Monday, April 15, 2024

Developing countries need $2.8trn annual investment in clean energy by 2030 – Report

BY FESTUS OKOROMADU, ABUJA

In order to achieve the climate goals set out in the Paris Agreement, emerging and developing economies will need $2.8 trillion annual investment in clean energy by early 2030.

The amount is more than triple the $770 billion annual investment achieved in 2022, according to a new report released at the weekend by the International Energy Agency and International Finance Corporation.

The report, titled ‘Scaling Up Private Finance for Clean Energy in Emerging and Developing Economy,’ also emphasized that public investments alone would be insufficient to deliver universal access to energy and tackle climate change.

It hinted that increased public funding can be used most effectively in partnership with private sector capital to reduce project risks – a concept known broadly as blended finance, it stated.

According to the report, two-thirds of the finance for clean energy projects in emerging and developing economies (outside China) will need to come from the private sector, adding that currently, $135 billion in annual private financing for clean energy in these economies will need to rise to as much as $1.1 trillion a year within the next decade.

Commenting on the report and the opportunities the development offers, IEA Executive Director, Fatih Birol, said, “Today’s energy world is moving fast, but there is a major risk of many countries around the world being left behind. Investment is the key to ensuring they can benefit from the new global energy economy that is emerging rapidly.

“The investment needs go well beyond the capacity of public financing alone, making it urgent to rapidly scale up much greater private financing for clean energy projects in emerging and developing economies. As this report shows, this offers many advantages and opportunities – including expanded energy access, job creation, growing industries, improved energy security and a sustainable future for all.”

To expand opportunities for private investors, the report underscores the need for policy reforms in emerging and developing economies.

“A range of cross-cutting policy issues, such as fossil fuel subsidies, lengthy licensing processes, unclear land use rights, restrictions on private or foreign ownership, and inappropriate pricing policies, create barriers to investment or increase the cost of clean energy projects.

Lifting these barriers will help emerging and developing economies benefit more fully from the opportunities of the new global energy economy,” Birol noted.

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