Big oil's green-spending boost isn't enough, IEA says

London

THE oil and gas industry is set to boost investments in clean energy this year, but that still won't be enough to put the world on a path to limit a dangerous 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 per cent of their capital spending, up from just one per cent last year, according to a report on Wednesday.

The figure underscores both the rapid pace that investment is tilting towards low-carbon sources as well as the scale of the challenge. The IEA said earlier this year that the world needs to stop development of new oil and gas fields as well as coal mines to limit global temperature increases.

"Much greater resources have to be mobilised and directed to clean energy technologies to put the world on track to reach net-zero emissions by 2050," said Fatih Birol, the IEA's executive director. "The rebound in energy investment is a welcome sign, and I'm encouraged to see more of it flowing toward renewables."

Overall, the IEA expects spending on power generation to increase about 5 per cent this year to a record of more than US$820 billion globally. Renewable power sources including solar and wind will make up about 70 per cent of new capacity.

Despite the pressure to cut emissions, the IEA expects less than 45 per cent of global investment in the sector to go towards clean energy. That includes spending on renewables, transmission infrastructure, nuclear power, batteries, carbon capture and energy efficiency.

Investments in clean energy need to more than triple this decade to maintain the possibility of limiting warming to 1.5 degrees Celsius.

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, the IEA said. BLOOMBERG