IEA: EUROPE MUST INVEST
A top energy watchdog has warned that Europe could face an energy shortfall if power companies and oil producers failed to respond to rising demand.
In its first full update on the industry's investment needs in more than a decade, the International Energy Agency said Tuesday that investment in European electricity generation was being thwarted by insufficient prices, while in the Middle East social spending was limiting investment in oil fields.
"In Europe, we are facing the risk of seeing the lights going off," Fatih Birol, the IEA's chief economist, said at a news conference on the report's findings.
The agency, which represents energy consumers in industrialized nations, said $2.2 trillion in investment was needed through 2035 to replace Europe's aging electricity infrastructure and meet regulatory goals to reduce carbon emissions.
"We don't see the appetite in many utilities to invest" as they struggle to make a profit under current regulations, Mr. Birol said.
The watchdog said reforms were needed, including a 23% rise in wholesale prices, for Europe to make the investment required to boost output to meet demand.
The IEA said more than 80% of the investment needed to develop oil and gas fields—worth more than $850 billion annually by 2035—would instead be spent on maintaining existing production.
Despite the current boom in U.S. oil production, most long-term increases in output will come from the Middle East, the agency said. To meet expected demand, the region's production would have to rise by 6 million barrels a day in the next 20 years, the IEA said.
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