@ green | MARCH-APRIL , 2023

New report finds glaring disparities between investments in developed and developing countries , calls for substantial increase in financial flows from Global North to South

The joint report by the International Renewable Energy Agency ( IRENA ) and Climate Policy Initiative ( CPI ) - launched on the sidelines of the Spanish International Conference on Renewable Energy in Madrid - also found that , although global investment in renewable energy reached a record high of US $ 0.5 trillion in 2022 , this still represents less than 40 per cent 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 2030 Agenda for Sustainable Development Goals .

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 US $ 0.5 billion in 2021 , investment in off-grid renewable solutions falls far short of the US $ 2.3 billion needed annually between 2021 and 2030 .

Furthermore , investments have become concentrated on specific technologies and use . In 2020 , solar photovoltaic alone attracted 43 per cent of the total investment in renewables , followed by onshore and offshore wind at 35 per cent and 12 per cent shares , respectively .

Based on preliminary figures , this concentration seems to have continued until 2022 . To best support the energy transition , more funds must flow to less mature technologies and other sectors beyond electricity , such as heating , cooling , and system integration .

Comparing renewables financing across countries and regions , the report shows that glaring disparities have increased significantly over the last six years . About 70 per cent of the world ’ s population , mostly residing in developing and emerging countries , received only 15 per cent of global investments in 2020 .

Sub-Saharan Africa , for example , received less than 1.5 per cent of the amount invested globally between 2000 and 2020 . In 2021 , European investment per capita was 127 times that in Sub- Saharan Africa and 179 times more in North America .

The report emphasises how lending to developing countries looking to deploy renewables must be reformed and highlights the need for public financing to play a much more vital role beyond mitigating investment risks .

Recognising the limited public funds available in the developing world , the report calls for more vigorous international collaboration , including a substantial increase in financial flows from the Global North to the Global South .

“ 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 .

“ This joint report underscores the need to direct public funds to regions and countries with many untapped renewables potential but find it difficult to attract investment . International cooperation must aim to direct these funds to enable policy frameworks , develop energy transition infrastructure , and address persistent socio-economic gaps .”

Achieving an energy transition in line with the 1.5 ° C Scenario also requires redirecting US $ 0.7 trillion annually from fossil fuels to energy-transition-related technologies . But fossil fuel investments are now rising following a brief decline in 2020 due to Covid-19 .

Some large multinational banks have even increased their investments in fossil fuels at an average of about US $ 0.75 trillion 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 eliminating subsidies to level the playing field with renewables .

However , the phaseout of subsidies must be accompanied by a good safety net to ensure adequate living standards for vulnerable populations .

CPI ’ s Global Managing Director Barbara Buchner said : “ The path to net zero can only happen with a just and equitable energy transition . 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 .”

This is the third edition of the biannual joint report by IRENA and CPI . This report series analyses investment trends by technology , sector , region , source of finance , and financial instrument .

It also analyses financing gaps to support informed policy-making to deploy renewables at the scale needed to accelerate the energy transition . This third edition looks at 2013-2020 and provides preliminary insights and figures for 2021 and 2022 .

AT the inaugural I-REC Day in São Paulo , Brazil , Sembcorp ’ s carbon management solutions company GoNetZero debuted its blockchain-powered digital platform for trading Brazil International Renewable Energy Certificates ( I-REC ). Instituto Totum , the authorised local issuer of I-REC in Brazil , integrated its digital platforms with GoNetZero for the launch .

The partnership positions GoNetZero to help Brazil ’ s fast-growing renewable energy certificate market . Brazil , the world ’ s second largest I-REC market , issued 22 million I-RECs in 2022 , enough to power 4.0 million Singaporean households for a year .

Generators may quickly reach GoNetZero ’ s worldwide buyer network through the simplified method . Corporates can use GoNetZero to manage online renewable energy certificate issuing , trade , maintenance , and retirement .

GoNetZero has onboarded CGN Brazil Energy , a China General Nuclear subsidiary , with 1.3GW of wind energy capacity in Brazil .

Ng Lay San , co-founder and head of GoNetZero , said : “ GoNetZero supports corporates to achieve their decarbonisation goals . We are pleased to deepen our reach in Brazil and are thankful to work with Instituto Totum , a like-minded innovative partner , to support Brazil ’ s growing renewable energy market .”

Fernando Giachini Lopes , founder and CEO of Instituto Totum , said : “ Instituto Totum will facilitate access to the I-REC market in Brazil . This joint work with GoNetZero has achieved this objective : greater liquidity for I-REC registrants and participants and more access for buyers of any scale .” – @ Green