BARCELONA — Investment in clean energy in emerging and developing economies needs to rise by more than seven times, topping $1 trillion per year by 2030, to put the world on track for net-zero emissions by 2050, the International Energy Agency said Wednesday.
In a report carried out with the World Bank and the World Economic Forum, the IEA said that, without far stronger action, energy-related carbon dioxide emissions from those economies – mostly in Asia, Africa and Latin America – would grow by 5 billion tons over the next two decades.
By contrast, carbon emissions are projected to fall by 2 billion tons in advanced economies and plateau in China.
"In many emerging and developing economies, emissions are heading upward while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals," said Fatih Birol, the IEA's executive director, in a statement.
"Many (countries) do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the COVID-19 crisis are lasting longer in many parts of the developing world," he added.
The report noted that while developing and emerging economies account for two-thirds of the world's population, they receive only one-fifth of investment in clean energy.
Annual investments across all parts of the energy sector in developing and emerging markets have fallen by about 20% since 2016, it added, partly because of challenges including weak regulation and a lack of profitable clean energy projects.
The coronavirus pandemic has sapped corporate balance sheets and consumers' ability to pay for energy, and put additional strains on public finances, the report said.
Clean energy investment in emerging and developing economies declined by 8% to less than $150 billion in 2020, with only a slight rebound expected in 2021, it noted.
Boosting investment to more than $1 trillion a year this decade would bring major economic and social benefits, including new jobs, the report said.
But it will require substantial work to improve the domestic environment for clean energy investment, alongside international efforts to accelerate inflows of capital.
Public finance will be needed to attract private investment to early-stage markets and sectors, and in situations where risks are hard to abate, such as energy access projects for vulnerable or remote communities.
Tim Gould, the IEA's head of division for energy supply outlooks and investment, told journalists richer nations should start by delivering on an overdue pledge to mobilize $100 billion per year in climate finance from 2020, a large part of which will be spent on clean energy in poorer countries.
Actual investment needs are far higher, and the $100-billion goal should be seen as "a floor rather than a ceiling," he added.
New 'dash for gas'?
This week, a separate report from the International Institute for Sustainable Development found gas projects in low- and middle-income countries received an annual average of nearly $16 billion in international public finance from 2017 to 2019.
This investment – four times as much as for wind or solar – "risks driving a new dash for gas that locks countries into a high-carbon pathway," it added.
Renewable energy alternatives for most of the uses for gas are either already cheaper or expected to be within a few years, the report noted.
On Wednesday, more than 100 economists issued an open letter to G7 leaders meeting in Britain this weekend, urging them to build on a decision to end international funding for coal-fired power in 2021, by committing to shift their finance out of all fossil fuels this year.
Between 2017 and 2019, G7 nations provided $86 billion in public finance for fossil fuels, of which nearly 90% went to oil and gas, the economists said in the letter published on the Thomson Reuters Foundation website.
Signatory Nonhlanhla Makuyana, co-director of Decolonising Economics, a grassroots collective, said gas was "not clean" or "necessary."
"G7 countries need to stop pushing gas expansion in the Global South with huge sums of public money, leaving countries and communities saddled with polluted lands and waters, forced displacement, stranded assets and conflict," she added in a written comment.