Released June 26, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Huge public and private investments in clean energy have been made in recent years in advanced economies and China. But even more massive investments in those technologies will be needed in emerging market and developing economies (EDMEs) to stave off the worst effects of global climate change, according to a new report from the International Energy Agency (IEA) (Paris) and the International Finance Corporation (IFC) (Washington, D.C.), which is part of the World Bank.
Clean energy investments in EDMEs rose from about $538 billion in 2015 to approximately $773 billion in 2022, but clean energy investments in those countries need to escalate to between $1.1 trillion and $2.8 trillion per year over the 2031-2035 period to slow or reverse global concentrations of carbon dioxide (CO2), according to the report, Scaling up Private Finance for Clean Energy in Emerging and Developing Economies, released June 21.
Click on the image at right to see annualized investments in clean energy in EDMEs in three scenarios that the report says are needed to limit or reverse global CO2 emissions and hold back global climate change.
"Today's energy world is moving fast, but there is a major risk of many countries around the world being left behind. Investment is the key to ensuring they can benefit from the new global energy economy that is emerging rapidly," IEA Executive Director Fatih Birol said in a statement accompanying the release of the report. "The investment needs (of EDMEs) go well beyond the capacity of public financing alone, making it urgent to rapidly scale up much greater private financing for clean energy projects in emerging and developing economies. As this report shows, this offers many advantages and opportunities--including expanded energy access, job creation, growing industries, improved energy security and a sustainable future for all."
The IEA has developed three scenarios to assess whether and to what degree worldwide clean energy investment trends will meet the goals of the Paris Agreement, which nearly 200 nations signed in 2015, to limit their CO2 emissions and keep global temperature gain to 1.5 to 2 degrees Celsius above preindustrial temperatures.
The agency defined its three scenarios this way:
Previous IEA reports have documented the rise in worldwide clean energy investments. But the new IEA-IFC report looked at where those investments have been made, and where they should be made, to fight global climate change. It urged a massive shift to clean energy investments in EDMEs.
As previous IEA reports have noted, CO2 emissions have been growing from EDMEs like China and India, where rising coal and gas use are dwarfing the impact of investments in decarbonization and clean energy by advanced economies like the U.S. and the European Union (EU). For more on that, see March 23, 2023, article - China Remains Critical Variable in Global Gas Market in 2023, and November 9, 2022, article - Coal Use by Developing Economies Holds Key to Lower Carbon Emissions.
Since 2015, annual clean energy investments have been skewed to advanced economies and China, the report noted. For each of those years, clean energy investments in China have been greater than the sum of all other EDMEs. The report urges greater investment in clean energy in EDMEs, aside from China, to slow or reverse global temperature gains.
Click on the image at right to see a graphic depicting annual clean energy investment since 2015 in China, other EDMEs and advanced economies.
Around the world, the energy sector accounts for about three-quarters of CO2 emissions, underscoring the need to accelerate clean energy investments in that sector to stabilize or reduce emissions. The IEA used its three scenarios to project how CO2 emissions from the energy sector could shift by 2050.
The report projected annual clean energy investments that need to be made each year through 2035 in various sectors in EDMEs in order to achieve the IEA's most aggressive climate scenario, Net-Zero by 2050. The numbers are staggering:
The size of the investments these agencies urge takes the concept of enlightened self-interest to a new level. Call it global mutual preservation: Failure to reduce global emissions of CO2, mainly from the energy sector, will continue to warm the planet, eventually making portions of the globe uninhabitable. Thus, future markets are relinquished. Time will tell whether multilateral agencies, governments in advanced economies and the private sector will be willing to pony up, in order to potentially preserve and grow future markets.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Clean energy investments in EDMEs rose from about $538 billion in 2015 to approximately $773 billion in 2022, but clean energy investments in those countries need to escalate to between $1.1 trillion and $2.8 trillion per year over the 2031-2035 period to slow or reverse global concentrations of carbon dioxide (CO2), according to the report, Scaling up Private Finance for Clean Energy in Emerging and Developing Economies, released June 21.
Click on the image at right to see annualized investments in clean energy in EDMEs in three scenarios that the report says are needed to limit or reverse global CO2 emissions and hold back global climate change."Today's energy world is moving fast, but there is a major risk of many countries around the world being left behind. Investment is the key to ensuring they can benefit from the new global energy economy that is emerging rapidly," IEA Executive Director Fatih Birol said in a statement accompanying the release of the report. "The investment needs (of EDMEs) go well beyond the capacity of public financing alone, making it urgent to rapidly scale up much greater private financing for clean energy projects in emerging and developing economies. As this report shows, this offers many advantages and opportunities--including expanded energy access, job creation, growing industries, improved energy security and a sustainable future for all."
The IEA has developed three scenarios to assess whether and to what degree worldwide clean energy investment trends will meet the goals of the Paris Agreement, which nearly 200 nations signed in 2015, to limit their CO2 emissions and keep global temperature gain to 1.5 to 2 degrees Celsius above preindustrial temperatures.
The agency defined its three scenarios this way:
- Stated Policies Scenario (STEPS), which maps out a trajectory that reflects current policy settings, based on a detailed sector‐by‐sector assessment of what policies are in place or are under development by governments around the world. This amounts to a "business as usual" approach.
- Announced Pledges Scenario (APS), which assumes that all long‐term emissions and energy access targets, including net-zero commitments, will be met on time and in full, even where policies are not yet in place to deliver them.
- Net Zero Emissions by 2050 Scenario (NZE), which sets out a pathway for the global energy sector to achieve net-zero CO2 emissions by 2050, updating the landmark IEA analysis first published in 2021. While the first two scenarios are exploratory, the NZE Scenario is normative, as it is designed to achieve the stated objective and shows a pathway to that goal.
Previous IEA reports have documented the rise in worldwide clean energy investments. But the new IEA-IFC report looked at where those investments have been made, and where they should be made, to fight global climate change. It urged a massive shift to clean energy investments in EDMEs.
As previous IEA reports have noted, CO2 emissions have been growing from EDMEs like China and India, where rising coal and gas use are dwarfing the impact of investments in decarbonization and clean energy by advanced economies like the U.S. and the European Union (EU). For more on that, see March 23, 2023, article - China Remains Critical Variable in Global Gas Market in 2023, and November 9, 2022, article - Coal Use by Developing Economies Holds Key to Lower Carbon Emissions.
Since 2015, annual clean energy investments have been skewed to advanced economies and China, the report noted. For each of those years, clean energy investments in China have been greater than the sum of all other EDMEs. The report urges greater investment in clean energy in EDMEs, aside from China, to slow or reverse global temperature gains.
Click on the image at right to see a graphic depicting annual clean energy investment since 2015 in China, other EDMEs and advanced economies.Around the world, the energy sector accounts for about three-quarters of CO2 emissions, underscoring the need to accelerate clean energy investments in that sector to stabilize or reduce emissions. The IEA used its three scenarios to project how CO2 emissions from the energy sector could shift by 2050.
The report projected annual clean energy investments that need to be made each year through 2035 in various sectors in EDMEs in order to achieve the IEA's most aggressive climate scenario, Net-Zero by 2050. The numbers are staggering:
- In China, annual investments to achieve Net-Zero carbon emissions by 2050 would have to more than double, from about $500 billion in 2022 to more than $800 billion over the 2026-2030 period, and then to nearly $1 trillion per year over the 2031-2025 period.
- India's annual investments in clean energy would have to more than triple, from about $60 billion in 2022 to about $275 billion per year over the 2026-2030 period, and then to about $350 billion annually from 2031-2035.
- Achieving Net-Zero carbon emissions by 2050 would require similarly dramatic percentage gains in annual clean energy investments in Southeast Asia, Africa, Latin America and the Middle East.
The size of the investments these agencies urge takes the concept of enlightened self-interest to a new level. Call it global mutual preservation: Failure to reduce global emissions of CO2, mainly from the energy sector, will continue to warm the planet, eventually making portions of the globe uninhabitable. Thus, future markets are relinquished. Time will tell whether multilateral agencies, governments in advanced economies and the private sector will be willing to pony up, in order to potentially preserve and grow future markets.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
