The “near-to-medium-term outlook” was “gloomy from a climate target perspective”, said the firm’s analyst Prasoon Agrawal as he presented its 2024 energy outlook.
“Renewable energy projects are capital-intensive, which makes them especially vulnerable to hikes in interest rates,” Agrawal said. “In the last year, we have seen many projects being scrapped as increasing interest rates made them uneconomical.”
Although interest rates were expected to fall this year, he said the easing would be “slower than expected”, meaning “there is some risk that the political support for the energy transition will fade away”.
This could risk green growth after it said a record 400 GW of renewable capacity were installed worldwide in 2023.
The report projected that global GDP growth would drop this year to 2.3% from last year’s 2.5%, with energy consumption expected to decline in Europe and North America amid a weak macroeconomic environment.
Earlier this week, the European Commission called for a 90% net reduction in EU greenhouse gas emissions from 1990 levels by 2040 to keep the bloc on track to have net-zero emissions by 2050.
The EU also aims to cut carbon emissions by 55% below 1990 levels by 2030 amid its effort to combat climate change, improve energy security and meet the 2015 Paris agreement ambition to limit the global temperature rise this century to 1.5C of pre-industrial levels.
Globally, the report said demand for coal was not expected to fall until at least 2026 due to Asian consumption.
It forecast crude oil demand to remain in a net positive growth position until at least 2032, with oil prices expected to drop as increased production from emerging markets lessens the influence of Opec+ producers.
Agrawal said that the gas demand destruction in Europe caused by Russia’s war on Ukraine would keep a lid on the continent's gas growth in the medium term.