty from policy makers. Governments must not only maintain but heighten their commitment to achieve energy security and climate goals.”

China was the chief destination for money to fund renewable power capacity. At more than $90 billion, renewable power made up 60% of the nation’s total 2015 investment in power generation. By contrast, Chinese fossil fuel power generation investments were about $45 billion and mostly in coal.

From a broader perspective, IEA raised some alarm bells about funding the movement of natural gas, and specifically LNG.

Investment in LNG liquefaction terminals and major pipelines is falling after two years of spending highs.

Spending peaked in the past two years with about $35 billion annually while plants were converted or built in Australia and the U.S. In 2016, LNG investment is on course to plunge by 30% and could fall even more in the coming years.

“The looming collapse in investment in LNG from 2017, which will result from a lack of final investment decisions on new projects, points to a tightening of LNG markets and potential supply security concerns in the coming years,” the report said.

The U.S. shale industry faces its own challenges as it was the E&Ps’ willingness to live on the edge of the balance sheets that got them into trouble in the downturn.

“The impact of low oil prices on cash flow tested the debt-financed investment model of the U.S. shale oil industry, leading to a particularly sharp fall in investment of 52% in that sector in the past two years,” the IEA report said. “While financial pressures in the shale industry remain widespread despite a recent partial recovery in oil prices, the operators that have filed for bankruptcy represent only a minor proportion of total U.S. non-conventional production.”

Darren Barbee can be reached at dbarbee@hartenergy.com.