Energy transition needs $35trln by 2030

IRENA’s Director-General Francesco La Camera has warned that a fundamental course correction in the global energy transition is needed urgently. Speaking at the Berlin Energy Transition Dialogue, La Camera stated that a successful energy transition requires bold, transformative measures that reflect the urgency of the present situation. The forthcoming World Energy Transitions Outlook 2023 Preview warns that the scale and extent of change falls far short of the 1.5°C pathway. To keep the target alive, deployment levels must grow from 3,000 GW today to over 10,000 GW in 2030, an average of 1,000 GW annually. The Preview outlines three priority pillars of the energy transition, namely physical infrastructure, policy and regulatory enablers, and a well-skilled workforce.

Although global investment in energy transition technologies reached a record of $1.3 trillion in 2022, the Preview warns that yearly investments must more than quadruple to over $5 trillion to stay on the 1.5°C pathway. Moreover, public sector intervention is required to channel investments towards countries in a more equitable way. Africa accounted for only one percent of additional capacity in 2022, and regions home to about 120 developing and emerging markets continue to receive comparatively little investment. To address this, La Camera called for a fundamental shift in the support to developing nations, with a focus on energy access and climate adaptation.

The Preview highlights the need for new ways of cooperation, in which all actors can engage in the transition and play an optimal role. A profound and systemic transformation of the global energy system must occur in under 30 years, underscoring the need for a new approach to accelerate the energy transition. Pursuing fossil fuel and sectoral mitigation measures is necessary but insufficient to shift to an energy system fit for the dominance of renewables. The emphasis must shift from supply to demand, towards overcoming the structural obstacles impeding progress.

IRENA’s Global landscape of renewable energy finance 2023 confirms that around $1 trillion of planned annual fossil fuel investment by 2030 must be redirected towards transition technologies and infrastructure to keep the 1.5°C target within reach. La Camera emphasized the need for stronger international collaboration, including collective efforts to channel more funds to developing countries. Multilateral financial institutions need to direct more funds, at better terms, towards energy transition projects and build the physical infrastructure that is needed to sustain the development of a new energy system. The forthcoming 2023 edition of the World Energy Transitions Outlook will contribute to the first Global Stocktake concluding at COP28 in the UAE and will propose effective ways to accelerate progress over the next five years towards 2030.