Energy Spending of International Energy Agency to Surpass US$ 440 Billion

Energy Spending of International Energy Agency to Surpass US$ 440 Billion

Energy Spending of International Energy Agency to Surpass US$ 440 Billion

The International Energy Agency (IEA) is planning to invest more than US$ 440 billion on renewables in 2022. The clean energy investments across the globe is likely to grow by 12% in 2022, thereby reaching US$ 1.4 trillion as the world is pouring money into energy efficiency, electric vehicles, and renewables.

IEA’s annual review of global energy investment states that the rapid energy transition is considered to be crucial at a time when leading worldwide are focusing more on energy affordability and security owing to Russia’s invasion of Ukraine and the hindrance of the COVID-19 pandemic.

Energy storage, transmission networks, and renewables account for approximately 80% of the global investment in the power sector. It outstrips the overall investment on coal mining, as well as oil and gas production. Technologies, including carbon capture and green energy are set to gain traction across the globe, says IEA. Besides, the world is nowadays selling as many electric vehicles in a single week than it used to sell a decade ago.

However, energy transition does come with certain challenges apart from those green energy milestones. Rather than investments in novel clean energy capacity, government bodies are spending more in clean energy owing to increasing prices. This surge in prices is mainly propelled by the bottle-neck supply chain. It is incapable of keeping up with the high demand for significant minerals that are utilized in electric vehicles, wind turbines, and solar panels. The adoption of clean technologies is expected to vary from one country to another as developed countries are investing huge sums in such technologies. Thus, less wealthy countries are being bypassed from the energy transition process.

Moreover, the world is still not ready to reach net-zero emission despite the high spending on innovative green technologies by 2050. As per Faith Birol, IEA Executive Director, increasing investments to boost clean energy transitions can be considered as the only lasting solution. The world requires a much faster surge to lower the pressure on customers due to high prices of fossil fuel. It can only make the energy system secure and help the world get back on track for meeting its climate goals.

IEA’s report further mentions that the demand in the oil industry is galloping ahead of supply due to the high demand and a refining crunch. Last year, the global refining capacity was reduced for the first time in three decades. To add fuel to the fire, Russia’s invasion of Ukraine pushed that dynamic as several developed countries across the globe had to shun oil from Russia.

At the same time, the war disturbed the global market. Europe had to scramble to come up with a new replacement for shipments coming from Russia in the form of LNG cargo. To overcome this issue, many countries started inclining towards coal as a new alternative. However, the coal market was squeezed backed by the declining investment in the mining industry.

Coal investment is anticipated to surge by 10% this year as the situation changed back in 2021. India and China are mainly contributing to the growth of the coal market. Even Europe is now shifting towards coal as an alternative to gas. In the second half of 2021, China added nearly 350 million tons of coal mining capacity. The same year, coal production in the U.S. was 578 million tons.

Clean energy is growing at a fast pace even though investments in fossil fuel are surging. Many companies are investing huge sums in coal, gas, and oil production to eliminate the fall of fossil fuel market.

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