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IEA’s World Energy Investment Report, 2021

Context:

The International Energy Agency (IEA) published the World Energy Investment Report, 2021 which said that most of the Global energy investment is expected to shift out of traditional fossil fuel production.

Relevance:

GS-III: Industry and Infrastructure (Energy Sector, Sources of Energy, Types of Resources and Sustainable use of Resources), GS-III: Environment and Ecology (Conservation of Environment, Important International Institutions)

Dimensions of the Article:

  1. About the International Energy Agency (IEA)
  2. Highlights of the World Energy Investment Report, 2021

About the International Energy Agency (IEA)

  • The International Energy Agency (IEA) is an autonomous Intergovernmental Organisation established in 1974 in Paris, France.
  • IEA mainly focuses on its energy policies which include economic development, energy security and environmental protection. These policies are also known as the 3 E’s of IEA.
  • It is best known for the publication of its annual World Energy Outlook.

IEA’s Role and Functions:

  • IEA’s role has expanded to cover the entire global energy system, encompassing traditional energy sources such as oil, gas, and coal as well as cleaner and faster growing ones such as solar PV, wind power and biofuels.
  • IEA acts as a policy adviser to its member states, as well as major emerging economies such as Brazil, China, India, Indonesia and South Africa to support energy security and advance the clean energy transition worldwide.
  • IEA’s mandate has broadened to focus on providing analysis, data, policy recommendations and solutions to help countries ensure secure, affordable and sustainable energy for all. In particular, it has focused on supporting global efforts to accelerate the clean energy transition and mitigate climate change.
  • The IEA has a broad role in promoting rational energy policies and multinational energy technology co-operation with a view to reaching net zero emissions.
  • IEA Clean Coal Centre is dedicated to providing independent information and analysis on how coal can become a cleaner source of energy, compatible with the UN Sustainable Development Goals.

Membership of IEA

  • The IEA is made up of 30 member countries. Only OECD member states can become members of the IEA.
  • IEA member countries are required to maintain total oil stock levels equivalent to at least 90 days of the previous year’s net imports.
  • In 2018, Mexico joined the IEA and became its 30th member.
  • India became an Associate member of IEA (NOT full membership) in 2017 but it was in engagement with IEA long before its association with the organization.
  • Other Association Countries of IEA apart from India are: Brazil, China, Indonesia, Morocco, Singapore, South Africa and Thailand.

Highlights of the World Energy Investment Report, 2021

  • Global energy investment is expected to rebound in 2021 and increase 10% year-on-year to around USD 1.9 trillion and most of this investment will flow towards power and end-use sectors, shifting out of traditional fossil fuel production.
  • Renewable power will have the largest share with around 70% of the total investment in energy spent on new power generation capacity.
  • Upstream (production and exploration) investment in oil is expected to grow 10%. This expansion in fossil fuels was planned with novel technologies like Carbon Capture and Storage (CCS) and bioenergy CCS, which are yet to attain commercial success.
  • The increment of coal-fired power in 2020, mostly driven by China, is indicating that coal is down but not yet out.
  • The above positive scenarios will still not deter the increase in carbon dioxide emission, after contraction in 2020 mainly due to economic slowdown induced by the novel coronavirus pandemic.
  • Many developing nations’ supporting policy and regulatory frameworks are not yet aligned with long-term net-zero goals.
  • In many Emerging Market and Developing Economies (EMDEs), investment in renewables was hit harder by Covid-19 than in developed nations – and now many EMDEs have prioritised coal and oil in recovery plans.

Recently in News: IEA’s Net Zero Emissions (NZE) Roadmap

Why is there an increase in emissions?

  • The emerging market is almost 70% responsible for demand growth and hence the increased emissions; India plays an important part in this block.
  • China is showing a tremendous expansion in coal-based power production — their coal consumption in December 2020 was a historic high — though the country has a commendable renewable growth.
  • Although the US has shown renewed commitment to the multilateral United Nations system for tackling climate change by re-joining the Paris agreement. Its fascination with cheap shale gas is creating an investment distortion and adversely affecting the sustainability of developmental pathways of countries like India.

-Source: Down to Earth Magazine

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October 2022
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