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Energy investment challenges

June 3, 2014

The world will have to invest trillions of dollars to meet their energy needs in the decades to come, the IEA watchdog has said in its latest report. It added that more incentives were required for renewables.

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Wind farm in Denmark
Image: Morten Stricker/AFP/Getty Images

Satisfying the world's growing energy hunger would require more than $48 trillion (35.3 trillion euros) in investment over the period to 2035, the International Energy Association (IEA) said on Tuesday.

Its special report on investment needs pointed out that current financial inputs into energy supply systems amounted to $1.6 trillion (1.17 trillion euros) annually, but said it would have to swell towards $2 trillion over the coming decades. Annual spending on higher energy efficiency would have to reach $550 by 2035, up from just $130 billion right now.

"The reliability and sustainability of our future energy system depends on investment," said IEA Executive Director Maria van der Hoeven.

Governments to act

She urged governments to create credible political frameworks for investment and ensure stable access to long-term sources of finance. Van der Hoeven added there was a real risk of shortfalls, if investments were misdirected because environmental impacts were not properly reflected in prices.

The IEA noted that investment in renewables in the EU had been higher than investment in natural gas production in the US, adding that non-fossil sources now accounted for some 15 percent of annual investment flows.

The resources that currently went into cleaner sources of energy fell well short of reaching climate stabilization objectives, the association warned. It said today's policies and market signals were not strong enough to switch investment to low-carbon sources and higher energy efficiency at the necessary scale and speed.

hg/uhe, ipj (dpa, IEA)