The latest research results from Oxford University show that while there is a steady increase in the financing of coal mines and coal power projects on a more global scale, loans and financing related to renewable energy are steadily declining.
A new study by the Sustainable Finance Program of the world’s leading university shows how, by comparing 2007–2010 and 2017–2020, the cost of finance for coal mines and coal power plants was 54% over the past decade, respectively. And increased by 38%.
By comparing 2000–2010 and 2011–2020, loans for coal power in countries of North America, India and South East Asia have increased by 47%, 63% and 63%, respectively. Interestingly, in Southeast Asia and India, the amount of debt has increased rapidly, while in North America it has decreased from $ 14 billion to $ 8 billion.
Also – the cost of finance for solar and wind has dropped significantly. When comparing 2007–10 with 2017–20, the average debt spread of renewables has decreased by 12% onshore wind (onshore wind) and by 24% in offshore wind (offshore wind). This has accelerated after 2015 as the cost of solar PV, onshore wind, and offshore wind finance has decreased by 20%, 15% and 33% (compared to 2015-2014 of 2010-14), with an increase in renewables deployment. .
This research shows that when compared to 2007–20 to 2017–20, the spread of renewables loans has decreased by an average of 12% onshore wind (onshore wind) and 24% in offshore wind (offshore wind). is. It has accelerated after 2015 as the cost of solar PV, onshore wind, and offshore wind finance decreased by 20%, 15% and 33% (compared to 2015-2014 of 2010-14), with an increase in renewables deployment. . We also see regional differences. In this period, the cost of financing offshore wind in Europe decreased by 39%; 41%, 14%, and 11% reductions for onshore wind in Australia, North America, and Europe; And 32% and 27% reductions for solar PV in North America and Europe.
Unlike renewables, compared to 2007-20 2017-2017, the credit expansion of coal power stations and coal mines has increased sharply by 38% and 54% respectively. This trend also persists when comparing 2000–10 with 2011–20, in which the credit spread increased by 56% and 65%, respectively. We have found that the cost of financing for coal mines in developed countries has increased the most, when compared to 2000–10 with 2011–20, 80% in North America, 134% in Europe and 71% in Australia. Debt spread with an increase of%.
But in oil and gas, changes in funding costs are highly mixed and in many cases have been reduced over the last decade. For example, while the credit spread for gas-fired power stations increased 68% between 2000–10 and 2011–20, only 7% increased in the past decade, while coal power increased 38% (2007). Compared 2017-20 with -10) 20). There have been major differences across all sectors: when comparing 2011–20 with 2000–10, gas-based electricity showed a 23% decrease in credit spreads in ASEAN (ASEAN), but a 16% increase in North America. But over the past decade, debt proliferation for gas-based electricity in North America has decreased by 28% (compared to 2017–10 with 2007–10).
In the case of oil and gas production, the cost of financing has worsened when comparing 2000–10 to 2011–20, but credit spreads have remained largely stagnant over the past decade, with oil and gas production Has increased by just 3%. In fact, loan spreads fell for some sub-sectors over this period, such as -41% for offshore oil. This shows that financial constraints on oil and gas have not affected the way coal has been affected.
Co-author and director of the Oxford Sustainable Finance Program and Lombard Odier Associate Professor of Sustainable Finance at Oxford University, Drs. Ben Caldcout said, “This is good news for the cost of renewables, as financing costs are a key determinant of total costs. The falling debt spread for renewables means that these projects will become even more affordable for taxpayers and ratepayers (taxpayers and buyers), which is a good thing for the rapidly decarbonizing energy sector. “
Lead and lead author for Sustainable Investment Performance in the Oxford Sustainable Finance Program, Drs. Xiaoyan Zhou, said, “If these observed trends continue and we see the cost of capital for oil and gas go the way of coal, it could have very important clues to the economics of oil and gas projects around the world.” . This can result in trapped assets and present substantial re-financing risk. “
Caldcout also stated that, “Climate-related infection risks in the energy sector are sometimes seen as far-reaching, long-term risks. Our findings support that their price is being maintained today: increasing costs for coal and decreasing for renewables. The challenge is that this is not happening evenly and certainly is not happening at the pace required to deal with climate change. In particular, financing costs for oil and gas projects will have to increase. “
o Credit expansion for coal mines and coal power stations has increased severely, increasing by 54% and 38% over the past decade, compared to 2007–2010 and 2017–2020. This apparent increase in credit spread Fattouh et al. (2019) (Fattooh et al. (2019)) supports the findings, which show that investors perceive coal to be significantly more risky than other energy projects.
o Compared to 2000–2010 from 2011–2020, the average loan spread for coal mining has increased sharply in developed markets such as Europe, North America, and Australia, 134%, 80% and 71%, respectively, and relative Latin America, Emerging markets such as China and Southeast Asia have grown by 56%, 32% and 12% respectively.
o During this period, the credit spread of coal power in countries of North America, India and South East Asia has increased by 47%, 63% and 63% respectively. In Southeast Asia and India, the amount of debt has steadily increased, while it has decreased from $ 14 billion to $ 8 billion in North America.
• Gas power
o Globally, over the past decade, credit spreads for gas power have been more stable, compared to the 2017–2020 average of 2007–2010, an increase of only 7%.
o In North America, credit expansion has increased by 16% from 2000–2010 to 2011–2020, while credit volume has increased from $ 17.4 billion to over $ 106 billion. But in the last decade, the credit spread has fallen by 28% (compared to 2017–20 with 2007–10).
• Solar PV
o Compared to the average loan spread of 2010-2014 and 2015-2020, there has been a 20% decline globally.
o During this period, the spread of solar PV in Europe has decreased by 27%, and meanwhile loan volume has increased from $ 2 billion to $ 3 billion. In North America, the average debt spread has fallen by 32%, and since 2015, loan volume has increased from $ 15 billion to $ 19 billion.
o Globally, between 2010–2014 and 2015–2020, the credit spread for onshore and offshore wind has fallen by 15% and 33%.
o During this time, credit expansion for offshore wind in Europe has fallen by 39%, and loan volume has increased from $ 18 billion to $ 63 billion. Since 2010, large amounts of loans have been issued in the interest of European firms.
o In North America, the average debt for offshore wind has fallen by just 1%, while loan volume has increased from $ 1.2 billion to $ 1.5 billion since 2015.
o In this period, the onshore wind lending spread in Australia, Europe and North America declined by 41%, 11% and 14% respectively. Since 2010, large amounts of debt have been issued in the interests of American firms.
• Oil and gas production
o Although credit spreads have increased since 2000, credit spreads in oil and gas have remained largely stable over the past decade, increasing by only 3% (compared to 2007–2010 to 2017–2020). This shows that the financial constraints on the oil and gas companies have not been in the same way as coal.
o When compared to 2000–2010 and 2011–2020, the cost of credit related to oil production in India, China and the Middle East and North Africa has been reduced by 43%, 18% and 17%, respectively, whereas it has been reduced in other regions and Countries have risen. During this time period, the amount of onshore oil production debt in North America has more than doubled.
o Compared to the 2000–2010 and 2011–2020 averages, the average debt spread for offshore oil production is reduced by up to 30% in Europe.
• Oil and Gas Pipeline
o Compared to 2000–2010 and 2011–2020, the cost of loans for gas pipelines in Europe, North America and India increased by 80%, 52% and 67%, respectively. The total amount of loan amounts for gas pipelines in North America has more than doubled in North America, from $ 84 billion to $ 166 billion, with huge amounts of debt being issued in the interest of North American firms.
o The cost of debt for oil pipelines has increased in most areas over this period, but debt for oil pipelines in North America has almost doubled, from $ 35 billion to $ 63 billion. Since the year 2000, large amounts of loans have been issued in the interest of North American firms.
• Oil and Gas Refining
o In Europe, between 2000–2010 and 2011–2020, average debt for oil and gas refining increased by 54%, more than doubling the total amount of loan volume from $ 174 billion to $ 361 billion.
In North America, the cost of debt has gone up by 17%. Meanwhile, the loan volume has increased by 14%.