The Paris Agreement calls for countries to take collaborative climate action to reduce greenhouse gas emissions to limit global warming and rise in temperature and limiting it to 1.5°C by 2030.
IRENA recently released a report preview of the World Energy Transition Outlook 20231, that highlights some challenges to achieving the required investment for the energy transition.
International Renewable Energy Agency (IRENA), is a body that promotes, educates, and helps countries to adopt and transit to sustainable renewable energy.
To achieve the global 1.5°C climate goal by 2030, it is necessary to deploy an average of 1 terawatt (TW) of new renewable energy sources every year.
Current efforts to achieve are failing and reaching the goal seems unlikely.
IRENA’s report preview states that while there has been some progress in the power sector, there is a need to significantly increase the deployment of renewable energy sources.
Specifically, the current level of renewable energy deployment of 3 terawatts (TW) must be expanded to more than 10 TW by 2030.
A challenge is that investments in fossil fuels continue to outweigh those in renewable energy.
Current Performance of Renewable Energy Sources
The latest Renewable Capacity Statistics 2023 report preview by IRENA reveals that renewable energy sources made up 40% of newly installed power generation worldwide in the previous year, and contributed to 83% of global power additions.
Renewable energy overtook coal and nuclear power in the US Electric Power Sector in 2022 while natural gas remained the largest source of electricity generation.
The report preview also states that there was a 22% increase in installed solar capacity, with a total of 192 GW added in 2022.
The growth of renewable generation capacity was 295 GW (9.6%), and solar energy accounted for 65.1% of this growth in global renewable power capacity, and the majority of the deployment was done by the European Union, China, and the United States.
More Investments Needed in Energy Transition Technologies
A new all-time high record of US$1.3 trillion annually was achieved in global investment in energy transition technologies in 2022.
IRENA warns that annual investments will need to increase more than fourfold to over US$5 trillion annually to remain on track toward achieving the 1.5°C climate target.
The report preview predicts that about a total of US$44 trillion in cumulative investments will be needed by 2030 to support a sustainable and low-carbon energy system in order to meet the 1.5°C climate target and energy transition technologies must account for 80% of this total, or US$35 trillion.
Energy efficiency (reducing energy consumption), electrification, grid expansion, and flexibility are the top priorities for investment as they are crucial for a successful energy transition.
Electrification involves shifting commodities toward cleaner sources of electricity.
Grid expansion and flexibility refer to developing a more robust and flexible power grid that can handle intermittent sources of energy.
IRENA’s projections emphasize the urgent need for significant investment in energy transition technologies to achieve the 1.5°C climate target by 2030 and avoid the worst impacts of climate change.
Benefits of Increased Investment in Energy Transition Technologies
The benefits of increasing investments in renewable energy are numerous; it will help in reducing greenhouse gas emissions and slowing down the effects of climate change.
The investments will create jobs in the renewable energy sector, which is expected to grow rapidly in the coming years.
IRENA and the International Labour Organization (ILO) have shown that the renewable energy sector employed some 12.7 million people worldwide as of 2022, growing from about 7.3 million in 2012.
Energy transition modeling indicates that tens of millions of additional jobs will likely be created in the coming decades as investments grow and installed capacities expand.
Increasing investments in renewable energy will improve access to energy in developing countries and promote greater energy security.
International Cooperation Is Needed for the 1.5°C Pathway
As discussed earlier, the majority of renewable energy source deployment was done by the European Union, China, and The United States.
Developing countries are the least responsible for causing global warming but are disproportionately affected by its consequences, such as sea-level rise, increased frequency of natural disasters, and loss of biodiversity.
The lack of sufficient incentives for investors to invest in renewable energy comes as a challenge.
Governments need to create more favorable policies and financial incentives to encourage investments in renewable energy.
IRENA and the Climate Policy Initiative (CPI) emphasize enhanced and redesigned international cooperation to ensure greater resilience and equality in the transition to clean energy.
The need for coordination among various actors involved in the energy transition and adapting to the changing energy landscape is vital.
Investments in systems for cross-border and global trade of energy commodities will require international cooperation at an unprecedented scale.
Renewable energy investments have been lacking in the “Global South” (regions of Latin America, Africa, Asia, and Oceania) where most of humanity resides, hence the report stresses channeling funds to these regions.
International cooperation is important for achieving the energy transition and requires careful evaluation and implementation of collaborative methods to ensure they are effective and adaptable.
The report preview suggests that international organizations, such as the United Nations, international financial institutions, and multilateral development banks, need to reconsider their roles and responsibilities to ensure their optimal contribution to the energy transition.
- International Renewable Energy Agency, ‘World Energy Transitions Outlook 2023: 1.5°C Pathway; Preview’, 28 March 2023, https://www.irena.org/Publications/2023/Mar/World-Energy-Transitions-Outlook-2023