Global investments in energy transition technologies must quadruple to $35 trillion by 2030 to stay in line with commitments made under the Paris climate agreement, according to a new report by the International Renewable Energy Agency (Irena).
Investments in renewable energy technologies reached a record of $1.3 trillion last year but that figure must rise to about $5 trillion annually to meet the key Paris accord target of limiting temperature increases to 1.5 degrees Celsius above pre-industrial levels, the Abu Dhabi-based agency said in its World Energy Transitions Outlook 2023 preview.
Renewable capacity must grow from about 3,000 gigawatts currently to more than 10,000 gigawatts in 2030, an average of 1,000 gigawatts annually, it said.
“The stakes could not be higher. A profound and systemic transformation of the global energy system must occur in under 30 years, underscoring the need for a new approach to accelerate the energy transition,” Irena’s director general Francesco La Camera said.
“Pursuing fossil fuel and sectoral mitigation measures is necessary but insufficient to shift to an energy system fit for the dominance of renewables.”
Countries are continuing to boost investments in renewables to limit global warming.
A record 295 gigawatts of renewable energy capacity was added globally in 2022, up nearly 10 per cent from the year before. Eighty-three per cent of all new capacity last year was produced by renewables, Irena said this month.
Nearly half of all new renewable capacity last year was built in Asia, leading to a combined renewable capacity of 1.63 terawatts (TW). China, the world’s largest manufacturer of solar equipment, added 141 gigawatts to the continent's capacity.
In Europe and North America, renewable energy sources grew by 57.3 gigawatts and 29.1 gigawatts, respectively, according to Irena.
“China, the European Union and the US accounted for two thirds of all additions last year, leaving developing nations further behind,” the report said.
Africa accounted for only 1 per cent of renewable capacity installed last year.
A fundamental shift in the support to developing nations must put more focus on “energy access and climate adaptation”, Mr La Camera said.
He urged multilateral financial institutions to direct more funds, at better terms, towards energy transition projects and build the physical infrastructure that is needed to sustain the development of a new energy system.
Irena: 'The future is bright if action is taken today'
Last month, the Arab Petroleum Investments Corporation (Apicorp), a Saudi Arabia-based multilateral lender owned by the 10 members of the Organisation of Arab Petroleum Exporting Countries, said it has allocated $335 million to fund green projects after it raised $750 million through a green bond in 2021.
As of October last year, Apicorp financed 10 projects in Saudi Arabia, the UAE, Egypt, Jordan and Spain, including solar and wind farms, waste-to-energy plants and wastewater treatment units.
The International Energy Agency also called on boosting investments in renewable energy to cut emissions.
Investment in renewable energy must double to more than $4 trillion by the end of the decade to meet net-zero emissions targets by 2050, the Paris-based energy agency said in its World Energy Outlook last year.
The IEA’s stated policies scenario, which is based on the latest policy settings worldwide, expects clean energy investment to rise to slightly more than $2 trillion by 2030.
