Page 6 - AsiaElec Week 21

AsiaElec COMMENTARY AsiaElec
Energy investment set to plummet in 2020 at lockdown takes its toll
Renewables are proving more resilient than fossil fuels, although green investment continues to fail to meet Paris Agreement requirements, writes Richard Lockhart
GLOBAL
WHAT:
Energy investment set to fall by 20% in 2020
WHY:
The global lockdown, falling demand and declining revenues have all pulled down investment
WHAT NEXT:
The future is uncertain, and weak areas, such as coal generation outside China, will see investment fall the most
GLOBAL energy investment in now forecast to fall by 20%, or $400bn, in 2020, the International Energy Agency (IEA) has warned, rather than grow by the previously forecast of 2%.
The economic impact of coronavirus (COVID-19) will lead to what the IEA calls the biggest fall in global energy investment in history.
Only renewables investment has shown any resilience to the global collapse in energy demand, but it is still well below what is needed to meet the world’s climate change goals. Indeed, the energy transition risks being undermined as investment dips, while the focus that govern- ments and energy companies will direct towards green energy in future is far from certain.
The IEA called the 20% decline “unparal- leled,” and blamed it squarely on the COVID-19 crisis bringing large parts of the world economy to a standstill.
Meanwhile, energy sector revenues are fore- cast to fall by $1 trillion in 2020, driven by a com- bination of falling demand, lower prices and a rise in the non-payment of bills.
Indeed, global consumer spending on oil could fall below the amount spent on electricity, the report found.
Spending breakdown
The report forecasts that investment in oil and gas will decline by 32%, or $245bn in 2020, while capital spending in the power sector will fall by 10%, or $70bn. Investment in energy end use and efficiency could decline by 12%, or $40bn. The smallest absolute decline is for coal at $10bn, or a 15% fall in coal investment.
In regional terms, China, the largest mar- ket for investment and a major determinant of global trends, is set for a 12% decline in energy spending in 2020. This decrease is softened by Beijing restarting industrial activity earlier than in the rest of the world following the country’s strong lockdown measures.
“The slowdown in spending on key clean
energy technologies also risks undermining the
much-needed transition to more resilient and
sustainableenergysystems.” IntheUS,investmentissettobe25%,asitis
Global recession
The IEA describes its 20% forecast for the decline in energy investment as its “baseline expecta- tion,” which foresees a global recession resulting from widespread lockdowns.
This builds on its previous report on CO2 emissions, which forecast an 8% contraction in 2020, the largest annual decline ever.
the most exposed to the reduction in oil and gas spending. Investment in Europe will contract by 17%.
The report warns the reduced investment will hurt developing economies in Africa and Asia, especially those with oil and gas industries, the hardest, as they are the most exposed to fall- ing revenues.
P6
w w w . N E W S B A S E . c o m Week 21 27•May•2020