The money must all be invested in the energy sector by the year 2035, IEA explains

Jun 3, 2014 18:13 GMT  ·  By
The world must invest $48 trillion in energy supply and energy efficiency by 2035, IEA report says
   The world must invest $48 trillion in energy supply and energy efficiency by 2035, IEA report says

A report issued this June 3 says that, if the world is to even stand a chance to have its power demands properly dealt with in the near future, over $48 trillion (€35.2 trillion) need be invested in the energy sector by the year 2035.

Before people are too quick to label the things included in this report as mumbo-jumbo and dismiss them, it need be said that the paper is the brainchild of the International Energy Agency. Hence, it does not lack credibility.

On its website, the Agency details that, according to evidence at hand, future energy needs can only be met if investments in energy supply and energy efficiency both increase to a considerable extent by said year.

Thus, the report argues that, of the $48 trillion that must go to the global energy sector by 2035, around $40 trillion (€29.4 trillion) should be spent on energy supply, and the remainder $8 trillion (€5.8 trillion) on energy efficiency.

Of the $40 trillion that need be invested in energy supply, $23 trillion (€16.9 trillion) should go towards fossil fuel extraction, transport, and refining. Power generation, and transmission and distribution would gobble up $10 trillion and $7 trillion (€7.3 trillion and €5.1 trillion), respectively.

Researchers with the International Energy Agency recommend that high officials worldwide move to increase annual investments in the power sector without delay, and see to it that $48 trillion investment target over the period to 2035 is met.

This can happen if annual global investments in energy supply up from the current $1.6 trillion to $2 trillion (approximately €1.2 trillion to €1.4 trillion) over the coming decades.

Annual spending on energy efficiency, on the other hand, must increase from today's $130 billion to $550 billion (some €95.5 billion to €404 billion), the International Energy Agency writes on its website.

Interestingly enough, Executive Director Marian van der Hoeven with the Agency has wished to stress that, unless the right policies and incentives are announced and set in place, the world is unlikely to reach the $48 trillion target.

“The reliability and sustainability of our future energy system depends on investment. But this won’t materialize unless there are credible policy frameworks in place as well as stable access to long-term sources of finance,” Maria van der Hoeven says in a statement.

“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,” adds Chief Economist Fatih Birol.