Annual clean energy investment in emerging and developing economies needs to increase by more than seven times – from less than $150 billion last year to over $1 trillion by 2030 to reach net-zero emissions by 2050, according to a recent report by the International Energy Agency (IEA).
It added that unless much stronger action is taken, energy-related carbon dioxide emissions from these economies, which are mostly in Asia, Africa and Latin America, were set to grow by 5 billion tonnes over the next two decades, according to Reuters.
The special report titled ‘Financing Clean Energy Transitions in Emerging and Developing Economies’ has been carried out by IEA in collaboration with the World Bank and the World Economic Forum.
“In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals,’’ said Fatih Birol, executive director, IEA.
He added that there was no shortage of money worldwide, but it is not finding its way to the countries, sectors and projects where it is most needed.
“Governments need to give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world,” Birol said.
The report said that recent trends in clean energy spending pointed to a widening gap between advanced economies and the developing world even though emissions reductions were far more cost-effective 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, according to IEA.
It added that annual investments across all parts of the energy sector in emerging and developing markets have fallen by about 20 per cent since 2016, and they face debt and equity costs that are up to seven times higher than in the United States or Europe.