Coal and a wind turbine in Hohenhameln, Germany, on April 11, 2022. Several major economies have developed plans to reduce their dependence on Russian hydrocarbons in recent months.
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According to the International Energy Agency, global energy investment will grow by more than 8% by 2022 and reach $2.4 trillion, but more money will be needed if climate-related goals are met. .
Published on Wednesday, the latest version of the IEA’s World Energy Investments report says clean energy investment will exceed $1.4 trillion this year and account for “nearly three-quarters of the growth in energy investment overall.”
While the agency welcomes this, it points to the enormous amount of work that lies ahead.
“The average annual growth rate of clean energy investment in the five years after the Paris Agreement was signed in 2015 was just over 2%,” the report said.
Since 2020, that percentage has increased to 12%. The IEA describes it as “very short of what is needed to achieve the international climate goals, but nonetheless an important step in the right direction.”
The Executive Director of the IEA, Fatih Birol, highlighted the challenges and opportunities facing the planet in the current situation.
“We can’t ignore today’s global energy crisis or the climate crisis, but the good news is that we don’t have to choose between them – we can tackle both at the same time,” he said. at the time.
Birol added that “the massive increase in investment to accelerate the clean energy transition” is the “only long-term solution.”
“This type of investment is growing, but we need to grow much faster to ease the pressure on consumers from high fossil fuel prices, make our energy system safer, and bring the world on track to achieve our climate goals.”
Spending is unevenly distributed
While the investment was welcome, a statement accompanying the IEA report noted that the increase in clean energy spending was unevenly distributed, with advanced economies and China accounting for the majority. great.
On top of that, it said some markets are seeing high prices and concerns related to energy security are driving “more investment in fossil fuel supplies, particularly in coal.” rock.”
According to the IEA’s report, 2021 sees around $105 billion in investments in what it calls a “coal supply chain”. That represents a 10% increase over 2020. It is forecast that the industry will likely follow a similar path this year.
“Investment in the global coal supply is expected to grow by 10 percent by 2022 as tight supply continues to attract new projects,” it said. “With more than $80 billion, China and India are projected to account for the majority of global coal investment by 2022.”
The U.S. Energy Information Administration lists a wide range of emissions from coal combustion. These include carbon dioxide, sulfur dioxide, particles and nitrogen oxides.
For its part, Greenpeace has described coal as “the dirtiest, most polluting way of energy production.”
Challenging global environment
The IEA report comes at a time of rising inflation, persistently rising oil and gas prices and geopolitical tensions related to the Russia-Ukraine war.
Those factors have created an extremely challenging environment for businesses, governments and consumers. The energy sector is no different.
“Nearly half of the $200 billion in additional investment in 2022 will likely be consumed by higher costs, rather than resulting in additional energy supply or savings,” the IEA said.
It added that the cost of solar panels and wind turbines – critical technologies for the energy transition – has now “increased by 10% to 20% since 2020” after a period of decline. .
People around the world are feeling the pinch too: Total energy bills for consumers in 2022 look set to exceed $10 trillion for the first time, the IEA report says.
“High prices are encouraging some countries to step up investment in fossil fuels, as they seek to secure and diversify their supplies,” the report states.
Several major economies have formulated plans to reduce Russia’s reliance on hydrocarbons in recent months, which has led to some challenging situations.
In Europe, for example, Russian gas flows have decreased and the specter of full supply disruptions has has prompted some governments to consider a return to coal.
Germany, Italy, Austria and the Netherlands have all said coal-fired power plants could be used to make up for cut Russian gas supplies.
