The Investments in low-carbon projects will increase by $60 billion this year, Rystad report has said.

The investment is 10 per cent higher than in 2022, led by wind developments and helped by a significant rise in funding for hydrogen and carbon capture, utilisation and storage (CCUS) infrastructure.

Rystad Energy research shows that the growth in total low-carbon spending is a slowdown from recent years, which averaged 20 per cent annual increases.

According to the report,while spending on green sectors surged 21 per cent in 2022 to overtake oil and gas investments for the first time, inflation-spooked developers seem set to rein in spending growth this year, although, as inflationary pressure weakens, the energy intelligence firm expects spending to rebound.

Audun Martinsen, Rystad Energy’s head of supply chain research, said: “The weaker-than-expected growth is not a reason to panic for those in the low-carbon sector. Rampant inflation typically triggers fiscal restraint across industries, and spending will likely bounce back in the coming years. The outlook for hydrogen and CCUS is especially rosy as technology advances, and the large-scale feasibility of these solutions improves.”

The company highlighted that investments in the geothermal, CCUS, hydrogen, hydropower, offshore and onshore wind, nuclear and solar industries are set to hit $620 billion in 2023, up from about $560 billion last year. Service segments included in Rystad’s calculations entail project equipment and materials, engineering and construction, wells, operations and maintenance, and logistics and vessels.

Besides, solar and onshore wind are expected to contribute the most by a sizable margin with spending on solar investments totalling $250 billion this year, rising only 6 per cent over 2022.

However, thanks to the falling cost of polysilicon – the primary cost driver of solar PV cells – capacity growth will be more substantial than dollar investments suggest, underlined the energy intelligence group. The installed capacity is expected to swell by roughly 25 per cent to 1,250 gigawatts (GW), despite a relatively insignificant rise in investment value.

Even though spending growth will vary widely across industries, hydrogen and CCUS are expected to see the most significant annual increase, growing 149 per cent and 136 per cent, respectively. As a result, the total hydrogen spending will approach $7.8 billion in 2023, while CCUS investments will total about $7.4 billion.

The hydropower market is expected to shrink over 2022, while nuclear investments are forecast to stay relatively flat, based on Rystad’s research. The firm underscored that onshore wind investments are projected to increase by 12 per cent to about $230 billion, while offshore wind spending is expected to jump 20 per cent to $48 billion. In addition, the expenditure on geothermal is expected to jump significantly – about 45 per cent – albeit from a relatively low starting position, elaborated the energy market intelligence group.

As low-carbon investments are more short-cycled than the fossil fuel industries, they are more sensitive to inflationary pressures and project plans, permitting activity and awards from companies and governments indicate this year’s expected investment growth.

Meanwhile, logistics and vessel companies – heavily weighted towards offshore projects and marine trade – are estimated to take in 15 per cent more this year while spending in the equipment, materials, engineering, and construction sectors, where the bulk of global investment dollars are spent, are expected to rise by about 9 per cent annually.

According to Rystad, “the new and relatively tiny” market of suppliers exposed to low-carbon, well-related services is forecast to climb 33 per cent this year, driven by geothermal drilling and CO2 injection. Regardless of the significant increase, investments in this market are estimated to only total about $3.7 billion.

The firm also pointed out that Asian growth of 12 per cent is heavily impacted by China’s ambitions within solar and wind. Additionally, the U.S. Inflation Reduction Act and a step-up in renewables and CCUS will help push North American investments up 9 per cent this year.

In contrast, Europe is challenged by high inflation and a regional supply chain in crisis, resulting in a projected investment growth of 7 per cent, which is much lower than the tempo needed to meet the European Union’s REPowerEU ambitions, concluded Rystad.

The Nigeria Employers’ Consultative Association has lamented that the country has been losing about $2.5bn monthly on account of its failure to meet the 1.8m barrel per day crude oil production allocation by the Organisation of Petroleum Exporting Countries.

The Director-General of NECA, Adewale-Smatt Oyerinde,who expressed this in a statement, claimed that though the country’s crude oil production grew by 4.2 per cent to 1.23 million barrels per day in December 2022, it was still short.

He said, oil theft seemed to continue unabated and the unsustainable subsidy on petroleum products had joined to reduce the government’s revenue, leading to absurd debt accumulation.

According to him,misalignment between the fiscal and monetary policies, which were deflating investors’ confidence, has made the country unattractive for Foreign Direct Investments.

He added:“Crude oil production grew in the month of December 2022 by 4.2 per cent month-on-month to 1.23m barrel per day, but remained significantly short of the 1.8m barrel per day allocated by OPEC to the nation, amounting to about $2.5bn loss monthly at an average of $100pb,” he remarked.

He expressed the need for the government, especially the incoming one to demonstrate the political will to implement policies that will drive the economy back on a growth trajectory.

“Deliberate efforts must be made to reverse some of the current policies and implement new ones. All leakages associated with government revenue must be blocked (oil theft, skewed concessions, fuel subsidy, etc.). A wholesome review of the tax administration to make it more equitable and investor-friendly should be initiated”

He lamented that while governments in other climes were reducing tax rates in order to enhance economic activities, promote sustainable consumption and attract investors, Nigeria cannot continue to over-tax its businesses and citizens.

He added:“With over 50 different taxes, levies and fees and Company Income Tax hovering around 35 per cent, raising taxes in order to increase revenue will be counterproductive. As the nation nears the mark of N77trn in debt with negligible impact on infrastructural development, the incoming government must develop strategies to diversify the revenue base through the revival of the country’s lagging non-oil sectors.

“While there have been projections for a global recession in 2023, the time for a major paradigm shift in our economic philosophy is now. Over the last decade, the country has spent over N10tn on fuel subsidy, about N15.5tn on Capital Expenditure, N2.5tn on Health and about N3.9tn on Education. This is a misplacement of priority and shows that critical developmental items such as education, health and infrastructure have suffered due to crass misplacement of our economic priorities”

Chevron Nigeria Limited,operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL ,has faulted report that it intends to leave Nigeria

Esimaje Brikinn,spokesman of the multinational oil company,who clarified the position in a statement made available to Premium News,said the allegation was untrue and does not represent the position of Chevron in Nigeria.

He said his remains committed to sustaining the existing mutually beneficial and long-term relationship with Nigeria and other stakeholders as demonstrated by the company’s significant economic and social investments in Nigeria over the last six decades.

He added:”These investments have generated visible and viable socio-economic development in several communities across Nigeria. CNL will, along with industry peers in Nigeria, continue to engage the government on policies and opportunities to ensure global competitiveness and sustainability of the petroleum industry”