IEA Warns Covid-19 Could Spur a Record Drop in Global Energy Investment

The Covid-19 has sent global energy investment into a historical drop, expecting to collapse in every major sector this year, the International Energy Agency said in the report, published on Wednesday.

 

Since the beginning of 2020, global energy investment was tracking for growth of around 2%, the largest annual surge in six years. But as soon as the coronavirus has spread worldwide, bringing global economic to a standstill for months, the investment is now estimated to shrink by 20%, or nearly $400 billion year-on-year.    

 

IEA’s analysis showed that countries in full lockdown are experiencing a decline at 25% in energy demand, while countries in partial lockdown declined by an average of 18%.

 

At the height of the lockdowns in April, global oil demand was down by around 25 mb/d. For the year as a whole, oil demand could drop by 9 mb/d on average, returning oil consumption to 2012 levels, according to the IEA’s World Energy Investment 2020 report.

 

“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.”

 

Report also said that a combination of falling demand, lower prices and a rise in cases of non-payment of bills could cause energy revenues that are supposed to go to governments and industry falling by over $1 trillion in 2020. Oil accounts for most of this decline as, for the first time, global consumer spending on oil is set to fall below the amount spent on electricity. Global investment in oil and gas is expected to fall by almost one-third in 2020.