- Recent volatility in energy prices could become the norm if investments in renewable sources are not sufficient to meet demand, the IEA warned.
- “We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a premature time period,” the agency said.
- More investment in renewable energy is needed to reduce carbon emissions and to avoid an economic shock from rising oil prices, the IEA said.
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Rising energy prices in Europe and Asia due to a continuing supply crisis could become the norm if investment in renewable sources does not accelerate, the International Energy Agency warned in its annual outlook report.
The watchdog said that while energy demand continues to grow as global population growth continues and millions of people are lifted out of poverty each year, it will be essential for supply to play catch-up to prevent a continued rise in oil, coal, and natural gas prices.
“We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a premature period,” the IEA said.
Lack of investment in renewable energy sources such as solar and wind could be a losing streak for the global population as it would lead to continued growth in carbon emissions and could also contribute to economic shock if energy prices remain high.
To achieve the goal of transitioning to net zero emissions by 2050, the energy grid must play a delicate balancing act to match supply and demand as it moves away from fossil fuels and to less carbon alternatives.
“If the supply side moves away from oil or gas before global consumers become, then the world could face periods of market stress and volatility. Alternatively, if companies misinterpret the rate of change and over-invest, then these assets are at risk of depleting. or become helpless, ”the IEA report said.
The world is struggling with this imbalance after coming out of the pandemic, as demand has been underestimated and energy suppliers are struggling to recover. Oil prices have risen 60% so far, and U.S. natural gas prices have more than doubled.
To meet the expected increase in energy demand and at the same time achieve a zero emissions target by 2050, the IEA predicts that $ 4 billion in annual spending on renewable energy will be needed by 2030. Much of that funding must come from the private sector, but leadership is needed.
“Clear signals and direction from policy makers are essential. If the road forward is to be paved only with good intentions, then it will indeed be an uneven journey,” the IEA report said.