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Earth’s energy needs will cost $48 trillion by 2035 to meet the demands of a growing global population, the International Energy Agency (IEA) reports.
The Paris-based IEA, an energy think tank, reported June 3 that the world’s current annual investment in energy is about $1.6 trillion but needs to rise to about $2 trillion a year. Besides that, it said, investment in energy efficiency must rise to more than $550 billion a year.
Of the $48 trillion total, about $40 trillion will have to be spent on extracting, transporting and, where applicable, refining energy, as well as investing in low-polluting technologies such as nuclear and renewable power, the report said.
Two-thirds of investment will have to be spent in countries with emerging economies in Asia, including China, and in Africa and Latin America, the report said. However, it stressed that developed economies, mostly in the West, also will pay more during the next two decades to address policies on climate change and to cope with their aging energy infrastructures.
The IEA assessment said even $48 trillion won’t be enough to address all world’s energy problems, including energy efficiency, increasing renewable sources and making ensuring adequate fossil fuel supplies to countries that don’t have indigenous sources of these materials.
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For example, the Global Sustainability Institute, a British think tank, reported that some European countries face energy crises because their energy stockpiles are dwindling, and Australia’s energy industry is strapped with a combination of declining productivity and soaring costs.
Meanwhile, the IEA report said, Middle Eastern countries also must increase their currently sluggish investments in energy, or the price of its oil may rise by $15 a barrel by 2025.
The report quoted IEA Executive Director Maria van der Hoeven as saying governments can’t afford to skimp on these investments. “There is a real risk of shortfalls, with knock-on effects on regional or global energy security, as well as the risk that investments are misdirected because environmental impacts are not properly reflected in prices,” she said.
By Andy Tully of Oilprice.com
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com