By the end of last year, renewable energy investments declined by its largest amount ever and are likely to keep falling this year. This fall threatens global climate goals.
Capital spending in renewable energy generation fell by 7% in 2017 compared with the previous year. According to a report from the International Energy Agency, this decline was attributed to a fall in onshore wind and hydropower investment.
Fatih Birol, the IEA’s executive director, said the declines in clean power and energy efficiency were “worrying”. “The current investment trends are insufficient both in terms of addressing the security of supply concerns and environmental concerns,” Mr Birol said in an interview Financial Times.
Following the Paris climate agreement in 2015 more than 170 countries agreed to try limiting global warming to well below 2C, an effort that will require huge investments in low-carbon energy systems.
But with global carbon emissions rising again and investment in renewables falling, there are concerns about how the goals of the Paris agreement can be met.
The IEA’s report shows that renewable power investment fell to $298bn in 2017 from $318bn in 2016, representing the biggest absolute drop since the agency started keeping track of clean power in 2000.
Investments in energy efficiency measures — such as improving systems for heating, cooling and lighting so that buildings consume less power — also saw weaker growth than in previous years.
The electricity sector as a whole attracted the largest share of energy investments in 2017 amid greater spending on grids. More than $750bn was spent on electricity out of total energy investments of $1.8tn last year.
Investment in fossil fuel energy supply stabilized at about $790bn last year as a drop in spending in coal and liquefied natural gas offset a 4 per cent rise in oil and gas exploration and production.
After a brutal industry downturn, the IEA said energy companies had continued to prioritize cost control, financial discipline and returning cash to shareholders. This suggested that the industry was shifting towards so-called short-cycle projects, such as in US shale, which take less time to develop but can also suffer from steep price declines. This has raised fears that the global oil market could face a supply crunch.
Bloomberg NEF, a research organization, said this month that world investment in clean energy, a category for which it excludes large hydropower projects, was $138.2bn in the first six months of 2018, down 1 per cent from the same period last year.
The research body expected a cooling off in China’s solar boom this year, following Beijing’s announcement to restrict new installations that required a national subsidy