Global energy investment to plummet this year

28th May 2020


Web electricity istock 494281850

Related Topics

Related tags

  • Energy ,
  • Fossil fuels ,
  • Renewable ,
  • Global ,
  • Investment

Author

Colin Charman

The coronavirus pandemic will result in the largest drop in global energy investment ever recorded, with spending expected to plummet across every major sector this year.

That is according to a new report from the International Energy Agency (IEA), which said that the “staggering“ decline could have serious implications for energy security and clean power transitions.

The report outlines how global energy investment for 2020 was on track for around 2% of growth prior to the coronavirus crisis, which would have been he largest annual rise in spending for six years.

However, with the pandemic bringing large swathes of the world economy to a standstill in a matter of months, investment is now expected to plummet by 20%, or almost $400bn (£324bn), compared with last year.

“The historic plunge in global energy investment is deeply troubling for many reasons,“ said IEA executive director Dr Fatih Birol. “It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers.

“The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.“

The forecasts are based on the latest available investment data and announcements by governments and companies as of mid-May, tracking of progress on individual projects, and interviews with leading industry figures and investors.

Global investment in oil and gas is expected to fall by almost one-third in 2020, while investment in coal supply is set to fall by one-quarter, although this does not pose an existential threat for the industry.

Concerningly, the IEA found that approvals of new coal plants in the first quarter of 2020, mainly in China, were running at twice the rate observed over 2019 as a whole.

Renewables investment has been more resilient than fossil fuels, but spending on rooftop solar installations has been strongly affected, and final investment decisions in the first quarter of 2020 for new utility-scale wind and solar projects fell back to the levels of three years ago.

Spending on efficiency and end-use applications is set to fall by an estimated 10-15% as vehicle sales and construction activity weaken and investment in more efficient appliances and equipment is dialled back.

The overall share of clean energy technologies in global energy spending is expected to jump from around 33% to 40%, but only because fossil fuels are taking such a heavy hit, and the share remains far below levels needed to accelerate energy transitions.

“The crisis has brought lower emissions but for all the wrong reasons,“ Dr Birol continued. “If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment.

“The response of policy makers – and the extent to which energy and sustainability concerns are integrated into their recovery strategies – will be critical.“

Image credit: iStock

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

How much is too much?

While there is no silver bullet for tackling climate change and social injustice, there is one controversial solution: the abolition of the super-rich. Chris Seekings explains more

4th April 2024

Read more

Alex Veitch from the British Chambers of Commerce and IEMA’s Ben Goodwin discuss with Chris Seekings how to unlock the potential of UK businesses

4th April 2024

Read more

Five of the latest books on the environment and sustainability

3rd April 2024

Read more

The UK’s major cities lag well behind their European counterparts in terms of public transport use. Linking development to transport routes might be the answer, argues Huw Morris

3rd April 2024

Read more

Ben Goodwin reflects on policy, practice and advocacy over the past year

2nd April 2024

Read more

A hangover from EU legislation, requirements on the need for consideration of nutrient neutrality for developments on many protected sites in England were nearly removed from the planning system in 2023.

2nd April 2024

Read more

It’s well recognised that the public sector has the opportunity to work towards a national net-zero landscape that goes well beyond improving on its own performance; it can also influence through procurement and can direct through policy.

19th March 2024

Read more

The UK government’s carbon capture, usage and storage (CCUS) strategy is based on optimistic techno-economic assumptions that are now outdated, Carbon Tracker has warned.

13th March 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close