[/URL]Global energy investment is leaning toward clean sources of power, such as these windmills near Fort Macleod, Alta., a new IEA report says.Todd Korol/Reuters
[url]https://www.theglobeandmail.com/business/article-global-energy-investment-to-reach-record-us33-trillion/[/url]
Global energy ([url]https://www.theglobeandmail.com/topics/energy/[/url]) investment is set to increase to a record US$3.3-trillion this year, with clean technologies attracting twice as much capital as fossil fuels, according to a new report.
Forecasts in the 2025 World Energy Investment report, released Thursday by the International Energy Agency ([url]https://www.theglobeandmail.com/topics/international-energy-agency/[/url]), underscore how global investment trends are leaning toward clean energy ([url]https://www.theglobeandmail.com/topics/renewable-energy/[/url]), even at a time of geopolitical tensions and economic uncertainties.
Fatih Birol, executive director of the IEA, said the fact clean energy will amount to two-thirds of investment this year is driven by a significant drop in the cost of many green technologies, combined with countries seeing them as a key part of their energy security strategies.
“In Canada, in the U.S., we still need oil and gas ([url]https://www.theglobeandmail.com/topics/oil-and-gas/[/url]). We will need them for years to come. But we also need nuclear power. We need wind, we need solar. We need all these technologies for a secure energy system,” Dr. Birol said in an interview from Paris ahead of the report’s release.
Lower oil prices and demand expectations will result in a 6-per-cent fall in upstream oil investment in 2025 – the first year-on-year decline since the COVID-19 slump in 2020 and the largest since 2016, the report says.
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Global refinery investment in 2025 is set to fall to its lowest level in 10 years.
The IEA said in the report it initially expected oil and gas spending to be flat in 2025, based on company announcements, but investment sentiment has become more downbeat as oil prices come under pressure.
The report projects overall investment in oil and gas production this year to total just under US$570-billion.
By contrast, the global liquefied natural gas market is set to experience its largest-ever capacity growth between 2026 and 2028, with investment in new LNG facilities boosted by projects preparing to come online in the United States, Qatar, Canada and elsewhere.
Canada is a cornerstone of the global energy market, Dr. Birol said, and he applauded the country’s efforts reduce greenhouse gas emissions, particularly in the oil and gas sector.
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But if oil and gas are to remain a significant part of the global energy mix, fossil fuel companies will need to continue investing in those emissions-reducing technologies, he said.
“There is an excellent track record for methane emissions, for example, in Canada. And I hope that we see similar trends in the carbon emissions thanks to carbon capture and storage,” he said.
Per-barrel emissions from Alberta’s oil sands dropped by 26 per cent between 2012 and 2023, according to the most recent Oil Sands Greenhouse Gas Emissions Intensity Analysis, released Wednesday. That’s a 4-per-cent improvement over 2022.
Alberta’s natural gas production and processing emissions have declined by 24 per cent since 2015, and methane emissions by 52 per cent since 2014, according to the analysis.
On the electricity front, never before has there been such massive growth in global demand, Dr. Birol said. Between now and 2030, demand will increase as much as the current consumption in the U.S. and China ([url]https://www.theglobeandmail.com/topics/china/[/url]) combined.
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The cost of utility-scale batteries has fallen by two-thirds over the past decade, and global battery investment is approaching the level of gas-fired power generation investment, the report notes.
But investment in electricity grids, now at US$400-billion per year, is failing to keep pace with overall spending on generation and electrification.
As demand for energy continues to grow, more countries are embracing homegrown energy sources, Dr. Birol said.
Take nuclear, for example. Capital flows to the sector have increased by 50 per cent over the past five years and are on track to reach around US$75-billion in 2025, according to the report.
Dr. Birol attributes that growth to Russia’s war against Ukraine ([url]https://www.theglobeandmail.com/topics/ukraine/[/url]), which “reminded Europeans how important it is to increase domestic electricity generation.”
In Europe, countries are extending the lifetime of existing nuclear power plants and building new ones. There is also huge interest in small modular reactors, including in Canada ([url]https://www.theglobeandmail.com/business/article-federal-regulator-approves-canadas-first-small-modular-reactor/[/url]).
“I think this is good news for the world, both in terms of energy security, but also addressing our climate challenges,” Dr. Birol said.
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