Today, the major environmental challenge facing the modern world is climate change. Across the world, temperatures are rising, weather patterns are shifting, and the number of weather-related disasters is occurring with alarming frequency, just to mention a few.
In pursuit of a clean and green world, countries around the world are running interventions designed to halt the effects of global warming. To that effect, renewable energy has become a buzzword, having been recognized as one of the most effective tools to fight against climate change.
When it comes to clean energy adoption, however, some countries- especially those in developed economies- are far gone than others. Nevertheless, the world’s energy and climate future rest on the ability of emerging economies to successfully transition to cleaner energy systems.
Unsurprisingly, one of the major obstacles hindering their transition is the availability of financing.
According to a new report carried out by the International Energy Agency (IEA) in collaboration with the World Bank and the World Economic Forum, there is a huge opportunity for developing countries to take advantage of lower-cost clean energy technologies, led by solar and wind, to forge a new low-emissions development model.
Titled ‘Financing Clean Energy Transitions in Emerging and Developing Economies’, the report reveals that though there is no shortage of capital globally to ensure that there is an uptake in clean energy adoption, capital is not being channeled into the countries and sectors where it is most needed.
Per the report, emerging economies currently account for two-thirds of the world’s population. In terms of global investment in clean energy and global financial wealth, they account for one-fifth and one-tenth respectively.
Hence, the study proposes that annual clean energy investment in these regions needs to increase by more than seven times from less than USD 150 billion in 2020 to over $1 trillion by 2030.
Importantly, the report emphasizes that the acceleration of clean energy transitions in emerging and developing economies should no longer be just one investment option out of many but a top priority for governments and investors worldwide.
Clean energy investments equal benefits for all
Underscoring that clean energy investments and activities can bring substantial economic opportunities and job creation in industries worldwide, the study calls for transition programs that are people-centered and inclusive.
It further advises that investing in more efficient appliances, electric vehicles, and energy‐efficient buildings can provide further employment opportunities, and equally support the role of female entrepreneurship in fostering change and gender equality.
Commenting on the position of the World Bank, Demetrios Papathanasiou, the World Bank Global Director for Energy and Extractives said, “With the right policies and investments, countries can achieve lasting economic growth and poverty reduction without degrading the environment or aggravating inequality.
The broader financial sector can and must 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.”
He further added that 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.
In the same vein, Børge Brende, President of the World Economic Forum, said, “The need to scale clean energy in emerging economies offers a massive investment opportunity.
This report shows that current challenges to get this capital to the right places can be overcome through a combination of smart policies, financial innovation, as well as bold collective action.
The World Economic Forum is committed to enabling multistakeholder cooperation to accelerate progress in this important area.”
The following are some recommendations the report highlights:
- Governments, financial institutions, investors, and companies need to focus on channeling and facilitating investment into sectors where clean technologies are market-ready, particularly in the areas of renewables and energy efficiency.
- Groundwork should be laid for scaling up low-carbon fuels and industrial infrastructure needed to decarbonize rapidly growing and urbanizing economies.
- Efforts should be put into strengthening sustainable finance frameworks, addressing barriers to foreign investment, easing procedures for licensing and land acquisition, and rolling back policies that distort local energy markets.