The largest drop in the investment in the history of global energy is being engineered by the novel coornavirus pandemic.
According to the International Energy Agency (IEA), investment in global energy expected to increase by 2 per cent before the pandemic hit the world. But now the IEA estimates that there will be a plunge of 20 per cent in investment in new energy projects globally.
The IEA noted that investments were to get reduced most in fossil fuels with a 30 per cent drop in expected investments for oil and a 15 per cent for coal based projects.
Investment in revewable energy is expected to be down by 10 per cent which is about half of what was needed to address climate change issues, the IEA predicted.
For the time being however there has been fall in planet-heating carbon emissions because of a fall in investment because of the novel coronavirus lockdown measures imposed by many countries.
But there is a high likelihood of an increase in use and demand for fossil fuels after the crisis is over which will lead to an increase in CO2, the IEA warned.
One reason is because China and other Asian nations are putting in orders now for a new generation of coal-fired power plants to supply energy in the future.
“We see a historical decline in emissions, but unless we have the right economic recovery packages, we might see emissions again skyrocket and the decline of this year would be completely wasted,” said the IEA’s executive director Fatih Birol.
“Remember the 2008-2009 crashes. We immediately saw a decline in emissions, but afterwards it rebounded. We must learn from history.”
He added that compared to the whole of 2019, the number of clearances for new coal plants in the first quarter of 2020, primarily in China, was at double the rate of 2019.
Currently the investment in energy on the overall is lower by about $400bn of the t11ot1la expectations for 2020. Serious doubts about energy security after the reopening of global economy are being raised because of the drop in investments since energy projects take so long to deliver, the IEA said.
The report says the decline in investment is “staggering” in its scale and swiftness, mostly due to low demand and low prices for energy, especially oil.
“The historic plunge in investment is deeply troubling. 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 also risks undermining the much-needed transition to more sustainable energy systems,” Dr Birol said.
There will be more than a trillion dollars in 2020 of drop in combined value because of falling demand, lower prices and a rise in non-payment of bills means energy revenues to governments and industry, the report said.
Most of the total of this decline will be because of oil.
Oil accounts for most of the total of this decline. Shale gas – previously the darling of the energy sector – is anticipated to take the biggest percentage hit overall, with a 50% investment fall.
While investments in renewable energy projects is expected to be better compared to fossil fuels projects, there has been a steep decline in investments in rooftop solar installations. The IEA also expects a fall of 10-15 per cent in investments in energy efficiency projects.
(Adapted from BBC.com)