Investing in renewable energy in developing countries is a necessity, not an option

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The International Energy Agency has warned that the world does not have a choice, but rather it must support the deployment of clean energies in developing countries to a greater extent, otherwise it will not be possible to stop the acceleration of climate change.
Investment in green energies has been declining for a few years in emerging and developing countries (with the exception of China) and the Covid crisis has made it even more difficult. Accordingly, a report published by the International Energy Agency on Wednesday concluded that the current amount must be increased sevenfold, from $150 billion annually to more than 1,000 billion annually by 2030, to put the world on the path to carbon neutrality by 2050.
“We are engaged in a race for carbon neutrality,” agency director Fatih Birol told AFP. It is not a race between nations but against time: there will be no winner if everyone does not cross the finish line.”
But he added that “developing regions with two-thirds of the world’s population generate 90% of the increase in emissions and receive 20% of the financing for clean energy…. If we do not act quickly to accelerate these investments, this will constitute the biggest crack in the fight against global warming.”
Appeal to the Group of Seven
Given the known energy plans at this stage, CO2 emissions from these Asian, African or Latin American economies are expected to increase over the next 20 years, when emissions from developed economies will decline and China’s emissions will stabilize.
Rapid industrialization and urbanization will lead to a boom in demand for construction, transportation and air conditioning, while 760 million people in the world remain without electricity.
The IEA report, produced jointly with the World Bank and the World Economic Forum, highlights the importance of private financing for these capital-intensive investments.
However, the report adds, international action and public finances should act as catalysts in unfavorable environments where capital is expensive (seven times as expensive as in North America) due to low national budgets, weak banking system, monetary instability and lack of visibility.
Birol asserts: “There is no shortage of money in the world, but it is not going where it is most needed…. Governments should give all international financial institutions the strategic mandate to finance energy transitions in developing countries.”
The economist called on the leaders of the Group of Seven, who will hold a three-day summit starting Friday, to seize the occasion. “The G7 can start,” he said. “Send the go-ahead.”
As for the annual $100 billion in financing climate projects, which the countries of the North committed to pay to the South in the framework of the United Nations climate negotiations and the Paris Agreement, the International Energy Agency described it as a “minimum.”
Cheaper in the south than in the north
The IEA insists there is an economic advantage: cutting emissions from developed countries costs twice as much as in a developing region where a transformation of entire sectors is often not necessary.
This is in addition to the low price of renewable energy sources. The cost of installing photovoltaic cells decreased by 40-55% between 2015 and 2019 in Brazil, Mexico, India and South Africa and by 15-30% for wind. But its cost is still high for other countries, such as in sub-Saharan Africa or Indonesia, even if the start-up costs are offset by lower operating costs or fuel savings.
Fatih Birol said, “The situation in Asia and Africa is critical, and providing clean and renewable electricity in them is a matter of priority.” Because Asia in particular has a program that relies entirely on coal to supply mega power plants with an average life of only 15 years, compared to 40 years for US power plants.
“These power plants generate money for governments and service companies: so we need to find innovative financial incentives to retire them early,” he added.
There is also a need for innovation to reform banking markets and support small and medium-sized businesses… The issues are manifold.
Borg Brindi of the World Economic Forum called for “strengthening cooperation between the public and private sectors,” announcing the creation of “alliances” to encourage investments, innovative financing and direct partnerships between energy companies and private clients.
(AFP)





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