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The International Energy Agency released its annual World Energy Investment 2020 report in May and noted that 2020 will see the single largest drop in energy investment in history!

The Covid-19 pandemic has been blamed in large part for the drop in investment and the Agency has warned that it could impact severely on energy security and the energy transition.

It has been predicted that investment in the global energy market could fall by as much as 20% this year – amounting to almost $400 billion. The obvious impact of this is job losses and loss of economic opportunity, in addition to falling behind in the progress made (and needed) along the energy transition journey.

Related information:
Read the IEA report here
Global energy investment to drop by $400bn

There is an additional impact for governments as well as revenue driven by energy investments fall – from a drop in fuel-levy and taxes due to lower sales, to lower royalties from oil and gas production. The IEA anticipates the impact of these lost opportunities to be in the region of $1 trillion this year with the majority of that impact felt due to changes in the oil and gas landscape. It is said that this is the first time that “global consumer spending on oil is set to fall below the amount spent on electricity.” 

The longer-term impacts of this pandemic will be felt for a long time –  from its impact on the health of individuals and the financial security for employees, employers, investors and governments. Developing countries are most likely to bear the brunt of this decline – and these are countries that can ill afford additional barriers to investment and financing.

The lower demand for power has seen a decrease in carbon emissions, but “for all the wrong reasons. If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment,” according to Dr Fatih Birol, the IEA’s Executive Director. “The response of policymakers – and the extent to which energy and sustainability concerns are integrated into their recovery strategies – will be critical.” 

What do you believe will be the impact on investments for the remainder of this year? How can governments quickly create jobs and spur economic activity? What will create some security for investors while driving much-needed investment to those countries and regions that most need it?

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Wishing you a successful, healthy week ahead

Until next time!