The International Energy Agency (IEA) warns that energy innovation slows down as shifting priorities and financing changes, despite earlier investments that stimulate economic and security gains.
Investment in global energy innovation loses the momentum, according to a new report from the IEA.
The “The State of Energy InnovationThe report emphasizes a delay in technological progress as a result of shifts in financing and policy priorities, the IEA said, despite the fact that innovation remains crucial for national energy strategies.
The report noted that innovation activity has steadily increased in recent years, with public and business energy research and development (R&D) expenditure that grow with an average annual percentage of 6%. However, the first estimates for 2024 indicate that growth in some advanced economies can slow down.
Annual energy -related venture capital (VC) financing fell by more than 20% in 2023 and 2024. The report attributed the decline to inflation and uncertainties about climate policy obligations that trust many startups to stimulate demand.
The drop turns around a trend where VC financing for energy technologies is more than six -time between 2015 and 2022, and reaches levels that are equivalent to the total public energy r & d. The report said that the low interest rates and the costs for solar and battery technologies decrease the increase.
Between 2021 and 2022, private capital helped with the financing of approximately 1,800 energy startups. Even if only a fraction successfully scales up, it said IEA: “The impact on energy by the 1920s promises to be very important.”
IEA -executing director Fatih Birol said that innovation remains the lifeline of the energy sector, with emerging technologies ready to improve energy, affordability and sustainability in the long term.
“But we require investments, both public and private, to scale up innovative solutions,” Birol added. “The payback time may not always be fast, but it will be permanent.”
The IEA report contains a study among nearly 300 practitioners from 34 countries, who said that energy needs has gained strength in recent years due to political obligations and recent energy crises.
However, experts noted that progress was not the same worldwide, with emerging markets and developing countries that still benefit from technological progress.
Survey respondents identified solar energy, batteries and thermal storage as the fastest growing innovation areas. They also said that solar energy, batteries and electric vehicles are aged into a point where market competition, instead of policy support, will stimulate future progress.
“This indicates a shift in the innovation landscape, where policy is mainly needed to ensure that innovation ecosystems provide the constant improvements,” the report said.
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