Economy

Surge in clean energy investments needed to meet climate goals: IEA

A new report by the International Energy Agency, carried out in collaboration with the World Bank and the World Economic Forum, has found that annual clean energy investment in developing economies needs to increase by more than seven times – from less than $ 150 billion last year to over $1 trillion by 2030-to put the world on track to reach net-zero emissions by 2050.

According to the report, Financing Clean Energy Transitions in Emerging and Developing Economies, unless much stronger action is taken, energy-related carbon dioxide emissions from these nations – which are located mostly in Asia, Africa and Latin America – are set to grow by 5 billion tonnes over the next two decades.

Also read: IEA report on ‘Net Zero by 2050’ suggests need to stop oil, gas projects

“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,’’ said Fatih Birol, IEA Executive Director.

Lack of funds

“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,” Dr Birol said. “Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.”

Recent trends in clean energy spending point to a widening gap between advanced economies and the developing world even though emissions reductions are far more cost-effective in the latter.

Avoiding a tonne of CO2 emissions in emerging and developing economies costs about half as much on average as in advanced economies. That is partly because developing economies can often jump straight to cleaner and more efficient technologies without having to phase out or refit polluting energy projects that are already underway.

“A major catalyst is needed to make the 2020s the decade of transformative clean energy investment,” said Dr Birol.

“The World Bank will continue to support countries that seek assistance to transition away from fossil fuels and scale up low-carbon, renewable energy, and energy efficiency investments,” said Demetrios Papathanasiou, World Bank Global Director for Energy and Extractives.

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