It will cost $48 trillion to keep up with rising energy demand worldwide over the next two decades, a newly released report by the International Energy Agency concludes.
That's a massive jump from the $16 trillion predicted the last time the report was fully updated in 2003.
“The headline numbers revealed by this analysis are almost too large to register,” the IEA World Energy Investment Outlook special report notes.
The costs of supplying the world with energy, the report finds, have already more than doubled since 2000. And the costs of fossil fuels are projected to rise, even without accounting for any increase in demand. By 2035, the world's energy will require a $2 trillion investment every year. The vast majority of the $1.6 trillion spent on energy last year – a total of $1.1 trillion – went to extracting fossil fuels, oil refining and building power plants that burn fossil fuels.
Over the next two decades, the world would need to invest over $20 trillion to replace production from aging, declining oil and gas fields.
To put that $20 trillion into perspective, the Iraq war cost the U.S. government $1 trillion over its nine years, according to White House estimates. That means the financial investment needed by fossil fuel projects over the next two decades would equal the cost to U.S. taxpayers of twenty Iraq wars.
An alternate plan, aimed at limiting climate change to 2 degrees Celsius, would add another $250 billion to the average yearly price tag, the IEA adds, and require a focus on energy efficiency and renewable energy sources and reduced spending on oil, gas and coal.
But this approach could ultimately be less expensive, because less will need to be spent compensating for the harmful effects of global warming.