IEA notes solar energy’s central role in meeting COP28 targets, with developing economies holding significant growth potential.
The goal to triple renewable energy use by 2030 set during last year’s COP won’t be met unless further financial support is provided to emerging and developing markets, the International Energy Agency’s (IEA) has warned in its latest annual report.
The world gained an extra 50% in renewable energy last year compared to 2022 levels – a jump described by IEA Executive Director Fatih Birol as “historical”. Global capacity expanded by more than 500 gigawatts (GW), equal to the current energy capacity of Germany, France and Spain combined.
However, that growth appears to have been highly concentrated, as group of 20 (G20) countries account for nearly 90% of global renewable power capacity. The IEA stressed that the rate of new installations in other countries, especially emerging and developing economies outside the G20, needed to accelerate to reach the sustainability goals set by the Paris Agreement and in Dubai.
“The most important challenge for the international community is rapidly scaling up the financing and deployment of renewables in emerging and developing economies, many of which are being left behind in the new energy economy,” said Birol. “Success in meeting the tripling goal will hinge on this.”
Under existing policies and market conditions, the IEA projected that global renewable capacity would reach 7,300GW by 2028. This growth trajectory would see global capacity increase 2.5 times by 2030, falling short of the tripling goal.
The IEA previously said that US$4 trillion of yearly investments in renewable energy globally would be needed until 2030 to achieve net zero by 2050, of which at least US$1 trillion should go to emerging markets and developing economies.
Carrying out COP28 commitments
Before last year’s COP, the IEA had called on governments to support five pillars of action by 2030. One of them focused on scaling up financing for emerging and developing economies.
Tripling global renewable energy capacity and doubling annual energy efficiency improvements by 2030 were key commitments that 118 countries subscribed to during COP28 . If fulfilled, those targets would see worldwide renewables capacity reach 11 terawatts (11,000GW) by the end of the decade.
“Financing the clean energy transition in developing and emerging countries is crucial and, in my view, is one of the important missing items in the COP28 agreement,” Birol said.
This issue is expected to be a key focus for governments in the coming period.
“There are a lot of good signals for investors coming out of COP28 that the global energy sector is going in the right direction,” Birol added.
The IEA also highlighted in its report that access to finance, strong governance and robust regulatory frameworks would be essential to reduce risk and attract investment in emerging and developing economies. This will include establishing new targets and policies in countries where they do not exist yet.
“For emerging markets, the most important component is the financing and policies de-risking investment going forward,” said Heymi Bahar, Senior Analyst for Renewable Energy Markets and Policy at the IEA. “The tripling pledge is not far off, even with current policies, but we can be on track if we address several challenges in developing countries.”
Another key observation made by the IEA is the central place held by solar and wind energy, which could account for as much as 95% of the world’s renewable energy expansion.
“In the coming five years, solar photovoltaics (PV) role is going to increase drastically,” Bahar said. “We expect around 3,700GW of new capacity to become operational, and almost 75% of this will be provided by this single technology.”
Important developments in this area are taking place in developing economies across Southeast Asia, the Middle East, as well as North and Sub-Saharan Africa, where deployment is “finally taking good steps forward”, according to Bahar.
Last year, industry experts underlined the major opportunity that untapped African solar projects represent for investors.
Previous research from the IEA also showed that the African continent possessed 60% of the best solar resources globally, but only 1% of installed solar PV capacity globally, further highlighting the need for a rapid redirection of resources and investment.