Investment in the oil and gas sector has decreased significantly, but according to an analyst at the International Energy Agency (IEA) renewable energy investment is getting hit even harder.
Chief Economist and Head of the Economic Analysis Division for the IEA Fatih Birol told Reuters, "Energy investment is plunging.” He continued, “If these two come together – a further cut down in the investment and a quick and strong recovery in the economy – we may have difficulties in the oil market in a few years’ time."
Spending on renewable energy, such as wind power, is falling even more rapidly than on oil and gas which Birol predicts will fall 21% this year. The IEA expects renewables investment to slide by 38% this year compared to last, Birol said.
He said that the lack of investment will have adverse affects on the industry as companies continue to struggle to obtain capital, lenders have tightened credit lines, and customers are buying less. However, the IEA’s outlook isn’t shared by everyone as some analysts have said that its analysis contribute to higher prices by instituting a “fear premium” in the market.