Greater Targeting of Public Investment in The Renewable Energy Sector Will Encourage Greater Development

The growth of investments in renewable energy sources, which this year is estimated to be about 8% or worth 2.4 trillion dollars, indicates the sector’s continued development despite the market turbulence. The energy transition is certain, only the pace at which this process will take place remains uncertain. The uneven trend of investments in the world, and rapid development in certain areas, as opposed to stagnation in other parts of the world, indicate the unused potential of certain continents. But there is also a need for greater systemic activity of governments and proper direction of public money.

Private investments in renewable energy sources must be supported by public investments, through different models. The redirection of public money in such development projects that will contribute to green energy, but also to social transformation and the creation of new jobs, is a great opportunity for less developed areas, which have great natural potential for renewable energy sources.

IRENA’s analysis of investments in renewable energy sources shows a downward trend in public investments. In 2020, public investment decreased to $17 billion, compared to $22 billion in 2019 and 2018. There is also a drop in international support for investment in green energy projects in developing countries, where $12.2 billion was invested, compared to $12.5 billion in 2019.

Investments in renewable energy sources are a strategic area aimed at ensuring new energy stability, based on green resources and reducing CO2 emissions. In order to achieve this goal, relatively evenly, greater support through public investments is necessary. Public investments are perhaps the best source of finance that will encourage the process of including green energy in households, in a systematic way.

In less developed countries where the economic power of the population is low, governments can use public finances to encourage these processes by creating different financial models.

It will mean a reduction of CO2 in households, reduced costs, modernization, and a rising standard of living. For certain households in less developed regions of Africa and Asia, this approach will provide green energy for cooking, thereby overcoming many of the problems faced by people living in these regions. According to the World Health Organization, nearly 2.6 billion people do not have access to energy for cooking.

Solving this problem saves lives, but also contributes to the reduction of energy poverty. This segment is an important part of the energy transition in the world. At the same time, this sector creates new jobs, thus encouraging growth. By 2030, it is estimated that this sector will produce around 2.7 million jobs.

Hence, if we start from the fact that investing in renewable energy sources has a social, environmental, and social component, it is logical that governments through public funds influence the development of this sector. In that way, they will stimulate a greater inflow of private capital, because the greater focus of governments in this sector can also contribute to the general improvement of the business climate by improving the performance of certain mechanisms, such as changing the distribution of costs, more straightforward regulations, shortening of bureaucratic costs for investment, support for innovation and development of new technologies, etc.