By Onome Amuge
Global investment in energy transition technologies reached a new record of 1.3 trillion in 2022, but cumulative investments must amount to $44 trillion by 2030 to make the desired impact on the global energy transition which has been largely affected by the effects of global crises, according to the International Renewable Energy Agency (IRENA).
IRENA, in its latest World Energy Transitions Outlook 2023 Preview called for a fundamental course correction in the energy transition, noting that the world needs $35 trillion,representing 80 per cent of $44 trillion in the next seven years, prioritising efficiency, electrification, grid expansion and flexibility.
According to the agency, around one trillion of planned annual fossil fuel investment by 2030 must be redirected towards transition technologies and infrastructure needed to limit global temperature rise to 1.5°C.
“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,” the preview stated.
The review also showed that significant progress has been made in the power sector where renewables account for 40 percent of installed power generation globally, contributing to an unprecedented 83 per cent of global power additions in 2022.
However, it warned 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. It also stated that 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 to keep the 1.5°C target alive.
IRENA advised industry players to carefully assess new investment decisions to simultaneously drive the transition and reduce the risk of stranded assets.
Furthermore, public sector interventions were advised to channel investments towards countries in a more equitable way.
Francesco La Camera IRENA’s director-general said 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.
La Camera emphasised that 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, toward 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 said.
The Italian diplomat also called on international cooperations to improve their operations, noting that achieving the energy transition requires stronger international collaboration, including collective efforts to channel more funds to developing countries.
According to La Camera,the fundamental shift in the support to developing nations must put more focus on energy access and climate adaptation.
Moving forward,he urged multilateral financial institutions 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.
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