Climate activists say the oil and gas industry is investing too much in fossil fuels. Fossil fuel industry officials argue the opposite, that there’s not enough investment to meet demand that will remain robust for decades.

In a recent report, analysts from the consultancy Wood Mackenzie conclude that the current level of investment — some $500 billion annually across the globe — is about right, given the industry’s efficiency gains and the current pace of the clean energy transition.

The above chart shows how liquid fuels demand (which is nearly all oil) is displaced by cleaner sources between now and 2050.

Investment levels matter for several reasons.

Too much investment in new oil and gas fields could leave the industry with “stranded assets,” causing massive financial losses and corporate failures. Not enough could leave the world short of energy, sending fossil fuel prices skyrocketing and triggering a global recession if countries don’t have adequate clean energy sources.

Fewer dollars invested doesn’t necessarily mean less oil, however. The industry has learned to squeeze more production from each dollar of investment. For example, producers of oil from shale deposits in the United States today generate three times the oil per dollar invested compared to 2014, the result of technology advancements and more disciplined spending, according to Wood Mackenzie.

The investment levels may be ‘just right’ for where we are in the energy transition today, but we’re in no Goldilocks zone. The current pace of the energy transition, although gaining momentum, is still not fast enough to meet climate goals and avert the worst impacts of a warming planet. The current trajectory will keep global warming to about 2.5 degrees Celsius, well above the 1.5-degree stretch-goal from the 2015 Paris Climate Agreement, the analysis finds.

Even if the world gets on track to limit warming to 1.5 degrees, almost $400 billion in fossil fuel investments would still be needed annually until the end of the decade to meet demand that renewables aren’t projected to fill, Wood Mackenzie found. After that, the world would need to continue spending nearly $250 billion a year on fossil fuels through the 2030s to meet energy demand.