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An IEA report estimates that clean energy investment in the developing world needs to increase by 600% to achieve net-zero by 2050.
- Despite having 66% of the world population, the global south receives only 20% of clean energy investments.
- Governments need to give international public finance institutions a mandate to finance clean energy in developing economies.
According to a recent report by the International Energy Agency (IEA), the annual clean energy investment in emerging and developing economies will have to increase by over 600 per cent (from under $150 billion in 2019 to over $1 trillion by 2030) for countries to achieve net-zero emissions by 2050. The report titled ‘Financing Clean Energy Transitions in Emerging and Developing Economies’ was published by the IEA in collaboration with the World Bank and the World Economic Forum.
The report estimates that energy-related carbon dioxide emissions from Asiab, African and Latin American countries could grow by up to 5 billion tonnes over the next two decades if string actions aren’t taken. Fatih Birol, Executive Director, IEA, noted that emissions are rising in many emerging and developing countries while clean energy investments are falling. Birol adds that this creates a “dangerous fault line in global efforts to reach climate and sustainable energy goals.”
The problem Briol notes is not a shortage of finance, but that finance is not directed to sectors and projects where they are most needed. Therefore, he proposes that governments give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world.
Despite being more cost-effective in developing economies, clean energy spending in advanced economies is larger. The report adds that while developing economies currently account for two-thirds of the world’s population, it only receives only one-fifth of global clean energy investment.