IEA Report: Emerging Economies Encounter Clean Energy Investment Barrier

IEA Report: Emerging Economies Encounter Clean Energy Investment Barrier

By Staff Writer, 15 February 2024

Emerging economies, including Brazil, India, Indonesia, Mexico, South Africa, Kenya, Peru, Senegal, and Vietnam, encounter barriers to accessing global clean energy investment due to high capital costs, impeding the adoption of affordable technologies. The International Energy Agency (IEA) underscores the urgency of increased financing, particularly concessional finance, to accelerate clean energy deployment in these countries. Highlighting sectors such as utility-scale solar, wind projects, and energy-efficient buildings, the IEA emphasizes the need to address this challenge, particularly in some of the world's poorest nations, as identified in a recent report commissioned after the Paris Summit on a New Global Financing pact.

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Despite a 40% surge in global clean energy investment since 2020, predominantly advanced economies and China have witnessed most of the recent growth, leaving other emerging and developing economies with less than 15% of total investment. However, with these countries housing a significant portion of the global population and generating about a third of the global gross domestic product, redirecting investments becomes paramount. The IEA forecasts a sixfold increase in clean energy investment outside China by the early 2030s, requiring a tripling of concessional finance availability. Priority sectors identified in the report include utility-scale solar and wind projects, electricity networks, and energy-efficient building initiatives across these focused nations.

The IEA report pinpoints the persistent challenge of high capital costs in emerging and developing economies, where the cost of capital can exceed that of advanced economies by more than twofold. Addressing this disparity could potentially save $150 billion annually in financing for clean energy projects. To overcome these obstacles, IEA Executive Director Fatih Birol advocates for robust regulatory frameworks to mitigate risks and attract investment, coupled with increased financial and technical support from the international community. Such measures are essential for bridging the gap between investors and markets in need of clean energy solutions across the focused countries.

Source: Fibre2Fashion

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