It’s time to make clean energy investments in emerging and developing economies a top global priority

The global energy and climate future increasingly depends on the ability of emerging and developing economies to successfully transition to cleaner energy systems, calling for a radical change in global efforts to mobilize and channel the massive increase in energy costs. investment that is needed, according to a new report by the International Energy Agency.

The special report – produced in collaboration with the World Bank and the World Economic Forum – presents a series of actions to enable these countries to overcome the main obstacles they face in attracting the financing necessary to build clean energy systems, modern and resilient that can fuel their growing economies for decades to come.

Annual investments in clean energy in emerging and developing economies must be multiplied by more than seven – from less than $ 150 billion last year to more than $ 1,000 billion by 2030 to put the world on on track to achieve net zero emissions by 2050, according to report, Financing clean energy transitions in emerging and developing economies. Unless much stronger action is taken, the energy-related carbon dioxide emissions of these economies – which are mainly found in Asia, Africa and Latin America – are expected to increase by 5 billion tonnes over the course of over the next two decades.

“In many emerging and developing economies, emissions are rising as clean energy investments falter, creating a dangerous fault line in global efforts to meet sustainable climate and energy goals,” said Fatih Birol, executive director of the IEA. “Countries do not start this journey from the same place – many do not have access to the funds they need to move quickly to a healthier, more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer. long in many parts of the developing world.

“There is no shortage of money in the world, but it is not reaching the countries, sectors and projects where it is needed most,” said Dr Birol. “Governments must give international public financial institutions a strong strategic mandate to finance clean energy transitions in the developing world. ”

Recent trends in clean energy spending indicate a widening gap between the advanced economies and the developing world, even though emission reductions pay off much more in the latter. Emerging and developing economies currently account for two-thirds of the world’s population, but only one-fifth of global investment in clean energy and one-tenth of global financial wealth. Annual investments in all parts of the energy sector in emerging and developing markets have fallen by around 20% since 2016, and they face debt and equity costs up to seven times higher. higher than in the United States or Europe.

Avoiding a ton of CO2 emissions in emerging and developing economies costs on average half as much as in advanced economies, according to the report. Part of the reason is that developing economies can often switch directly to cleaner and more efficient technologies without having to phase out or renovate polluting energy projects already underway.

But emerging and developing market economies looking to scale up investment in clean energy face a series of challenges, which can compromise risk-adjusted returns for investors and the availability of bankable projects. The challenges involve the availability of trade agreements that support predictable income for capital-intensive investments, the creditworthiness of counterparties, and the availability of enabling infrastructure, among other factors at the project level. More general issues, including exhaustion of public finances, monetary instability, and weak local banking and capital markets, also pose challenges in attracting investment.

“A major catalyst is needed to make the 2020s the decade of transformative investments in clean energy,” said Dr Birol. “The international system lacks a clear, unified focus on financing emissions reductions and clean energy – especially in emerging and developing economies. Today’s strategies, capacities and funding levels are well below what they should be. Our report is a global call to action – especially for those who have the wealth, resources and expertise to make a difference – and proposes priority actions that can be taken now to get things done quickly. ‘

These priority actions – for governments, financial institutions, investors and businesses – cover the period to 2030, building on a detailed analysis of successful projects and initiatives in the areas of clean energy, efficiency and electrification, as well as transitions for fuels and emissions-intensive sectors. . These include nearly 50 real-world case studies across different industries in countries ranging from Brazil to Indonesia and Senegal to Bangladesh.

“As we expand access to energy, we also need a global transition to low carbon energy. It is essential to develop solutions that make energy systems more resilient to climate change and other crises. With the right policies and investments, countries can achieve sustainable economic growth and reduce poverty without degrading the environment or increasing inequalities. The broader financial sector can and should play a key role in achieving the goals of the Paris Agreement by mobilizing capital for green and low-carbon investments, while managing climate risks. The World Bank will continue to support countries asking for help to move away from fossil fuels and scale up investments in renewable and low-carbon energy and energy efficiency, ”said Demetrios Papathanasiou, World Director of the Bank. world for energy and extractive industries.

“The need to develop clean energy in emerging economies offers a massive investment opportunity. This report shows that the current challenges of getting that capital to the right places can be overcome through a combination of smart policies, financial innovation and bold collective action. The World Economic Forum is committed to enabling multi-stakeholder cooperation to accelerate progress in this important area, said Børge Brende, president of the World Economic Forum.

The report calls for focusing on channeling and facilitating investments in sectors where clean technologies are market-ready, especially in the areas of renewable energy and energy efficiency, but also on laying the groundwork for an increase in low-carbon fuels and industrial infrastructure needed to rapidly decarbonize growing and urbanizing economies. It also calls for strengthening sustainable financing frameworks, removing barriers to foreign investment, relaxing licensing and land acquisition procedures, and rolling back policies that distort foreign investment. local energy markets.

The report points out that investments and activities in clean energy can bring substantial economic opportunities and jobs to industries that are expected to thrive over the coming decades as energy transitions accelerate around the world. It calls for people-centered and inclusive clean energy transitions, including actions that build equitable and sustainable models for universal access to modern energy. Spending on more efficient household appliances, electric vehicles and energy efficient buildings can offer new employment opportunities and can in particular support the role of women and women entrepreneurs in driving change and improving business. gender equality.

Warning

IEA – International Energy Agency published this content on June 09, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 09 Jun 2021 05:18:00 AM UTC.


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