An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.

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The International Energy Agency believes the coronavirus pandemic has paved the way for the largest decline of global energy investment in history, with spending set to plummet in every major sector this year.

In the group’s annual World Energy Investment report, published on Wednesday, the IEA said that the unparalleled decline in worldwide energy investment had been “staggering in both its scale and swiftness.”

It warned the economic impact of the public health crisis could have “serious” implications for energy security and clean energy transitions.

“The historic plunge in global energy investment is deeply troubling for many reasons,” Fatih Birol, executive director at the IEA, said in a statement.

“It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” he continued. “The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems.”

Global spending on electricity set to overtake oil

To date, more than 5.5 million people across the globe have contracted the coronavirus, with over 346,700 deaths, according to data compiled by Johns Hopkins University.

The pandemic has meant countries have effectively had to shut down, with world leaders imposing draconian measures on the daily lives of billions of people.

The stringent restrictions, which have brought world travel close to a standstill, are expected to result in the worst economic downturn since the Great Depression in the 1930s.

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At the start of 2020, the IEA said global energy investment was on pace for growth of around 2%, reflecting the largest annual rise in spending in six years.

But, after the Covid-19 crisis brought large swathes of the world economy to a halt in a matter of months, the IEA said it now expects global investment to tumble by 20% compared to last year.

To be sure, that’s a fall of nearly $400 billion year-on-year.

KONYA, TURKEY – SEPTEMBER 13: Rows of solar panels are seen at a Tekno Ray Solar farm on September 13, 2018 in Konya, Turkey. By 2023 Turkey plans to generate thirty percent of it’s electricity from renewable sources in an aim to ease dependence on energy imports from Iran, Russia and Iraq. Due to it’s geographical location, Turkey has the second largest solar energy potential in Europe averaging 7.2 sunshine hours per day. (Photo by Chris McGrath/Getty Images)

Chris McGrath | Getty Images

Meanwhile, the Paris-based energy agency said a combination of falling demand, lower energy prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by “well over” $1 trillion in 2020.

Oil accounts for most of this decline, the group continued, adding that, for the first time, global spending on oil was set to fall below the amount spent on electricity.

“Electricity grids have been a vital underpinning of the emergency response to the health crisis — and of economic and social activities that have been able to continue under lockdown,” the IEA’s Birol said.

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“These networks have to be resilient and smart to ward against future shocks but also to accommodate rising shares of wind and solar power. Today’s investment trends are clear warning signs for future electricity security,” he added.

‘Lower emissions but for all the wrong reasons’

The overall share of global energy spending that goes to so-called clean energy technologies, such as renewables, efficiency, nuclear and carbon capture, utilization and storage, has been “stuck” at around one-third in recent years, the IEA said.

In 2020, it will jump toward 40%, they continued, before quickly dashing the hopes of climate activists hoping this could reflect a permanent change.

People wearing face masks walk on the Bir-Hakeim Bridge near the Eiffel Tower in Paris, on March 27, 2020, on the 11th day of a lockdown in France aimed at curbing the spread of COVID-19 (novel coronavirus).

JOEL SAGET | AFP via Getty Images

“In absolute terms, it remains far below the levels that would be required to accelerate energy transitions,” the group said.

“The crisis has brought lower emissions but for all the wrong reasons. If we are to achieve a lasting reduction in global emissions, then we will need to see a rapid increase in clean energy investment,” the IEA’s Birol said.

“The response of policymakers — and the extent to which energy and sustainability concerns are integrated into their recovery strategies — will be critical.”

Birol said the IEA planned to provide clear recommendations for how governments can quickly create jobs and spur economic activity by building cleaner and more resilient energy systems in an upcoming report.

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