Investment in renewables and other clean technologies must reach $5.7tr a year by 2030, Abu Dhabi based body warns
The world’s leading renewables authority has this morning raised the alarm that governments continued investment in fossil fuel infrastructure is pushing climate goals dangerously out of reach.
The World Energy Transitions Outlook report, published this morning by the International Renewable Energy Agency (IRENA), calculates that $700bn of investment needs to be diverted from fossil fuels into energy transition technologies annually by 2030 in order to cap global temperatures at safer levels and prevent the global economy being saddled with stranded assets.
Surging oil and gas prices and energy security concerns in the wake of Russia’s invasion of Ukraine – a crisis unfolding against the backdrop of a global pandemic and worsening extreme weather events caused by climate change – have underscored the need for governments to move away from fossil fuels and accelerate the clean energy transition, the report argues.
Francesco La Camera, director-general of IRENA, noted that governments around the world needed to take action in the short-term to fast-track the energy transition, arguing climate goals were under threat. “The energy transition is far from being on track and anything short of radical action in the coming years will diminish, even eliminate chances to meet our climate goals,” he said.
The Intergovernmental Panel on Climate Change (IPCC) has warned that global additions of renewable power must triple by 2030 so as to cap global temperature rises at 1.5C above pre-industrial levels. Meeting this global temperature goal also depends on unabated coal power being eliminated and other fossil fuel assets being phased out by the end of the decade, according to the scientific body.
La Camera said governments that continued to back the expansion of coal, oil, and gas were making a “political choice” to bet against the clean energy transition.
“Today, governments are facing multiple challenges of energy security, economic recovery, and the affordability of energy bills for households and businesses,” he said. “Many answers lie in the accelerated transition. But it’s a political choice to put policies in place that comply with Paris Agreement and the [International Energy Agency’s (IEA’s)] Sustainable Development Agenda. Investing in new fossil fuel infrastructure will only lock-in uneconomic practices, perpetuate existing risks and increase the threats of climate change.”
IRENA has calculated a 1.5C warming trajectory depends on $5.7tr being sunk into clean energy technologies, such as renewables, electric vehicles, energy efficiency, bioenergy, and green hydrogen, by the end of this decade. Most of this capital should come from the private sector, it states, however governments must play a major role by doubling down on clean energy financing while creating an enabling environment for all players to deliver a rapid transition away from fossil fuels.
Electrification and efficiency will be key drivers of the energy transition, according to the Outlook, enabled by a dramatic scaling up of renewable energy, green hydrogen, and sustainable biomass capacity. End-use decarbonisation is also set to “take centre stage”, the report predicts, arguing the majority of car sales by 2030 should be electric, up from eight per cent in 2021.
Overall, the organisation calculates the projected multi-trillion-dollar investment boom would add 85 million jobs worldwide between today and 2030 in renewables and other transition-related technologies, gains that would offset the 12 million jobs lost in sunsetting fossil fuel industries.
La Camera said that reducing countries’ reliance on expensive and volatile fossil fuel markets would unlock significant benefits for people and economies beyond decarbonisation. “Recent developments have clearly demonstrated that high fossil fuel prices can result in energy poverty and loss of industrial competitiveness,” he said. “80 per cent of the global population lives in countries that are net-importers of fossil fuels. By contrast, renewables are available in all countries, offering a way out of import dependency and allowing countries to decouple economies from the costs of fossil fuels while driving economic growth and new jobs.”
Carbon- and energy-intensive countries in the G7 and G20 must play a leadership role in driving the clean energy transition, IRENA said, by implementing ambitious plans and ploughing ahead with investments in relevant technologies and infrastructure both domestically and abroad. International cooperation will also be key, it noted, arguing that a “holistic global policy framework” is needed to encourage collaboration on finance, capacity, and technologies.
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