Global energy investment is set for a record 20% drop this year amid a “historic plunge” caused by the fallout from the Covid-19 pandemic, warned the International Energy Agency (IEA).

The Paris-based agency said in its World Energy Investment 2020 report, released on Wednesday, that the unparalleled decline is “staggering in both its scale and swiftness”, with serious potential implications for clean energy transitions around the world.

At the start of this year global energy investment was on track for a growth of around 2%, which would have been the largest annual rise in spending for six years. But the Covid-19 crisis has upended these expectations, and the IEA predicts that 2020 is now set to see the largest decline in energy investment on record, a reduction of around 20% – or almost $400bn – compared with last year.

The report said power sector spending is on course to decrease by 10% in 2020, with worrying signals for the development of more secure and sustainable power systems. Renewables investment has been more resilient than fossil fuels during the crisis, but spending on rooftop solar installations by households and businesses has been strongly affected, while final investment decisions for new utility-scale wind and solar projects in the first quarter of 2020 fell back to the levels seen three years ago.

“The historic plunge in global energy investment is deeply troubling for many reasons,” said IEA executive director Fatih Birol. “It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers. The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”

A combination of falling demand, lower prices and a rise in cases of non-payment of bills means that energy revenues for government and industry are set to fall by well over $1trn in 2020, according to the report. Oil accounts for most of this decline as, for the first time, global consumer spending on oil is set to fall below the amount spent on electricity.

The IEA said global investment in oil and gas is expected to fall by almost one-third during 2020. It said for oil markets if investment remains at 2020 levels then this would reduce the previously-expected level of supply by almost 9 million barrels a day in 2025. The shale industry was already under pressure, and investor confidence and access to capital has now dried up with shale investment anticipated to fall by 50% in 2020.

An expected 9% decline in investment in electricity networks this year compounds a large fall in 2019, and spending on important sources of power system flexibility has also stalled, with investment in gas plants stagnating and spending on battery storage levelling off.

“Electricity grids have been a vital underpinning of the emergency response to the health crisis – and of economic and social activities that have been able to continue under lockdown,” said Birol. “These networks have to be resilient and smart to ward against future shocks but also to accommodate rising shares of wind and solar power. Today’s investment trends are clear warning signs for future electricity security.”

The overall share of global energy spending that goes to clean technologies – including renewables, energy efficiency, nuclear and carbon capture and storage – has been stuck at around one-third in recent years. In 2020, it will jump towards 40%, but only because fossil fuels are taking such a heavy hit. In absolute terms, clean energy spending remains far below the levels required to accelerate energy transitions.

“The crisis has brought lower emissions but for all the wrong reasons. If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment,” said Birol. “The response of policymakers – and the extent to which energy and sustainability concerns are integrated into their recovery strategies – will be critical.”