Investments in solar eclipse oil for the first time

Investments in solar energy are on track to overtake spending on oil production for the first time, the most striking example of the widening gap between financing renewable energy and the stagnant fossil fuel industries, according to the head of the International Energy Agency.

The International Energy Agency said in its annual report on investment in global energy that more than $1 billion per day is expected to be invested in solar energy this year, which is higher than the total expected spending on new upstream oil projects.

Spending on so-called clean energy projects — which includes renewable energy, electric cars, low-carbon hydrogen and battery storage, among others — is rising at an “astonishing” rate and is far outpacing spending on traditional fossil fuels, Fatih Birol, the director said. Executive of the International Energy Agency in an interview. He said the figures should raise hopes that global efforts to keep global warming within manageable levels are moving in the right direction.

Birol noted the “strong concordance of the key factors,” leading to higher spending on clean energy, while spending on oil and fossil fuels remains weak. This includes increasing government spending aimed at increasing adherence to global climate goals such as President Biden’s inflation-reduction bill.

“A new global clean energy economy is emerging,” Birol told the Wall Street Journal. “There has been a significant increase in a short period of time – I would consider this a dramatic shift.”

Announcement – scroll to continue

A total of $2.8 trillion will be invested in global energy supplies this year, of which $1.7 trillion, or more than 60%, will go to clean energy projects. The number represents a sharp increase from previous years and highlights the growing divergence between spending on clean energy and traditional fossil fuel industries such as oil, gas and coal. And the IEA said that for every dollar spent on fossil fuel energy this year, $1.70 will be invested in clean energy technologies compared with five years ago when spending between them was broadly equal.

While investments in clean energy have been strong, they are not evenly divided. The International Energy Agency said that 90 percent of the growth in clean energy spending is happening in the developed world and China. Developing countries have been slower to adopt renewables, put off by the high price offered for emerging technologies and the lack of affordable financing. They are often financially unable to shell out large amounts of money on subsidies and government support, as the United States, the European Union, and China have done.

Data from the International Energy Agency shows that the COVID-19 pandemic appears to have marked a turning point in global energy spending. The strong post-lockdown economic recovery in most parts of the world has helped drive the divergence between spending on clean energy and fossil fuels.

Announcement – scroll to continue

The energy crisis that followed last year’s Russian invasion of Ukraine has exacerbated this trend. Rising oil and gas prices after the war began made emerging green energy technologies relatively affordable. While clean energy technologies have recently been hit by some inflation, their costs are still well below their historical levels. The war has also heightened concern for energy security, as many Western countries, particularly in Europe, seek to remove Russian fossil fuels from their economies altogether, often replacing them with renewable energy sources.

While clean energy spending has rebounded, fossil fuel spending has been tepid. Despite making record profits from soaring oil and gas prices, energy companies have shown a reluctance to invest in new fossil fuel projects when demand for them appears to be nearing its peak.

Energy forecasters are divided on when fossil fuel demand will peak, but most put a timeline within the first half of the century. The International Energy Agency said peak demand for fossil fuels could come as early as this decade. The Organization of the Petroleum Exporting Countries (OPEC), a cartel of one of the largest oil producing countries in the world, said that demand for crude oil may peak in developed countries in the middle of 2020, but that demand in the developing world will continue to grow until at least 2045.

Announcement – scroll to continue

Investments in clean energy and fossil fuels were very close together in the years leading up to the pandemic, but they have diverged sharply since then. The International Energy Agency said that while spending on fossil fuels has risen over the past three years, it remains below pre-pandemic levels.

Only the large state-owned NOCs in the Middle East are expected to spend more on oil production this year than in 2022. Nearly half of the extra spending will be absorbed by cost inflation, the International Energy Agency said. Last year was the first year that oil and gas companies spent more on debt repayments, dividends and share buybacks than they did on capital spending.

Underspending on fossil fuels raises a question mark about rising prices. Oil markets are already tight and are expected to narrow further as demand grows in the wake of the pandemic, with few sources of new supply appearing to compensate. Higher oil prices could encourage a shift towards clean energy sources.

If there is not enough investment globally to curb the growth of oil demand and there is no investment at the same time [in] Upstream oil may see more volatility in global oil prices, Birol said.

Write to Will Horner at [email protected]

#Investments #solar #eclipse #oil #time

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top