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JPMorgan: World Urgently Needs Extra $1.3 Trillion Energy Investment

Global energy demand will continue rising by 2030, which will necessitate an additional $1.3 trillion in investments in all forms of energy, including oil and gas, to avoid a shortage of energy supply, according to JP Morgan.

“Our main finding is that by 2030, energy demand growth will exceed supply growth by circa 20% based on current trends, primarily driven by emerging economies and their efforts to develop and lift their citizens out of poverty,” JP Morgan’s strategists Marko Kolanovic and Christyan Malek said in the bank’s first annual energy outlook, as carried by Reuters.

Global oil demand is set to grow by 10 percent by the end of this decade, while demand for natural gas is expected to jump by 18 percent, according to the U.S. investment bank.

Energy investment, therefore, should include all forms of energy, including oil and gas, nuclear power, and renewables, JP Morgan notes.

“Until scalable, reliable, clean and affordable technologies are available, the world will need to work with all of the current sources of energy - fossil and non-fossil - and their respective drawbacks,” JP Morgan analysts wrote in the outlook.

The bank’s strategists also note that not all fuels are interchangeable—for example, solar panels cannot replace crude oil in petrochemicals production. 

Chronic underinvestment in oil in recent years resulted in tighter market balances even before the Russian invasion of Ukraine roiled the market and upended all forecasts. The supply uncertainty about how much Russian oil could come off the market in the coming months has thrown the underinvestment into sharp relief in recent weeks. 

Moreover, renewable energy sources will need much more investment per year than the world is investing now if net-zero by 2050 targets are to be met, analysts and organizations, including the International Energy Agency (IEA), say.

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Investments in low-carbon energy need to triple if the world is to meet its Paris Agreement targets, the IEA’s Executive Director Fatih Birol said at the end of last year. 

By Tsvetana Paraskova for Oilprice.com

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