In a recently published World Energy Investment report, the International Energy Agency (IEA) warned about the economic impact of the coronavirus pandemic.
With other energy companies shifting to renewable energy, the IEA believes that the coronavirus pandemic has paved the way for the largest downfall of global energy investment in history.
As I said at the event, if policies don’t encourage a sustainable recovery, today’s lockdowns may lead to “lock-ins” of obsolete & inefficient energy technologies. pic.twitter.com/a1TzHnJ8OC
— Fatih Birol (@IEABirol) May 27, 2020
Energy spending is set to drop drastically in every major sector this year according to their report.
Although they have acknowledged the gradual reopening of the world’s economies, the report adds that a U-shaped recovery is taking place and the IEA’s expectation for 2020 is a widespread global recession generated by extended restrictions on mobility and social and economic activity.
Investments should focus on renewable energy
Faith Birol, executive director of the IEA, is concerned amid this historic plunge in global energy investment deeply troubling for many reasons as he 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 […] The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”
Beginning in 2020, the IEA said that global energy investment was on its course for growth of around two percent, reflecting the largest annual rise in spending in six years.
However, because of the unexpected coronavirus pandemic, the IEA now expects the global investment to tumble at a staggering 20% compared to last year.
As far as renewable energy is concerned, the Paris-based energy agency adds that the overall share of global energy spent on these clean energy technologies has been “stuck” at around one-third in recent years.
Is China taking advantage again of this energy crisis?
Around last month, news came in about China buying more oil and it looks like we may be seeing a pattern here. With the expectation of Saudi Arabia to slash its oil production starting June 1, reports came in once again about China stockpiling their oil supply.
In addition, the crude oil futures took a hit when China was reassessing its targets for 2020. Despite the IEA’s recent report, the oil markets are still trying to rebound amid the coronavirus pandemic.
The world has yet to see once again what the future holds for the energy sector.
Featured image courtesy of seagul/Pixabay