Global energy transition ‘in need of fundamental course correction’

Investments in renewable energy technologies must rise from $1.3tn (£1tn) to around $5tn (£4tn) a year in order to stay within the 1.5°C climate target, according to new research.

Global green energy investments must quadruple to reach the target set by the Paris climate accords, the International Renewable Energy Agency (IRENA) has said. 

The agency’s World Energy Transitions Outlook 2023 Preview has warned that the global energy transition is “off-track” and in need of a “fundamental course correction”, which would include a significant increase in funding.  

In 2021, $1.3tn (£1tn) was invested in renewable energy sources. However, the IRENA claimed that this figure must rise to around $5tn (£4tn) annually to limit global warming to 1.5ºC above pre-industrial levels by 2030. 

According to the agency, the world requires $35tn (£28tn) to be invested in the sector by 2030 in order to be able to reach a “successful energy transition”.

“A successful energy transition demands bold, transformative measures reflecting the urgency of the present situation,” IRENA said in a press release. “Investment and comprehensive policies across the globe and all sectors must grow renewables and instigate the structural changes required for the predominantly renewables-based energy transition.”

The agency recognised that significant progress towards net zero had been achieved in some sectors, particularly in renewable energy, which accounted for 83 per cent of global power additions in 2022.

However, the Preview stated that renewable deployment levels must grow from some 3,000 gigawatts (GW) to over 10,000GW in 2030, an average of 1,000GW annually, in order to reach the Paris climate targets. 

The agency also pointed out that growth in renewable technologies has been mostly confined to China, the European Union and the United States, which accounted for two-thirds of all additions in 2022. As a result, 85 per cent of global renewable energy investment benefitted less than 50 per cent of the world’s population, with Africa accounting for only one per cent of additional capacity in 2022. 

“The stakes could not be higher,” said Francesco La Camera, IRENA’s director-general.

“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,” he added. “Pursuing fossil fuel and sectoral mitigation measures is necessary but insufficient to shift to an energy system fit for the dominance of renewables.”

La Camera added that, in order to meet the 2030 global warming targets, the emphasis “must shift from supply to demand”, and focus on overcoming the structural obstacles impeding progress.

To achieve this, IRENA’s Preview outlined three priority pillars of the energy transition: the physical infrastructure, policy and regulatory enablers and a well-skilled workforce. Underscoring these three pillars is the need to “rewrite the way international cooperation works”, according to La Camera. 

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, the agency said. 

Earlier this month, the UK National Audit Office warned that ambitions to entirely decarbonise the UK’s energy sector by 2035 are under threat due to the government’s failure to draw up a long-term plan.

The full World Energy Transitions Outlook 2023 report is expected to be released later this year.

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