Vienna, July 20, 2018 - The World Energy Investment Report 2018, recently published by the International Energy Agency (IEA), showed more money was invested globally into fossile fuels than into renewables in 2017 – a development that runs contrary to the UN Sustainability Goals (SDGs) as laid out in the Agenda 2030. It also marks the reversal of a trend towards increased spending on renewable energy that had been continuing since 2014. In contrast to this trend, last year, 59 percent of all energy investment went into natural gas, oil and coal, while renewables saw a decline by 7 percent in investments as compared to 2016. This global development not only undermines the SDGs, it also stands in contrast to a recent decision by the EU Parliament and its Member States. They defined as their goal to push the share of renewable energy up to a third in the EU by 2030.
While energy efficiency overall showed some of the strongest expansion in 2017, it was not enough to offset the decline in renewables. Together, energy efficiency and renewables still experienced an investment decline of 3 percent. “Such a decline in global investment for renewables and energy efficiency combined is worrying,” said Dr Fatih Birol, the IEA’s Executive Director. “This could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.” In order to reach the 2030 climate targets, the share of investments into fossile fuels would need to be cut to 40 percent of overall energy investment – a reduction of almost one third compared to the current 59 percent.
Exceptions: China and India
The only marked exception to this trend of dwindling investment into renewables is solar power, which saw record levels of investment, while wind and water energy sectors lost out in comparison. The report links this development to strong support for the deployment of solar PV in China, which accounts for more than 40% of global investment in solar PV. India, too, marks an exception in that, for the first time, more money was invested into renewable energy than into fossile fuels.
Fossile Fuels Investment: Surge in Oil and Gas, Partial Decline in Coal
The share of national oil companies in total oil and gas upstream investment remained near record highs, a trend expected to persist in 2018. This growth trend is driven in particular by a boom of shale oil and gas in the U.S. In contrast, global investments into new coal power plants to be built in the next few years declined for a second straight year, which brings them down to a third of their 2010 level. Still, despite fewer plants being built and existing plants being retired a higher rate than in previous years, the global coal fleet continued to expand in 2017. And while there was a shift towards more efficient plants, 60% of currently operating plants still use inefficient technology.
The Role of Governments
As did previous IEA reports, this recent one also underscored that policy decisions by state actors have global implications with regard to investments in renewable energy and energy investment in general. Global energy investment depends increasingly on state-backed investments. State-owned enterprises were shown to be more inclined towards investing in oil, gas and thermal power compared with private actors, accounting for over 40 percent of global energy investments in 2017.
Also, government policies are playing a growing role in driving private spending. Across all power sector investments, more than 95% of investment is now based on regulation or contracts for remuneration. Investment in energy efficiency is particularly linked to government policy, often through energy performance standards.
For the full report, go to: https://webstore.iea.org/download/direct/1242?fileName=WEI2018.pdf
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