Covid-19 pandemic to cause global energy investment to plummet by $400 billion this year

Renewable energy targets in doubt

Rebound in fossil fuel use and emissions

The IEA is warning that fossil fuel use will rebound strongly following the end of the pandemic and as investment falls in clean energy we’re likely to see a spike in CO2 emissions.

“We see a historical decline in emissions, but unless we have the right economic recovery packages, we might see emissions again skyrocket and the decline of this year would be completely wasted. Remember the 2008-2009 crashes. We immediately saw a decline in emissions, but afterwards, it rebounded. We must learn from history,” said Dr Birol.

The collapse in oil prices last month and the ongoing downward pressure on wholesale energy prices have caused the IEA to rip up its earlier predictions that global energy investment would rise by 2% in 2020. This year would have been the largest year-on-year increase in six years. It’s now forecast to tumble by 20% year-on-year.

Energy Suppliers face a tough time says IEA

The IEA report also highlighted the challenges faced by energy suppliers.

Falling prices, the fall in demand and the rise in non-payment of bills will see revenues going to energy companies fall by more than $1 trillion this year.

Over the recent bank holiday weekend, energy prices in the UK fell to new record lows.

The average day-ahead wholesale electricity price across the 24 hours was -£9.92/MWh. Prices fell as low as -£52.03/MWh in the early hours of Friday morning.

This was more than twice as low as the previous record, which was set last December when day-ahead wholesale electricity prices hit -£4.62/MWh.

Ongoing declines in revenue will likely lead to many energy suppliers delaying or cancelling investment in existing and new energy projects.

The report also shows that there will be a 9% decrease in spending on electricity networks this year raising concerns that in the long-term energy grids will struggle to deal with future supply challenges. 

Further Reading

Energy Suppliers call for Government Bailout as more businesses and households struggle to pay bills

Energy Suppliers and Generators call for changes as the costs from the Covid-19 Pandemic pile up

Climate Campaigners launch a legal case against the UK Government’s energy policies

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