Countries have been told to drive a doubling of renewable investment this decade after research revealed the extent of COVID-19’s impact on energy sector investment.
World Energy Investment 2020, published by the International Energy Agency (IEA), warned that the pandemic has set in motion the “largest drop in global energy investment in history” with every major sector expected to see spending fall. Having been set for around 2% growth at the start of 2020, the largest annual rise in six years, global energy investment is now expected to fall 20% due to the impact of COVID-19.
Fossil fuels are to be most heavily impacted, with investment in oil and gas falling by a third worldwide, and shale gas investment dropping 50%, though power sector spending will also decline 10% in 2020. While renewables investment has been more resilient than fossil fuels during the crisis, this presents “worrying signals” for the development of more secure and sustainable power systems, said the IEA. Spending on rooftop solar installations has been strongly impacted as have final investment decisions in the first quarter of 2020 for new utility-scale wind and solar projects, dropping to the levels of three years ago.
The hit taken by fossil fuels will result in the overall share of global energy spending devoted to clean energy technologies – renewables, efficiency, nuclear, and carbon capture, utilisation and storage – actually rising. It will jump towards 40% in 2020, having been stuck around a third in recent years, but in absolute terms, still “far below” levels needed to accelerate energy transitions.
IEA Executive Director, Fatih Birol, said: “The crisis has brought lower emissions but for all the wrong reasons. If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment. The response of policy makers – and the extent to which energy and sustainability concerns are integrated into their recovery strategies – will be critical.”