OECD and IEA continue call for more green investment amid higher energy prices

Oil prices are at multi-year highs and have more than doubled year-to-date

Governments should desist from investing in fossil fuels in response to the global surge in energy prices and should continue to promote clean energy, according to the heads of the Organisation for Economic Co-operation and Development and the International Energy Agency.

The 38-member club of the world's richest nations and the Paris-based energy policy think tank IEA urged world governments to accelerate investment in sustainable energy infrastructure.

“As economic activity and fuel demand picks up, we must ensure that fossil fuel support continues to fall and Covid-19 recovery spending is focused on measures that are positive for the environment and the climate," said OECD secretary-general Mathias Cormann.

"Support provided in the face of rising energy prices should be designed in a way that helps the most vulnerable, whilst remaining true to our climate commitments,” he added.

Oil prices are at multi-year highs and have more than doubled year-to-date. Natural gas prices, which are linked with crude, are trading nearly 77 per cent higher than at the start of the year.

Brent, the international benchmark for crude, was down 0.87 per cent at $83.97 per barrel at 5.17pm UAE time. West Texas Intermediate, which tracks US crude grades was down 0.96 per cent at $83.24 per barrel.

Brent is expected to continue to trade above $80 per barrel for the next two years, according to the Bank of America, which anticipates tight supply.

Higher oil prices traditionally invite large oil producers as well as shale independents in the US to open their taps in order to cash in on higher commodity prices.

However, in a world preparing to become carbon neutral by mid-century, greater investment in hydrocarbons could derail energy transition efforts currently underway.

“The world urgently needs a surge in investment in clean energy technologies and infrastructure, and phasing out fossil fuel subsidies is one of the essential conditions to make that happen," said Fatih Birol, executive director at the IEA.

"Governments should be planning for a cleaner and fairer energy future in which everyone benefits from modern energy services. This means expanding access to clean energy, especially for the most vulnerable populations, not maintaining market distortions that favour polluting fuels," he added.

The statement comes amid the ongoing Cop26 summit in Glasgow, UK, which looks to exact pledges from governments to limit the warming of the planet to well below pre-industrial levels.

Updated: November 2nd 2021, 5:20 PM