According to the International Energy Agency (IEA), the world needs up to $1 trillion in clean energy financing by 2030 to help developing economies attain net-zero emissions targets by 2050.
The requirement is nearly seven times the $150 billion spent last year to assist energy transition by emerging and developing economies last year.
According to the Paris-based agency, spending on renewables declined 8 percent last year but is expected to rise this year.
The agency in its report ‘Financing Clean Energy Transitions in Emerging and Developing Economies’ stated that a boom in spending would bring huge economic and societal advantages, but that it would require “far-reaching efforts” to strengthen the domestic climate for clean energy investment.
Mr. Fatih Birol, the IEA’s Executive Director remarked that “in many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals.’’
“Countries are not starting on this journey from the same place many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future and the damaging effects of the COVID-19 crisis are lasting longer in many parts of the developing world,” he added.
Over the next two decades, energy-related carbon dioxide emissions from developing countries in Asia, Africa, and Latin America are expected to increase by 5 billion tonnes, challenging efforts to achieve global carbon neutrality by 2050.
A net-zero policy has been adopted by several countries. Last year, South Korea and Japan promised to become carbon neutral. The US, the world’s largest producer of fossil fuels, also intends to achieve carbon neutrality.
The IEA stated that efforts undertaken by financial institutions, donors, and multilateral banks to mitigate climate change-related risk factors were insufficient.
The agency said that “it is clear that we are nowhere near mobilizing the level of funds that will be needed.”
“This is why one of the most urgent recommendations is that governments give international public finance institutions a strong strategic mandate to finance clean energy transitions in the developing world,” the report added.
The demand comes amid concerns that the developing world, which is still mainly unvaccinated and suffering from various waves of the COVID-19 pandemic, may be left behind in the energy transition.
The pandemic’s effects on the developing world, might set them back years and lead to the adoption of more polluting and less expensive fuels like coal.
Last month, IEA caused a stir in Asian economies by encouraging countries to limit new fossil fuel investments and limit sales of internal combustion engine passenger cars to achieve their net-zero goal by 2050.
The agency’s roadmap to carbon neutrality calls for no new investments in fossil fuel supply projects and no further final investment decisions in new unabated coal plants, which use the fuel without reducing its carbon impact.
The IEA’s calls resonated with US climate envoy Mr. John Kerry, who reprimanded international organizations such as the World Bank for financing coal.
Related: IRENA, China join forces to attain the carbon neutrality goals