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IEA criticizes oil and gas industry’s green spending on hopes of fourfold growth

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By William Mathis On 6/2/2021

IEA Director Fatah Birolo

(Bloomberg) — The oil and gas industry is set to boost investment in clean energy this year, but it still won’t be enough to put the world on a path to limiting the alarming rise in global temperatures.

That’s the view of the International Energy Agency, which expects traditional fossil-fuel companies to increase climate-friendly investments to at least 4% of their capital expenditures, up from just 1% last year, according to a Wednesday report.

The figure underscores both the rapid pace that investment is leaning toward lower carbon sources as well as the scale of the challenge. The IEA said earlier this year that the world needed to halt the development of new oil and gas fields as well as coal mines to limit global warming.

“The world has to mobilize and direct much more resources towards clean energy technologies to reach net-zero emissions by 2050,” said Fatih Birol, IEA’s executive director. Among other milestones, the IEA’s 2050 plan hinges on all-new oil and gas exploration around the world that stalled several weeks ago. “The rebound in energy investment is a welcome sign, and I’m encouraged to see more of it flowing towards renewable energy.”

Overall, the IEA expects global investment in energy to reach $1.9 trillion in 2021, a nearly 10% gain that will almost make up for the decline last year from the start of the COVID-19 pandemic. Spending on electricity generation will increase by almost 5% this year to a record more than $820 billion globally. Renewable energy sources, including solar and wind, will make up about 70% of the new capacity.

Despite the pressure to cut emissions, the IEA expects that less than 45% of global investment in this sector will go towards clean energy. This includes spending on renewable energy, transmission infrastructure, nuclear power, batteries, carbon capture and energy efficiency. Investment in clean energy needs to more than triple this decade to keep warming likely to be limited to 1.5°C.

The IEA said that as more pressure comes on private companies to limit their climate impact, state-owned businesses will make up a greater proportion of fossil-fuel investments. Much of the change set to lead oil and gas companies’ overall investment in clean energy is driven by European firms most under pressure to cut emissions.

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