Climate graphic of the week: ‘Worrying’ gap in clean energy investment between leading and emerging economies
The “disturbing” disparity in clean energy investment between advanced economies and developing countries was spotlighted this week ahead of the G7 leaders’ meeting.
G7 economies account for about a quarter of the global energy-related carbon emissions that are behind global warming. The leaders’ meeting comes as all economies struggle to end their reliance on Russia for fossil fuel supplies as prices soared in the wake of Ukraine’s invasion.
The newest International Energy Agency world energy outlook report released last week said that while global clean energy investment has increased since the Paris climate accord was passed in 2015, the “weakness” of clean energy investment in the developing world has been “one of the most worrying trends.” .
“Much more needs to be done to bridge the gap between the one-fifth of global clean energy investment from emerging and developing economies and their two-thirds of the world’s population,” the IEA said.
The IEA cited scarce public resources, highly indebted state-owned enterprises and a deteriorating global economic outlook as factors that made it more difficult for emerging economies to invest in clean energy projects.
The agency called for financial and technical support, including concessional capital, private sector capital and inflows from international carbon markets, as “critical” to closing the gap.
The IEA also warned that global investment levels in the energy sector in the past three years had fallen below the levels needed to meet countries’ climate commitments, and would lead to the failure of the global net emissions target by 2050 required is to combat climate change.
The IEA estimated that global investment in power would total about $975 billion by 2022, versus an annual need of $1.2 trillion to meet country-imposed policies and $2 trillion to reach net zero.
It said a rapid acceleration in investment in renewable technologies, in addition to reduced reliance on fossil fuels, was needed for the world to achieve a 1.5°C stabilization of the rise in average global temperature. Since pre-industrial times, temperatures have already risen by about 1.1C.
Energy investment in emerging market economies had to grow at a compound annual growth rate of 25 percent to reach net zero levels, the IEA said — or twice the pace of advanced economies.
Leaders of the G7 countries are expected to discuss global energy demand when they meet in Germany on Sunday. German Chancellor Olaf Scholz assured that climate change will remain on the agenda, but the war in Ukraine has raised fears that Europe will fall back on its pledges to cut funding for fossil fuels as coal-fired and gas-fired power plants are commissioned to to offset Russian stocks.
The G7 countries must generate 42 percent of their electricity from wind and solar by 2030 to keep global warming at 1.5°C by 2050, the IEA has calculated.
Pressure is mounting on Japan, which will then assume the G7 presidency, to take a leading role in its commitments to reduce its use of coal. Tokyo agreed at the recent meeting of energy and environment ministers of the G7 to stop international financing of fossil fuel projects by the end of 2022 and pledged to clean up its electricity system by 2035. This included supporting “accelerated global unabated coal phase-out”.
It is the only G7 country that has set a target not meeting the IEA’s recommendation of getting 42% energy from renewable sources, but by setting itself a target of 38%.
“In the run-up to the G7, many will wonder whether it is possible for Japan to achieve a 100 percent clean energy system by 2035,” Ember said in a report last week. “While this goal will be challenging, it is achievable. The obvious place to start is scaling up solar and wind energy on the roof, that could help Japan create a much more secure and sustainable energy system by 2035.”
The EU has set an average target of 63 percent by 2030 for electricity generation from renewable sources.
Of the leading bloc countries, Germany is aiming for 80 percent by 2030, while Italy has a 70 percent target and France only 38 percent, due to large stocks of nuclear energy that are considered “clean”.
The UK has said it will generate 95 percent of its electricity from low-carbon sources by 2030, and the US has committed to 100 percent clean energy by 2035, but is lagging behind the G7 in current renewable energy generation.
A US official told reporters in Washington this week that the topic of energy security will be “very central to the discussions” at the G7 meeting.
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