Released June 01, 2020 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The COVID-19 crisis is causing the biggest fall in global energy investment in history according to the latest data from the International Energy Agency (IEA).
Spending is expected to plunge "in every major sector this year," from fossil fuels to renewables and efficiency. Before COVID-19, global energy investment was on track for growth of around 2%, which would have been the largest annual rise in spending in six years. However, since the pandemic struck and brought large sections of the world economy to a standstill in a matter of months, global investment is now expected to plummet by 20%, or almost $400 billion, compared with 2019.
"The historic plunge in global energy investment is deeply troubling for many reasons," said Dr Fatih Birol, the IEA's executive director. "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."
The World Energy Investment 2020 report found that a combination of falling demand, lower prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by well over $1 trillion in 2020. Oil accounts for most of this decline, and for the first time ever, global consumer spending on oil is set to fall below the amount spent on electricity. Companies with weakened balance sheets and more uncertain demand outlooks are cutting back on investment while projects are also being hampered by lockdowns and disrupted supply chains. The IEA predicted that in the longer-term "a post-crisis legacy of higher debt will present lasting risks to investment," something that will be felt more in some developing countries, where financing options and the range of investors can be more limited.
Global investment in oil and gas is expected to fall by almost one-third in 2020 while investment in shale is anticipated to fall by 50%. The shale industry was already under pressure, and investor confidence and access to capital has now dried up, the IEA found. At the same time, many national oil companies are now "desperately short of funding". In the oil sector, if investment stays at 2020 levels, it will reduce the previously expected level of supply in 2025 by almost 9 million barrels a day, creating a clear risk of tighter markets.
Industrial Info has been tracking the spending shifts announced by all of the major oil and gas, LNG and power companies. For additional information, see May 27, 2020, article--LNG Production Projects Disrupted Amid Global Oversupply, COVID-19 Pandemic, May 27, 2020, article--COVID-19 Delays Wind Power Projects Worldwide and May 5, 2020, article--Big Oil Hits the Skids, Battered by Excess Supply, Soft Demand and Low Prices.
Power sector spending is on course to decrease by 10% in 2020, "with worrying signals for the development of more secure and sustainable power systems". Renewables investment has been more resilient during the crisis than fossil fuels, but spending on rooftop solar installations by households and businesses has been strongly affected and final investment decisions in the first quarter of 2020 for new utility-scale wind and solar projects fell back to the levels of three years ago. There will also be a 9% decline in investment in electricity networks this year.
"Electricity grids have been a vital underpinning of the emergency response to the health crisis -- and of economic and social activities that have been able to continue under lockdown," Birol explained. "These networks have to be resilient and smart to ward against future shocks but also to accommodate rising shares of wind and solar power. Today's investment trends are clear warning signs for future electricity security."
The COVID-19 crisis is hurting the coal industry too with investment in coal supply set to fall by one-quarter this year. The IEA said decisions to go ahead with new coal-fired plants have come down by more than 80% since 2015, but that the global coal fleet continues to grow--led by China.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
Spending is expected to plunge "in every major sector this year," from fossil fuels to renewables and efficiency. Before COVID-19, global energy investment was on track for growth of around 2%, which would have been the largest annual rise in spending in six years. However, since the pandemic struck and brought large sections of the world economy to a standstill in a matter of months, global investment is now expected to plummet by 20%, or almost $400 billion, compared with 2019.
"The historic plunge in global energy investment is deeply troubling for many reasons," said Dr Fatih Birol, the IEA's executive director. "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."
The World Energy Investment 2020 report found that a combination of falling demand, lower prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by well over $1 trillion in 2020. Oil accounts for most of this decline, and for the first time ever, global consumer spending on oil is set to fall below the amount spent on electricity. Companies with weakened balance sheets and more uncertain demand outlooks are cutting back on investment while projects are also being hampered by lockdowns and disrupted supply chains. The IEA predicted that in the longer-term "a post-crisis legacy of higher debt will present lasting risks to investment," something that will be felt more in some developing countries, where financing options and the range of investors can be more limited.
Global investment in oil and gas is expected to fall by almost one-third in 2020 while investment in shale is anticipated to fall by 50%. The shale industry was already under pressure, and investor confidence and access to capital has now dried up, the IEA found. At the same time, many national oil companies are now "desperately short of funding". In the oil sector, if investment stays at 2020 levels, it will reduce the previously expected level of supply in 2025 by almost 9 million barrels a day, creating a clear risk of tighter markets.
Industrial Info has been tracking the spending shifts announced by all of the major oil and gas, LNG and power companies. For additional information, see May 27, 2020, article--LNG Production Projects Disrupted Amid Global Oversupply, COVID-19 Pandemic, May 27, 2020, article--COVID-19 Delays Wind Power Projects Worldwide and May 5, 2020, article--Big Oil Hits the Skids, Battered by Excess Supply, Soft Demand and Low Prices.
Power sector spending is on course to decrease by 10% in 2020, "with worrying signals for the development of more secure and sustainable power systems". Renewables investment has been more resilient during the crisis than fossil fuels, but spending on rooftop solar installations by households and businesses has been strongly affected and final investment decisions in the first quarter of 2020 for new utility-scale wind and solar projects fell back to the levels of three years ago. There will also be a 9% decline in investment in electricity networks this year.
"Electricity grids have been a vital underpinning of the emergency response to the health crisis -- and of economic and social activities that have been able to continue under lockdown," Birol explained. "These networks have to be resilient and smart to ward against future shocks but also to accommodate rising shares of wind and solar power. Today's investment trends are clear warning signs for future electricity security."
The COVID-19 crisis is hurting the coal industry too with investment in coal supply set to fall by one-quarter this year. The IEA said decisions to go ahead with new coal-fired plants have come down by more than 80% since 2015, but that the global coal fleet continues to grow--led by China.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
