IEA: To reach net-zero, renewable energy investment in developing nations must increase sevenfold
Some $150bn was invested in clean energy in developing economies last year, according to new International Energy Agency (IEA) analysis. But the Agency believes this figure must hit $1trn by 2030 to deliver a net-zero world.
The new analysis, published today (9 June) as part of a collaboration with the World Economic Forum (WEF) and World Bank, assesses the investments made in renewable generation, nuclear generation, biofuel generation and related technologies in recent years. It assesses investment and policy ‘gaps’, which will need to be closed if the world is to deliver on the IEA’s vision for net-zero by 2050.
Annual investments in both clean and fossil-based energies have fallen by one-fifth for developing nations and emerging economies since 2016, on average, the analysis states. While Covid-19 did dampen investor appetites, the IEA claims, there are other “persistent challenges”, including a lack of supporting policy frameworks. Between 2016 and 2020, these nations accounted for just one-fifth of global energy investment.
This trend, alongside the growth in investment in renewable power in many developed nations as more boost climate targets ahead of COP26, means that emerging and developing economies will likely account for the majority of emissions growth through to 2040. Emissions from these nations could be five billion tonnes higher in 2040 than they are today.
The IEA is using its report to issue recommendations for policymakers and the private sector to address this issue. It claims that, without action this decade, the global long-term transition to net-zero could be derailed or be significantly more expensive.
Policymakers can mandate that new buildings and vehicles run on clean energy, for example, while investors can be incentivised to back these projects. Governments can work with the private sector to deliver finance solutions that encompass both public and private investment. International agreements can be made on phasing out coal power plants.
The report also emphasises the importance of coupling the low-carbon transition with the transition to a more accessible energy economy. Almost 800 million people cannot access electricity at present, and the figure stands at 2.6 billion for those who cannot access clean cooking fuels. Governments and investors are encouraged to use efficiency and existing solutions to keep costs down while addressing the two issues in tandem. They are also urged to measure co-benefits such as improved air quality and social outcomes.
In total, the report includes more than 50 case studies that businesses, nations, regions and cities can draw upon.
IEA executive director Fatih Birol said: “In many emerging and developing economies emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals.
“Countries are not starting on this journey from the same place; many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world.
“There is no shortage of money worldwide, but it is not finding its way to the countries, sectors and projects where it is most needed.
“Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.”
The findings of the new report echo those from the IEA’s recent World Energy Investment report.
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