Summary

The cumulated volume of investments in the energy sector worldwide by 2035 would reach 48 trillion dollars, an increase of 30% compared to the average of the last 10 years (© OECD/IEA, Investment 2014). More than 2.2 trillion dollars would be invested yearly, compared to 1.6 trillion invested on average in the last 10 years. The increase in investments confirms that the energy transition is in progress and that new economies are catching up with mature ones. It also confirms while the world needs more energy going forward, it is trying to limit its dependency on fossil fuels and its energy footprint.

Huge disparities shall continue to exist in the domain: half of the investments would be in the primary energy sector, one third in the production and distribution of electricity, and the rest in energy efficiency.

The primary energy sector would be dominated by the American continent, in particular, North America, with oil and gas attracting the vast majority of investments (95% of the total). The coal market will remain dominated by China and, to a lesser extent, the rest of Asia.

The electricity sector would invest massively in the renovation of transportation and distribution infrastructures (42% of total investments), in particular, the distribution networks. New capacities of electricity production would mainly be based on renewable energies (36% of total investment, two thirds of the investment in new production capacities). They would mainly be made in Asia, Europe and North America. In Asia, these investments shall support the economic transition of the region, while in Europe and in North America, they would correspond to a change in energy mix, linked to the decommissioning of end-of-life thermal power plants. Wind is expected to be the dominant renewable energy source, followed by hydroelectricity and solar.

Finally, the emerging energy efficiency sector would represent 17% of total investments. Of these investments, 50% would go to automobiles and urban transportation, while investments in buildings and in industry would only represent 3 trillion dollars by 2035, or less than 170 billion dollars per year. The world is thus still far away from a global energy efficiency policy. The picture is different across the world’s geographies. Energy efficiency investments are expected to be significant in Europe, where they shall represent 36% of the total volume of energy investments. The corresponding percentage for the Middle East is however less than 5%.

According to the White House (2014), the absence of an active mitigation plan for climate change could result in a sustained 0.9-2% slowdown of worldwide GDP by 2050. Obviously, the negative effects on climate change are not yet fully visible and some of the costs incurred may not be recorded today as a result of political inaction. This is why the current impact on global GDP does not necessarily justify everywhere the implementation of energy efficiency actions. The slowdown would obviously cumulate year after year. Indeed, 2% less growth in global GDP per year represents more than half of the total growth, and therefore would cumulate in forty years to up to a 50% loss in absolute value. Seen from that angle, the return on investment on energy efficiency is unchallengeable. The earlier the investments are made, the higher the results over a given period of time.

 
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