Annual global energy investments are primed for an “unparalleled decline” of 20 percent, or by $400 billion, in 2020 due to the coronavirus disease (COVID-19) pandemic, according to the International Energy Agency (IEA).
Based on the Paris-based IEA’s World Energy Investment 2020 report, worldwide outlay on energy resources— including fuel supply, electricity, as well as end-use and efficiency—was expected to drop to $1.52 trillion this year from $1.89 trillion in 2019.
Before the COVID-19 outbreak put large parts of the global economy at a standstill, global investments was on track to a 2-percent increase. That would have been the biggest yearly increase in six years.
The IEA said the unparalleled decline was “staggering in both its scale and swiftness” and has serious potential implications for energy security and the worldwide effort to shift to clean energy.
“The historic plunge in global energy investment is deeply troubling for many reasons,” IEA executive director Fatih Birol said in a statement.“It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” Birol said. “The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”
In 2019, oil represented half of global consumer spending on energy while electricity accounted for an additional 38 percent.
The IEA said COVID-19 upturned this and would prompt in 2020 “a historic switch” when electricity becomes the biggest single element of consumer spending on energy.
The report found that power sector spending was primed for a 10-percent drop in 2020, with “worrying signals” for the development of more secure and sustainable power systems.