Major change in energy investment needed to meet climate goals: IEA

While countries need to increase investments on renewable energy and reduce spending on traditional sources, to meet the targets in the Paris Agreement, the trend witnessed in 2018 was the opposite, the IEA has warned

The world must double spending on renewable power and slash investment in oil and coal by 2030, to keep the Paris climate treaty temperature targets in play, the International Energy Agency (IEA) said, on May 14, 2019. For that to happen, however, trend lines on both fronts moved in the wrong direction last year, the agency reported, in its 4th annual World Energy Investment overview.

Money going into new upstream oil and gas projects – exploration, drilling and infrastructure – rose 4% in 2018, while investment in new coal sources went up by 2%, the first increase in that sector since 2012. At the same time, investment in new renewable power of all kinds dipped by about 2%. In total, global energy investment in 2018 – split across the fuel supply and electric power sectors – totalled USD 1.85 trillion, about the same as in 2017, the IEA reported. This two-year plateau, following three years of slow decline, reflects uncertainty across the industry as to what the future holds.

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“Governments have not clearly committed, nor have they clearly not committed, to reaching the Paris Agreement goals,” Mike Waldron, an IEA energy investment analyst, told journalists ahead of the report’s release. The 2015 treaty enjoins nations to cap global warming at ‘well below’ two degrees Celsius (3.6 Fahrenheit). A landmark UN report in October 2018, concluded that CO2 emissions must drop 45% by 2030 – and reach ‘net zero’ by 2050 – if the rise in Earth’s temperature is to be checked at the safer limit of 1.5 degrees C. The planet’s surface has already warmed 1 degree C since industrialisation began and is on track to heat up another 3 degrees C by century’s end – a recipe for human misery on a global scale, scientists say.

The lack of clear policy direction on climate change has steered energy investors towards projects with shorter lead times, and could contribute to a future gap between supply and demand, according to the report. On current trends, money going to develop all types of energy – especially oil, gas and coal – will fail to meet projected global energy needs over the next decade, it found. “The world is not investing enough in traditional elements of supply to maintain today’s consumption patterns,” IEA executive director Fatih Birol said. “Nor is it investing enough in cleaner energy technologies to change course. Whichever way you look, we are storing up for risks in the future,” Birol said.

At a country level, China continued to be the largest market for energy investment in 2018 but its lead narrowed. India had the second-largest jump in investment, after the United States. The poorest regions of the world, however, continue to see a disproportionate lack of money for new energy of any kind. Sub-Saharan Africa, for example, ‘only received around 15% of investment in 2018, even though it accounts for 40% of the global population’, the IEA said.

(This story has been used as part of the PTI news feed)