Global investment in energy is forecast to increase by nearly 10 percent in 2021 to USD 1.9 trillion, a new report from the International Energy Agency (IEA) said.
Global power sector investment is set to increase by around 5 percent in 2021 to more than USD 820 billion, after staying flat in 2020.
Renewables are dominating investment in new power generation capacity and are expected to account for 70 percent of the total this year. Dollar spent on solar PV deployment results in four times more electricity than ten years ago, thanks to improved technology and falling costs.
“The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing towards renewables,” said Fatih Birol, the IEA’s Executive Director. “But much greater resources have to be mobilised and directed to clean energy technologies to put the world on track to reach net-zero emissions by 2050. Based on our new Net Zero Roadmap, clean energy investment will need to triple by 2030.”
While renewables dominate new power investment, and approvals for coal-fired plants are some 80 percent below where they were five years ago, coal is not out of the picture. There was even a slight increase in go-aheads for coal-fired plants in 2020, driven by China and some other Asian economies.
Upstream oil and gas investment is expected to rise by about 10 percent in 2021 as companies recover financially from the shock of 2020, but their spending remains well below pre-crisis levels. The new report highlights the diverging strategies among different oil and gas companies. The majors are holding oil and gas spending flat on aggregate in 2021, despite recovering prices.
Some national oil companies are stepping up investment, raising the possibility of increased market share if demand continues to grow. Qatar’s decision to move ahead with the world’s largest liquefied natural gas (LNG) expansion, and to include carbon capture technologies in this investment, is a strong signal of its intent to maintain a leadership position in LNG.