Global energy investments shifting to renewables

MANILA, Philippines — Investments in the global energy sector are expected to move from oil and gas to renewables by next year, UK-based Economist Intelligence Unit (EIU) said in a report.

“We expect investments to shift away from upstream oil and gas toward electric supply,” the EIU said.

“Renewables will become a more attractive investment option, given new emissions regulations, priority on the grid and lower technology costs.”

EIU principal analyst for energy Peter Kiernan said while renewables would suffer in the shorter term from a slowdown in investment and capacity growth, it would be more resilient to the impact of COVID-19.

In terms of consumption, the report said renewables would grow in both 2020 and 2021, outpacing fossil fuels, emphasizing that the growth of solar and wind would be much stronger next year.

“We forecast a combined increase of 13 percent, which reflects the resilience of low-carbon sources even as the COVID-19 pandemic depresses overall energy consumption,”the EIU said.

It added that climate-friendly approaches to economic growth would dominate, but not everywhere around the world.

“All eyes will be on China in the light of its recent announcement to target carbon neutrality by 2060,”the EIU said, adding that this move would likely fuel the growth in renewable energy, particularly in Asia.

The EIU stressed that apart from China and South Korea, the outlook for the rest of Asia in terms of green agenda is less certain.

“ASEAN member states want renewables to account for 23 percent of energy demand by 2025, but this seems like an ambitious target,”the report said.

“Indonesia, Malaysia, the Philippines and Thailand have renewables targets on paper, but growth in solar and wind deployment has been slow,” it said.

Meanwhile, the report also forecasts overall energy consumption to rebound partially by 2.6 percent in 2021, after contracting by an estimated four percent in 2020.

“Consumption, however, will not return to 2019 levels,”it said.

“The years 2020 and 2021 will be lost years in terms of demand for the three fossil fuels – oil, gas and coal,” Kiernan said.

“Of the three, gas will be the least. Oil will take slightly longer to bounce back to the 2019 level, while coal is the most likely to have seen its peak,” he said.