What’s up? Low-carbon energy investment lags in developing economies

According to a study released yesterday, investments in low-carbon technology have fallen in emerging markets over the last four years, while financing has increased in developed economies. Investments in green energy technology are necessary to reduce global warming emissions. That’s one of the goals the countries have committed to by signing the Paris Agreement.

Building more clean energy production sites in emerging economies to help them transition away from fossil fuels will be high on the agenda for world leaders meeting in Egypt for a United Nations conference beginning November 6.

Recent crises have influenced low-carbon technologies

According to BloombergNEF analysts, these markets account for nearly half of global greenhouse gas emissions. But since the COVID-19 pandemic strikes severely the global supply chains and shrank project pipelines, less money is flowing into low-carbon initiatives of developing countries.

BloombergNEF study shows that equity and debt financing for wind and solar plants, carbon capture and storage, electrified heat and transport, energy storage and hydrogen, and nuclear reached a record high of $785 billion in 2021, nearly a quarter more than the previous year.

However, emerging economies experience an investment fall of 9% from a peak in 2018 to just under $67 billion in 2021. At the same time, richer countries saw a 53% increase in green investments.

IEA: We need annual investments of $4.2 trillion by 2030

As it is known, many global corporations and governments pledged to reduce greenhouse gas emissions to net zero. The time limit is by 2050. That means producing no more greenhouse gas emissions than can be absorbed back into natural sinks like forests or other technology. According to the International Energy Agency (IEA), this goal absolutely needs an annual clean energy investment of $4.2 trillion by 2030.

A lack of auctions for power delivery contracts, which have historically provided vital incentives and security for developers in those countries, was one of the constraints on investment in renewable energy or low-carbon technology in emerging markets in 2021.

According to BloombergNEF, the lack of auctions means that utility-scale low-carbon technology energy projects are going slow over the next few years.