(Bloomberg) – As the world’s richest economies invest in new and cleaner energy supplies, it is vital for everyone that the poorest nations are not left behind. Clean energy investments in these economies will need to grow to more than $ 1 trillion a year by the end of the decade in order to meet global climate goals, which contrasts with less than $ 150 billion in 2020, according to a new report from the International Energy Agency (IEA).
Since 2016, developing and emerging markets have experienced a decrease of around 20% in their annual investments in the energy sector, which represents a stark contrast to European countries and the United States, which led the burning of fossil fuels, but now they can spend much more to reduce their carbon footprints.
“This is the most serious flaw in the international fight against climate change,” said Fatih Birol, executive director of the IEA, who urged the leaders of the Group of Seven, who will meet this week in Cornwall, England, to commit to meet the goal set by the developed countries that are signatories to the Paris Agreement of mobilizing US $ 100 billion a year in climate finance for developing countries. “That should be the floor,” Birol said. “International financial institutions could be the catalyst.”
Trillions of dollars will be needed to eliminate emissions from transportation, buildings and heavy industries around the world. Leaders of rich nations have often pointed out that accelerating the transition to green energy can help stimulate their local economies, but concentrating investment only in rich countries will not be enough to eliminate emissions.
Developing countries account for two-thirds of the world’s population, but only one-fifth of global spending on clean energy. Without increasing that investment significantly, these nations will be responsible for most of the sustained increase in emissions in the coming decades.
Focusing investments to reduce pollution in rich countries is also ineffective. Avoiding a metric ton of CO₂ emissions in a developing country costs half that in an advanced economy, according to the IEA. That’s partly because emerging nations can go straight to cleaner, more efficient technologies rather than having to phase out or adapt polluting energy projects already underway.
However, finances remain a key barrier to the construction of new projects. Financing costs in emerging markets are up to seven times higher than in the US and Europe, and even higher in sectors considered riskier, such as clean hydrogen. That makes it difficult for developers to sell debt or achieve profitable returns on clean energy investments.
The latest IEA report comes after the agency noted that its models showed the world must stop spending on new oil, gas and coal fields immediately with the goal of reaching net zero emissions by 2050.
Original Note: Low Clean-Energy Spending Puts Climate Goals in Peril, IEA Says
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