The preview calls for a fundamental course correction in the energy transition, Irena’s Director-General Francesco La Camera said at the Berlin Energy Transition Dialogue (BETD)
A successful energy transition demands bold, transformative measures reflecting the urgency of the present situation. Investment and comprehensive policies across the globe and all sectors must grow renewables and instigate the structural changes required for the predominantly renewables-based energy transition, said a top Irena official, citing the World Energy Transitions Outlook 2023 Preview.
The preview calls for a fundamental course correction in the energy transition, Irena’s Director-General Francesco La Camera said at the Berlin Energy Transition Dialogue (BETD).
The Preview warns that a lack of progress further increases investment needs and calls for a systematic change in the volume and type of investments to prioritise the energy transition.
Although global investment in energy transition technologies reached a new record of $1.3 trillion in 2022, yearly investments must more than quadruple to over $5 trillion to stay on the 1.5°C pathway.
By 2030, cumulative investments must amount to $44 trillion, with transition technologies representing 80 percent of the total ($35 trillion), prioritising efficiency, electrification, grid expansion and flexibility, said La Camera.
The Preview shows that the scale and extent of change falls far short of the 1.5°C pathway. Progress has been made, notably in the power sector where renewables account for 40 percent of installed power generation globally, contributing to an unprecedented 83% of global power additions in 2022.
But to keep 1.5°C alive, deployment levels must grow from some 3,000 gigawatt (GW) today to over 10,000 GW in 2030, an average of 1,000 GW annually, said the top official.
Deployment is also limited to certain parts of the world. China, the European Union and the United States accounted for two-thirds of all additions last year, leaving developing nations further behind, he added.
La Camera Pointed out that the emphasis must shift from supply to demand, towards overcoming the structural obstacles impeding progress.
“Irena’s Preview outlines three priority pillars of the energy transition, the physical infrastructure, policy and regulatory enablers and well-skilled workforce, requiring significant investment and new ways of co-operation in which all actors can engage in the transition and play an optimal role,” he added.
Any new investment decisions, he stated, should be carefully assessed to simultaneously drive the transition and reduce the risk of stranded assets.
Some 41% of planned investment by 2050 remains targeted at fossil fuels. 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, he noted.
Furthermore, public sector intervention is required to channel investments towards countries in a more equitable way, he stated.
Last year, 85% of global renewable energy investment benefitted less than half of the world’s population, he added.
La Camera stressed that it was time to rewrite the way international cooperation worked.
“Achieving the energy transition requires stronger international collaboration, including collective efforts to channel more funds to developing countries. A fundamental shift in the support to developing nations must put more focus on energy access and climate adaptation,” said the top official.
“Moving forward, 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,” he added.
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