IRENA: Investments of $35 trillion needed by 2030 for Energy Transition.
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This week IRENA’s Director-General Fancesco La Camera shared the World Energy Transitions Outlook 2023 Preview and warned that our world needs a dramatic shift in the energy transition to avoid surpassing our 1.5 C climate target. What this translates to is a total of $35 trillion is needed by 2030 to expedite this energy transition.
Francesco La camera outlined that the energy transition today is off-track and ultimately there needs to be a massive disruption and correction. To have a successful energy transition there needs to be investments and comprehensive policies across the globe and all sectors would need to focus on renewables and the needed structural changes to support moving to a renewable-based energy transition. The preview identifies physical infrastructure, policy and regulatory enablers, and a skilled workforce as priority pillars of the energy transition, requiring significant investment and cooperation.
Currently when looking at Gross electricity generation (PWh) we are at about 27.0PWh annually. With 28% of that being renewables, 10% being nuclear, and 62% being fossil fuels and other non-renewables. By 2050, to sustain our 1.5 C warming, power generation needs to more than triple and the ratio or renewables vs nuclear vs fossil fuels needs to drastically change. By 2050 we should have 89.8PWh of electricity annually, with 91% being renewables, 4% being nuclear and 5% being fossil fuels.
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“The stakes could not be higher. A profound and systemic transformation of the global energy system must occur in under 30 years, underscoring the need for a new approach to accelerate the energy transition. Pursuing fossil fuel and sectoral mitigation measures is necessary but insufficient to shift to an energy system fit for the dominance of renewables… The emphasis must shift from supply to demand, toward overcoming the structural obstacles impeding progress. IRENA’s Preview outlines three priority pillars of the energy transition, the physical infrastructure, policy and regulatory enablers and well-skilled workforce, requiring significant investment and new ways of co-operation in which all actors can engage in the transition and play an optimal role.” - IRENA’s Director-General Francesco La Camera
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This preview warned that a lack of progress will only further increase needed investments and calls for systematic change in the volume and type of investments to prioritize the energy transition. While global investments in energy transition technologies set a new record in 2022 with an investment of $1.3 trillion, yearly investments will need to more than quadruple to stay on track to not surpass 1.5 C warming. This means that the current 41% of planned investments by 2050 that remains dedicated to fossil fuels needs to be redirected. instead, about $1 trillion of planned fossil fuel investments should be put towards transition technologies and infrastructure. It’s also of value to note that public sector intervention will be required to make sure that investments are allocated to countries in a more equitable way.
According to ESG News, in 2022, 85% of global renewable energy investment benefitted less than 50% of the world’s population. Africa accounted for only one percent of additional capacity in 2022. IRENA’s Global landscape of renewable energy finance 2023 confirms that regions home to about 120 developing and emerging markets continue to receive comparatively little investment.
“We must rewrite the way international cooperation works. Achieving the energy transition requires stronger international collaboration, including collective efforts to channel more funds to developing countries. A fundamental shift in the support to developing nations must put more focus on energy access and climate adaptation. Moving forward, multilateral financial institutions need to direct more funds, at better terms, towards energy transition projects and build the physical infrastructure that is needed to sustain the development of a new energy system.” - IRENA’s Director-General Francesco La Camera
Sources:
https://www.reuters.com/business/autos-transportation/eu-countries-poised-approve-2035-phaseout-co2-emitting-cars-2023-03-28/
https://www.esgtoday.com/eu-adopts-rules-requiring-zero-emissions-from-new-cars-by-2035-after-reaching-deal-on-e-fuels/#:~:text=Energy%20Transition%2F%20Government-,EU%20Adopts%20Rules%20Requiring%20Zero%20Emissions%20from%20New%20Cars%20by,Reaching%20Deal%20on%20e%2Dfuels&text=The%20European%20Council%20announced%20today,in%20the%20EU%20from%202035.
https://www.bloomberg.com/news/articles/2023-03-27/eu-offers-germany-e-fuel-pledge-to-advance-zero-emissions-plan?leadSource=uverify%20wall
