According to the International Energy Agency’s recently published report “The Impact of the Financial and Economic Crisis on Global Energy Investment”, the economic slowdown and consequent drop in energy consumption will lead to falling greenhouse gas emissions in the short term. However, in the medium to long term low fossil fuel prices, a reduction in the price of emission rights on the European market and financing constraints could cause investments in clean energy projects to fall and lead to an increase in fossil-fuel based projects. In turn, this would give rise to higher levels of greenhouse gas emissions.
The IEA warns that investments in renewables could fall by 38% from $82,000 million in 2008 to $51,000 million in 2009. In fact, a sharp fall in clean energy investments is already evident. Applications for new wind energy projects for example totalled 2 GW during the last quarter of 2008, while installed capacity only rose by 4 MW during the first quarter of 2009. Above all, high-risk or costly projects have been postponed or cancelled, especially offshore wind projects.
The IEA fears that a similar situation will arise in the solar PV sector and cites the new caps imposed in
New world agreement
The IEA calls for a “Clean Energy New Deal” guaranteeing the level of investment needed to limit atmospheric greenhouse gas concentrations to 450 ppm and ensure global temperatures rise by no more that 2ºC; the desirable goal of climate change experts.
In order to achieve this, the IEA says that the G20 nations must increase the amount invested in low-carbon power technologies during 2009 (including carbon capture and storage) by a factor of four and that such levels of investment must be maintained until 2030.
Globally, investments in renewables must be tripled from $60,000 million in 2009 to $180,000 million each year, informs the IEA, while six times more funding than is currently allocated should be earmarked to stimulate these technologies.
In order to cover such costs, the IEA proposes fiscal incentives and improving access to credit and reducing borrowing costs through loan guarantees, credits, etc. for clean energy and energy efficiency investments which have relatively short lead times.
All these measures are short-term, but in the medium term, the IEA calls for clear and reliable support systems for investors and solutions to other non-economic barriers such as bureaucratic restrictions or other barriers to electricity grid access.
