Energy costs, global temperature, continue rising

Perhaps one fact says it all: capital costs to produce energy have doubled since 2000. In 2013, $1.6 trillion was invested to provide the world’s consumers with energy, more than twice as much as was required in 2000. To maintain current levels of production and to meet rising demand in the next two decades, an investment of $40.2 trillion will be needed. An additional $8 trillion will need to be spent on energy efficiency.

For consumers of energy, the message from the International Energy Association (IEA), which released its World Energy Investment Outlook today, is not encouraging: despite massive amounts of new energy coming on stream in the form of LNG, and from renewable energy, prices for that energy will not be any lower. “Running fast to stand still” is how the report describes the next twenty years of investment in energy. Of that $40 trillion in new investment, most will go into offsetting declining production in existing oil and gas fields and to replace power plants and other infrastructure.

energy-supply-investment-oil-gas-fossil-fuels-carbon-renewables-nuclear-EDIWeekly

Financing the transition to a low-carbon energy system, the report warns, will be a “major challenge” that will only happen if governments take the lead with strong policy direction, and if it is sufficiently attractive to investors.

Policy makers face increasingly complex choices as they try to achieve progress towards energy security, competitiveness and environmental goals. These goals won’t be achieved without mobilising private investors and capital, but if governments change the rules of the game in unpredictable ways, it becomes very difficult for investors to play.

IEA Chief Economist Fatih Birol

As of now, about 15 per cent of annual investment goes into renewables, biofuels and nuclear power. The rest, which in today’s terms is over $1 trillion, goes to fossil fuels. That includes everything from extraction to refining to building of coal-fired power plants. The future of the world’s energy system depends on investment, says the IEA, but policy makers need to be clear and consistent in setting out their goals in terms of energy security, competitiveness, and the environment.

The difficulty for investors can be seen here in Canada. Just last week Total E&P Canada put an oil sands project in Alberta on hold, saying the company could not find a formula to make the $11 billion project work. Total is currently developing another Canadian venture, at a cost of $13.5 billion.

So far, the transition to low-carbon energy has not been successful, the IEA says. As part of the so-called 450 Scenario, governments have committed to keeping global warming to 2 degrees Celsius by controlling the burning of fossil fuels. Instead, if present trends continue, the world is likely to experience a long-term temperature rise of 3.6 degrees Celsius.

Did you miss this?

Other Popular Stories

  • Manufacturing gains in September driven by auto and food industries
  • Renewables will surpass natural gas, nuclear by 2016: IEA
  • Little certainty about toxicity of BPA in food cans despite new report
  • Slight drop in April manufacturing sales due to petroleum, aerospace
  • Some industry support for new water heater regulations
  • 3D printed hempcrete could revolutionize construction industry
  • Oil leads Canada's GDP growth while OPEC production cuts have prices surging
  • Manufacturing sales up in November, government scraps duties on imported food ingredients
  • Researchers find way to turn wood into supercapacitors
  • Ford hiring 1,000 at Oakville assembly plant
  • Construction giant to revolutionize industry with 3D concrete printing
  • Unemployment rate drops after strong job gains in May
  • Wind to provide 20 per cent of world's electricity by 2030: report
  • Building permits shot up in May
  • NASA Discovers Eighth Planet Circling Distant Star
  • Ontario homebuilder first to offer power storage system as option
  • Hyundai Plans to Sell Millions of BEVs
  • Everything you wanted to know about the NASA Artemis mission
  • Natural Resource GDP increased 0.4%, led by Energy subsector at 0.7% — Statscan
  • Who says bigger isn't better: General Electrics massive carbon-fibre 3D printed engine more fuel efficient
Scroll to Top