JP Morgan expert decries high cost, low return renewables investment
The Global Head of Commodities Research in the Global Investment Research Division of renowned Investment Bank Goldman Sachs, Mr Jeff Currie has lamented the low return on investment of renewable energy sources in the past 10 years.
According to a report by Climate Depot, Currie was quoted as saying to CNBC that despite the $3.8trn of investment in renewable energy resources in 10 years, fossil fuel consumption globally has only fallen by 1% during the period, from 82% to 81%. “Here’s a stat for you, as of January of this year. At the end of last year, overall, fossil fuels represented 81 percent of overall energy consumption,” Currie said.
“Ten years ago, they were at 82. So though, all of that investment in renewables, you’re talking about $3.8trn, let me repeat that $3.8trn of investment in renewables moved fossil fuel consumption from 82 to 81%, of the overall energy consumption. But you know, given the recent events and what’s happened with the loss of gas and replacing it with coal, that number is likely above 82..”
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Currie stated that the Organisation of Petroleum Exporting Countries, OPEC, was “back in charge” of global oil prices because only OPEC had made adequate investments in energy production, infrastructure and supply chains.
“So when we think about what those renewables have added — because remember, you’re adding capacity, but the capacity utilization factor is quite low on them. And then you have Europe making the investment in there, but China making further investments.
And I think the key point that I was saying is that why OPEC is in the driver’s seat, you know, at an unprecedented level is because, you know, we inclusively of everybody outside of OPEC have not adequately invested in overall energy production, infrastructure and the ability to supply and deliver it.
“And I don’t care — and by the way, the countries like Brazil, you know, was [indecipherable] about who’s going to be exposed to this because they raise interest rates really early in the cycle. They’re actually less exposed to what’s happening right now than let’s say Japan or Europe.”
Currie’s statements mirror that of many other energy experts and stakeholders around the world who say that policymakers and regulators have not balanced capital allocation between fossil fuel sources and renewables in recent years. This has contributed to volatility in markets since the COVID-19 pandemic subsided and economic activities have increased significantly, especially in Europe, China and the United States.
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The Russia-Ukraine war has also not helped matters as OPEC+ members have limited supply with production cuts. The International Crude Oil benchmark, Brent, traded at $89.25 per barrel as of the time of writing this report amid fears of demand limitations in China due to its zero COVID policies. The argument for renewables remains that energy storage will be critical to meeting the demand expectations. The United Nations COP27 conference saw leaders in the public and private sectors sign deals to catalyse the energy transition. It is estimated that a net-zero future will require 6 terawatt hour of energy storage according to a study by US researchers from the State Department of Energy.
