IEA: 10% increase in global energy investment in 2021 but still far from achieving climate goals

Global energy investment is set to rebound by about 10% in 2021 to $1.9 trillion, reflecting most of the decline in the past year caused by the Covid-19 pandemic. But spending on clean energy transitions needs to be accelerated much faster to meet climatetargets, according to a new report from the International Energy Agency.

Global investment in the energy sector is set to increase by about 5% in 2021 to more than $820 billion, an all-time high, after remaining flat in 2020. Renewables dominate investment in new power generation capacity; It is expected to represent 70% of the total this year. And that money is now going further than ever in financing clean electricity.

FatihBirol, Executive Director of the International Energy Agency, says: “The recovery in energy investment is a good sign, especially as investments are flowing towards renewables, but much greater resources should be mobilized and directed to clean energy technologies to put the world on the right track to reach net Zero emissions by 2050.

While renewables dominate new energy investment, and approvals for coal-fired plants are about 80% lower than they were five years ago, coal is not yet out of the ring especially and there is a slight increase in approvals for coal-fired plants in 2020, driven by China and some other Asian economies.

Investment in oil and gas exploration is expected to rise by about 10% in 2021 as companies recover financially from the 2020 shock, but their spending is still well below pre-crisis levels.

Big companies are keeping spending on oil and gas flat overall in 2021, even though prices have recovered. Meanwhile, some NOCs are stepping up their investments, raising the possibility of increasing their market share if demand continues to grow. Qatar’s decision to proceed with the world’s largest 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.

The expected amount of US$750 billion to be spent on clean energy and efficiency technologies in 2021 is encouraging but still falls far short of what is needed to put the energy system on a sustainable path. Investment in clean energy must triple to put the world on track to reach net zero emissions by 2050, thus keeping the door open for stabilizing 1.5°C of global warming.