Business Energy Broker
The latest reports from the International Energy Agency (IEA) address the increase in energy investments but are falling short of a net-zero future.
Global energy investments are due to make a 10% rebound in 2021, returning to pre COVID-19 level. Although this will result in a 1.9 trillion USD fund across the industry, clean energy investments must increase within a short period to meet net-zero goals established by COP26 as indicated by the International Energy Agency.
This year investments are set to be at their highest level ever and mark the sixth year in a row where energy investment exceeds the oil and gas supply markets. Positively, renewable energy and technology remain the dominant asset of investments which is expected to take a 70% share in this year’s total generation capacity.
Clean energy is more viable than ever with the continuous support and investments spent over the last decade. The leaps in technology have enabled us to benefit more from things such as solar photovoltaic power as we can generate four times more power compared to 10 years ago at the same price.
Nevertheless, we still require a rapid increase to clean investment as IEA’s Executive Director, Faith Birol, said:
“The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing towards renewables, 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.”
Unfortunately, the events of 2020 had a large impact on the progress of new technologies and in some cases, more coal-powered stations were introduced to make up for power loss. This was in large part to Asia and the power-intensive countries within the economy.
The majority of clean energy investments are directed towards electricity but, oil and gas investments are also expected to make a large increase to assist in net-zero efforts. Large national oil and gas businesses are expected to grow their market share of investments as demand grows for the industry. For example, Qatar is making the world’s largest liquefied natural gas expansion while including carbon capture technology to support reductions in emissions.
Compared to 2020 figures of a 1% capital spending to clean energy investment, the oil and gas industry will diversify their spending and raise capital spending to 4% with some European countries exceeding 10%.
In conclusion, we have seen great development in clean energy over the past decade improving viability and potential but this must continue to grow at an increased rate if we are to meet net-zero goals. There is a critical gap between current investments and the needs of climate scenarios which will be raised in the COP26 meeting at the end of the year, hosted in Glasglow.