Coal and a wind turbine in Hohenheimlen, Germany, on April 11, 2022. Several major economies have made plans in recent months to reduce their reliance on Russian hydrocarbons.
Mia Butcher | Picture Alliance | Getty Images
Global energy investment is on course to jump over 8% in 2022 to reach $2.4 trillion, With a marked increase to coal supply chains, but more funding will be needed to meet climate-related goals, According to the International Energy Agency.
Published on Wednesday, the latest edition of the IEA’s World Energy Investment Report said clean energy investment exceeded $1.4 trillion this year and accounted for “nearly three-quarters of the increase in overall energy investment”.
While the agency welcomed this, it pointed to a large amount of work that lies ahead.
“The annual average growth rate in clean energy investment in the five years following the signing of the Paris Agreement in 2015 was just over 2%,” it said.
From 2020, this rate had increased to 12%. The IEA described it as “far short of what is needed to hit the international climate targets, but nonetheless an important step in the right direction.”
IEA Executive Director, Fatih Birol highlighted the challenges and opportunities facing this planet in view of the current situation.
“We can’t ignore today’s global energy crisis or the climate crisis, but the good news is that we don’t have to choose between them – we can tackle both at the same time,” he said.
Birol said a “massive increase in investment” is “the only sustainable solution” to accelerate the clean energy transition.
“This type of investment is increasing, but we need to increase it very quickly to reduce pressure on consumers from high fossil fuel prices, make our energy systems more secure, and get the world on track to reach our climate goals.” the wanted.”
While the investment was welcomed, a statement accompanying the IEA’s report said growth in clean energy spending was unevenly distributed, with advanced economies and China accounting for the majority.
On top of that, it said some markets are seeing higher prices and concerns related to energy security are prompting “higher investments in fossil fuel supplies, particularly on coal”.
According to the IEA report, about $105 billion was invested in 2021 in what it called the “coal supply chain”. This represents an increase of 10% compared to 2020. It is speculating that the industry will follow a similar path this year as well.
“Global coal supply investment is expected to grow 10% in 2022 as tight supplies continue to attract new projects,” it said. “At more than USD 80 billion, China and India are projected to make up the bulk of global coal investment in 2022.”
The U.S. Energy Information Administration lists a range of emissions from the combustion of coal. These include carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.
Greenpeace, for its part, has described coal as “the dirtiest, most polluting way of producing energy”.
The IEA’s report comes at a time of rising inflation, a sustained jump in oil and gas prices and geopolitical tensions related to the Russo-Ukraine war.
Those factors have created an extremely challenging environment for businesses, governments and consumers. The energy field is no different.
“Nearly half of the additional $200 billion in capital investment in 2022 is likely to be eaten up by higher costs rather than by bringing in additional energy supply efficiencies or savings,” the IEA said.
It said the cost of solar panels and wind turbines – key technologies for the energy transition – after a period of decline is now “between 10% and 20% since 2020”.
People around the world are also feeling the pinch: Total energy bills for consumers are projected to exceed $10 trillion for the first time in 2022, the IEA report says.
“Higher prices are encouraging some countries to increase fossil fuel investment,” the report said, “as they seek to secure and diversify their sources of supply.”
In recent months several major economies have made plans to reduce their reliance on Russian hydrocarbons, which has led to some challenging conditions.
In Europe, for example, there are fears of a reduction in Russian gas flows and a complete disruption of supply. prompted some governments to consider the withdrawal of coal.
Germany, Italy, Austria and the Netherlands have indicated that coal-fired plants could be used to offset cuts in Russian gas supplies.