The global financial crisis has led to a dangerous drop in energy investment around the world which could choke off the nascent economic recovery, the International Energy Agency said Tuesday.
The EU has said that there should be a euro100 billion ($150 billion) annual package of public and private finance by 2020 to help poorer nations develop green industries and adapt to climate change.
The IEA, a policy adviser to 28 mostly industrialized oil-consuming nations, estimates that the financial and economic crisis is responsible for a $90 billion drop in global oil and gas investment this year, a 19 percent cut from 2008. The resulting drop in oil and electricity supplies could "undermine the sustainability of the economic recovery," the IEA warned.
Meanwhile, oil demand is set to continue rising over the next two decades, with a drop in developed countries oil use more than offset by increases in the developing world, mainly China and India, the IEA said.
It seems as if people's marginal utility for spending on "green" energy for the environment has decreased, which will not only result in the negative externality of further pollution, but could also lead to higher oil prices in the short term during the current crisis.
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