The IEA foresees a 10% recovery of energy investments in 2021

The International Energy Agency (IEA) expects that, after the record 20% collapse of investments in the sector in 2020, this year there will be a recovery of 10%, with significant growth worrying it in fossil fuels, even without reaching pre-crisis levels.

In its annual investment outlook report published on Wednesday, the IEA largely links this increase in investment to the 4.6% increase in global energy demand in 2021, which in that case will fully recover from the 4% decline last year.

Global investment in clean energy technologies and efficiency will increase by 8% in absolute figures to $750 billion by 2021, but its relative weight will fall slightly to just over 40% of the total.

The general director of the organization, Fatih Birol, considers that the rebound in investments is good news, but insists that what is needed is that “many more resources are mobilized and directed to clean energy technologies” to be able to meet the objectives of net zero emissions of carbon dioxide (CO).₂) on the horizon of 2050.

According to the roadmap drawn up by the IEA itself, the $750 billion is very insufficient to achieve those goals. According to his calculations, the funds would actually have to triple during this decade.

RENEWABLES WILL DOMINATE ELECTRICITY, WITH 70%

In electricity, after the stagnation observed in 2020, the increase in investment this year will be 5% to a record volume of 820,000 million dollars.

As happened last year, renewables will clearly dominate in energy, with 70% of the total, which is equivalent to 530,000 million dollars in new generation capacities.

The authors of the report note that thanks to the improvement of these renewable technologies and the lowering of production costs, now every dollar invested in photovoltaic solar equipment generates four times more electricity than ten years ago.

As far as fuels are concerned, after the 25% collapse in 2020, this year an increase of 14% to about 710,000 million dollars is anticipated.

14.5% of that money will go to coal and 84% will go to oil and gas, with an increase of 8%, which in this case will not allow to recover all the ground lost in 2020 with the shock of the coronavirus crisis.

STATE OIL COMPANIES GAIN GROUND

The IEA notes that there is a divergence of strategies between state-owned companies, especially from producing countries, and large Western private companies in the oil and gas sector, which are increasingly marginalizing these fuels despite the price pull of recent months.

While the latter will slightly decrease their investments in extraction wells (-2%), the former will inject more money (+10%) into their own deposits, which should lead to an increase in their market share, especially if demand also goes up.

To give you an idea, the relative weight of large private groups in oil and gas was 40% in the middle of the last decade and has been reduced to 25%.

In coal, investment should increase slightly, especially from the hand of the two big heavyweights that are China and India.

The IEA sees positive signs since the beginning of the year in policies in favour of energy innovation in advanced economies to reach the goal of net zero carbon dioxide (_CO2) emissions by 2050.

It estimates that by 2030 some $50 billion of public funding will be dedicated to pilot projects in low-emission technologies and other means of mitigating industrial pollution.

But if the trend of investment flow for clean energy is favorable – although insufficient – in the developed world and in China, the agency observes a delay in the rest of the developing countries, which will remain this year at levels lower than those before the crisis.

Source: The Energy Newspaper