Energy Investments Aren’t Enough to Bring Down Prices, IEA Says
Investments in global energy supplies will jump this year, led by an expansion in no-emission or low-emission capacity but the spending won’t be sufficient to tame soaring energy prices, or meet global climate targets, the International Energy Agency said.
The most severe global energy crisis in decades, brought on in part by Russia’s invasion of Ukraine, has caught companies and investors between longstanding efforts to transition to cleaner energy sources and more immediate demands to rapidly increase supply to contain soaring prices. The latest investment figures, published by the Paris-based agency in an annual report Wednesday, suggest energy investment levels are struggling in both regards, the IEA said.
“As things stand, today’s energy investment trends show a world falling short on climate goals, and on reliable and affordable energy,” the report said.
Total energy investment is forecast to rise by 8% this year to $2.4 trillion, above pre-Covid-19 levels. A jump in spending on clean and renewable energy sources comprises the largest chunk of the rise, a promising sign for global efforts to reduce carbon emissions following years of lackluster growth, the IEA said.
Clean energy investment grew by an average of 2% a year in the five years after the 2015 Paris climate agreement, which committed most of the world’s countries to reducing emissions. Since 2020, that investment has expanded by 12%, a significant increase but still far short of the levels required to meet the world’s emissions targets, the IEA said.
Spending on clean energy is expected to exceed $1.4 trillion in 2022, far behind the roughly $2.8 trillion which would be required to meet current climate pledges by 2030 and further still behind the more than $4 trillion that will be needed to achieve net-zero emissions by 2050. Both are targets embraced by Western governments.
Oil and gas prices have soared since Russia’s invasion of Ukraine. Russia, one of the world’s biggest exporters of oil, has seen some of its supplies shunned by Western nations. Sanctions have stranded millions of barrels of oil in the country and forced its oil companies to shut off wells. Russia has also recently curtailed natural gas shipments to Europe, blaming technical issues. Western leaders accuse Moscow of using gas as a political weapon.
While the crisis has accelerated spending on clean energy, it has also revived investments in fossil fuels, prompted by concerns about energy security. Oil and gas investments rose 10% in 2021 but remain below pre-Covid levels, the IEA said. Investment in coal supply rose 10% in 2021 and is expected to rise by a similar amount this year, despite global pledges to move away from the fuel.
Despite all that new investment, there was little sign that the extra energy supplies would be sufficient to bring an end to high energy prices. Soaring prices threaten to push millions in Asia and Africa back into energy poverty, the IEA said.
“A massive surge in investment to accelerate clean energy transitions is the only lasting solution,” said
Fatih Birol,
the IEA’s executive director. “This kind of investment is rising, but we need a much faster increase to ease the pressure on consumers.”
Write to Will Horner at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Investments in global energy supplies will jump this year, led by an expansion in no-emission or low-emission capacity but the spending won’t be sufficient to tame soaring energy prices, or meet global climate targets, the International Energy Agency said.
The most severe global energy crisis in decades, brought on in part by Russia’s invasion of Ukraine, has caught companies and investors between longstanding efforts to transition to cleaner energy sources and more immediate demands to rapidly increase supply to contain soaring prices. The latest investment figures, published by the Paris-based agency in an annual report Wednesday, suggest energy investment levels are struggling in both regards, the IEA said.
“As things stand, today’s energy investment trends show a world falling short on climate goals, and on reliable and affordable energy,” the report said.
Total energy investment is forecast to rise by 8% this year to $2.4 trillion, above pre-Covid-19 levels. A jump in spending on clean and renewable energy sources comprises the largest chunk of the rise, a promising sign for global efforts to reduce carbon emissions following years of lackluster growth, the IEA said.
Clean energy investment grew by an average of 2% a year in the five years after the 2015 Paris climate agreement, which committed most of the world’s countries to reducing emissions. Since 2020, that investment has expanded by 12%, a significant increase but still far short of the levels required to meet the world’s emissions targets, the IEA said.
Spending on clean energy is expected to exceed $1.4 trillion in 2022, far behind the roughly $2.8 trillion which would be required to meet current climate pledges by 2030 and further still behind the more than $4 trillion that will be needed to achieve net-zero emissions by 2050. Both are targets embraced by Western governments.
Oil and gas prices have soared since Russia’s invasion of Ukraine. Russia, one of the world’s biggest exporters of oil, has seen some of its supplies shunned by Western nations. Sanctions have stranded millions of barrels of oil in the country and forced its oil companies to shut off wells. Russia has also recently curtailed natural gas shipments to Europe, blaming technical issues. Western leaders accuse Moscow of using gas as a political weapon.
While the crisis has accelerated spending on clean energy, it has also revived investments in fossil fuels, prompted by concerns about energy security. Oil and gas investments rose 10% in 2021 but remain below pre-Covid levels, the IEA said. Investment in coal supply rose 10% in 2021 and is expected to rise by a similar amount this year, despite global pledges to move away from the fuel.
Despite all that new investment, there was little sign that the extra energy supplies would be sufficient to bring an end to high energy prices. Soaring prices threaten to push millions in Asia and Africa back into energy poverty, the IEA said.
“A massive surge in investment to accelerate clean energy transitions is the only lasting solution,” said
Fatih Birol,
the IEA’s executive director. “This kind of investment is rising, but we need a much faster increase to ease the pressure on consumers.”
Write to Will Horner at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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