The world is not moving fast enough on investment in low carbon energy to tackle climate change, new research from the International Energy Agency has found.
About $1.6 trillion is invested annually in the global energy supply, but while that represents a doubling of investment since the turn of the century, the amount needs to rise to $2 trillion if the world is to limit global warming to no more than 2C of temperature rises, the energy thinktank said.
Energy efficiency will be key, the IEA said, with about $130bn spent on it globally each year at present, an investment that must rise to more than $550bn by 2035.
Companies and governments are still investing heavily in fossil fuels, which could leave $300bn in 'stranded assets', such as coal-fired power plants and oil extraction infrastructure, it added.
But President Obama’s decision this week to try to cut carbon dioxide emissions from power generation in the US was welcomed by Fatih Birol, chief economist at the IEA and one of the world’s foremost experts on energy, as “very encouraging”.
He said China was also “moving in the right direction” with measures to cut air pollution, which have a knock-on effect on greenhouse gases. A senior adviser to the Chinese government said on Tuesday the country was going to put an absolute cap on its future emissions.
Birol said he was still hopeful of a strong global agreement on climate change being signed at a crunch meeting in Paris at the end of next year. This would be vital to securing the investment needed in renewable energy and other low-carbon forms of supply, as energy demand is set to continue rising, he said.
Maria van der Hoeven, chief executive of the IEA, the world’s gold standard for energy research, warned: “The reliability and sustainability of our future energy systems depend on investment, but this won’t materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance. Neither of these conditions should be taken for granted. There is a real risk of shortfalls, as well as the risk that investments are misdirected because environmental impacts are not properly reflected in prices.”
Investment in renewable energy technologies made up about 60% of the total investment in power plants from 2000 to 2012.
Separately on Tuesday, renewable energy non-profit REN21 reported growth of more than 8% in renewable energy generation capacity in the past year. The group said developing countries were forging ahead, with 95 poor nations putting in place policies to stimulate renewable energy investment, up from just 15 such countries in 2005.
The European Environment Agency also said on Tuesday that the EU’s greenhouse gas emissions had declined to the lowest level recorded, putting Europe on track to meet its international commitments on emissions cuts.
But the UK bucked the downward trend, with emissions up more than 3% between 2011 and 2012. This was due to an increase in the use of coal, the price of which has fallen on international markets as less of it is being burned in the US, where shale gas is booming.UK greenhouse gas emissions (million tonnes carbon dioxide equivalent)