Drop In Energy Investment Will Keep 1.6 Billion People Without Electricity

Across the board energy investment will decline severly in 2009, as the recession takes its toll. In the short term it doesn’t matter as energy demand is slumping. In the coming years, though, the IEA says it “will have far-reaching and, depending on how governments respond, potentially grave effects on energy security, climate change and energy poverty.”

Declines in investment across industries for 2009:

  • Global upstream oil and gas investment budgets down at least 21%
  • Renewables down 38%
  • Coal down 40%

Effects of the decline:

  • “A real danger” that we will have a shortage of energy capacity in the comng years.
  • For now, emissions drop, but once economy starts again, the gains will be wiped out, as more emissions are produced.
  • The concern about the recession could wreck any chance of a comprehensive global energy plan being implemented.
  • 1.6 billion people in sub-Saharan Africa and southern Asia don’t have electricity. This number might grow due to the recession. From the report: The crisis is also holding back progress in expanding access to electricity among the poor, as the financial crisis and falling cash flow is stymieing theability of utilities to fund investment in expanding networks. The governments of many emerging economies are facing serious difficulties in raising the funds they need to curb the effects of the downturn, with the implementation of energy-poverty alleviation programmes encountering delays in many cases. Africa, in particular, is already experiencing powershortages and this situation will worsen if investment in networks and new power generation capacity is reduced. The crisis is also expected to slow rural-to-urban migration and force someworkers to return to their villages, which often lack access to modern energy services. At present, roughly 2.4 billion people still rely on traditional fuels for their basic cooking andheating needs.
  • From the report: The crisis is also holding back progress in expanding access to electricity among the poor, as the financial crisis and falling cash flow is stymieing theability of utilities to fund investment in expanding networks. The governments of many emerging economies are facing serious difficulties in raising the funds they need to curb the effects of the downturn, with the implementation of energy-poverty alleviation programmes encountering delays in many cases. Africa, in particular, is already experiencing powershortages and this situation will worsen if investment in networks and new power generation capacity is reduced. The crisis is also expected to slow rural-to-urban migration and force someworkers to return to their villages, which often lack access to modern energy services. At present, roughly 2.4 billion people still rely on traditional fuels for their basic cooking andheating needs.

IEA recommendations:

  •  A “Clean New Deal” that increases investment in energy efficiency and clean tech by a factor of four, sustained for many years.
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