Global energy investment this year is seen expanding by 10 percent from 2020 to $1.9 trillion, the International Energy Agency said in its World Energy Investment 2021 report.
Energy demand is also on the rebound, and it is a strong one, with the IEA expecting it to expand by 4.6 percent this year, more than making up for the 4-percent contraction of last year.
Investments in the power sector are set for a 5-percent increase this year, with renewables unsurprisingly taking the biggest share. These will account for 70 percent of 2021 investments in the power sector, or $530 billion out of a total $820 billion in power sector investments. The rest will be investments in energy storage and the grid.
Investments in oil and gas exploration and production are set to rise by 10 percent this year, driven by recovering demand and the resulting higher oil and gas prices. Yet, the IEA notes, spending will remain below pre-pandemic levels this year.
Some $740 billion is expected to be invested in clean energy technologies and efficiency this year as well. The IEA has noted that this amount still “remains far below what is required in climate-driven scenarios. Clean energy investment would need to double in the 2020s to maintain temperatures well below a 2°C rise and more than triple in order to keep the door open for a 1.5°C stabilisation.”
The amount invested in energy will vary significantly across countries, the IEA also noted. While developed economies have recovered relatively quickly from the pandemic, emerging economies are lagging behind. They also have fewer resources available to invest in energy, which is why, according to the IEA, emerging economies excluding China will only account for a third of energy investments this year and a fifth of clean energy investments, with the rest coming from developed economies.
By Irina Slav for Oilprice.com
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Moreover, it is a slap in the face of the IEA who recently called for keeping global oil and gas reserves underground in its roadmap to zero emissions.
Oil and gas will reign supreme well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London