Global investment in energy is on track to recover by nearly 10% in 2021 to US$ 1.9 trillion, reversing most of last year’s decline as a result of the COVID-19 pandemic, but still likely to delay net-zero by 2050, IEA notes.
In a report released on Wednesday, June 2, 2021, the International Energy Agency (IEA) averred that spending on clean energy transitions need to accelerate much more rapidly.
The report notes that while energy investment is returning to pre-pandemic levels, the composition remains skewed towards electricity. And 2021 is likely to become the sixth consecutive year to have investment in the power sector exceed that in oil and gas supply.
Specifically, investment in electricity is set to increase by around 5 percent in 2021 to more than US$ 820 billion, its highest ever level, after remaining stagnant in 2020. Besides, renewables are the dominating investment in new power generation capacity, and are expected to account for 70 percent of the total this year.
“The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing towards renewables,” remarked Faith Birol, the IEA’s Executive Director.
“But much greater resources have to be mobilised and directed to clean energy technologies to put the world on track to reach net-zero emissions by 2050. Based on our new Net Zero Roadmap, clean energy investment will need to triple by 2030.”
Faith Birol, Executive Director, IEA
While renewables appear to dominate new power investment, coal is not out of the picture, although the use of coal fired plants for electricity has been subdued by some 80% below as compared to their use five years ago.
Investment in other sectors and Climate policies
Moreover, the report reveals that upstream oil and gas investment is expected to rise by about 10% in 2021 as companies recover financially from the pandemic’s effect, albeit their spending is below pre-pandemic levels.
The report further highlights that the recovery packages and new climate policy measures are likely to reflect in an expected rise in expenditure on renewable power, electricity grids, energy efficiency.
These increased expenditure are likely to occur in the buildings sector in Europe and emerging technologies such as carbon capture, utilisation and storage and low-carbon hydrogen. Likewise, the United States may provide further momentum if the infrastructure plan proposed by the administration of President Joe Biden is enacted, the report suggests.
“As set out in detail in our recent Roadmap to Net Zero by 2050, governments need to go beyond making pledges to cut emissions and take concrete steps to accelerate investments in market-ready clean energy solutions and promote innovation in early-stage technologies.
“Clear policy signals from governments would reduce the uncertainties associated with clean energy investments and provide investors with the long-term visibility they need. Our Roadmap shows there are huge opportunities for companies, investors, workers and entire economies on the path to net zero. Governments have the power to unlock these broad-based benefits.”
Faith Birol, Executive Director, IEA
In all these, the disparity identified between current investment trends and the needs of climate-driven scenarios is particularly large in emerging markets and developing economies. The report notes that this presents the major defaulting line in clean energy transitions, thus, a clear direction is required to close the gap in investment.
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