Global investment in energy transition technologies last year — including energy efficiency — reached USD 1.3 trillion. It set a new record-high, up 19 percent from 2021 investment levels, and 50 percent from before the pandemic in 2019, the report called Global Landscape of Renewable Energy Finance 2023 reveals.
Though global investment in renewable energy reached a record high of USD 0.5 trillion in 2022, this still represents less than 40 percent of the average investment needed each year between 2021 and 2030, according to IRENA’s 1.5°C Scenario. Investments are also not on track to achieve the goals set by the 2030 Agenda for Sustainable Development.
The International Renewable Energy Agency (IRENA) and Climate Policy Initiative (CPI) launched the report on the side-lines of the Spanish International Conference on Renewable Energy in Madrid.
Since decentralised solutions are vital in plugging the access gap to reach universal energy access to improve livelihoods and welfare under the 2030 Agenda, efforts must be made to scale up investments in the off-grid renewables sector. Despite reaching record-high annual investments exceeding USD 0.5 billion in 2021, investment in off-grid renewable solutions falls far short of the USD 2.3 billion needed annually in the sector between 2021 and 2030.
Investments have become concentrated in specific technologies and uses. In 2020, solar photovoltaic alone attracted 43 percent of the total investment in renewables, followed by onshore and offshore wind at 35 percent and 12 percent shares, respectively.
Comparing renewables financing across countries and regions, disparities have increased significantly over the last six years. About 70 percent of the world’s population, mostly residing in developing and emerging countries, received only 15 percent of global investments in 2020. Sub-Saharan Africa received less than 1.5 percent of the amount invested globally between 2000 and 2020. In 2021, investment per capita in Europe was 127 times that in Sub-Saharan Africa, and 179 times more in North America.
“For the energy transition to improve lives and livelihoods, governments and development partners need to ensure a more equitable flow of finance, by recognising the different contexts and needs,” says IRENA Director-General, Francesco La Camera.
Achieving an energy transition in line with the 1.5°C Scenario requires the redirection of USD 0.7 trillion per year from fossil fuels to energy-transition¬-related technologies. Some large multi-national banks have even increased their investments in fossil fuels at an average of about USD 0.75 trillion dollars a year since the Paris Agreement.
In addition, the fossil fuel industry continues to benefit from subsidies, which doubled in 2021 across 51 countries. The phasing out of investments in fossil fuel assets should be coupled with the elimination of subsidies to level the playing field with renewables.
Barbara Buchner, CPI’s Global Managing Director says, “While our numbers show that there were record levels of investment for renewables last year, a greater scale-up is critically needed to avoid dangerous climate change, particularly in developing countries.”