Maintaining a 1.5 degrees Celsius global guardrail will require a fourfold increase of annual clean power investments by 2030, with the bulk of upscaled financing needed in developing and emerging economies.
International Energy Agency (IEA) Deputy Executive Director Mary Warlick issued this stark call for an urgent increase of clean power investment during a Green Climate Fund (GCF) energy transition forum at the international climate change meeting in Glasgow.
Pinpointing the need to deploy clean energy in emerging and developing economies as the “defining challenge of our times,” Warlick said there is ample global capital available to achieve this aim. “But it is simply not reaching where it is most needed,” she added.
The GCF event “Support for Developing Country Aspirations and Ambitions for Energy Transition” explored how developing countries can leapfrog their economies to mainstream clean energy – crucial if we are to overcome the climate challenge as power generation is the largest greenhouse gas contributor.
Reflecting the crucial place of climate finance in ongoing COP26 negotiations, representatives from developing countries and international institutions told the forum at GCF’s COP26 pavilion that sourcing new flows of investment was key in helping developing countries avoid carbon-intensive trajectories.
Warwick said keeping to a 1.5 Celsius temperature rise under the Paris Agreement required a shift to a “completely new energy economy, with a surge of annual investment in clean energy of around 4 trillion by 2030 - from less than 1 trillion today. “And most of this growth comes from the emerging and developing economies - where there needs to a dramatic scale up of private capital to fund 60 percent of clean energy by 2030.”
Forum participants saw COVID-19 as presenting both a challenge and an opportunity in driving a low-caron energy transition in developing countries.
GCF Executive Director Yannick Glemarec said energy transition-focused financing must be a key part of COVID-19 economic stimulus. He noted that currently less than 20 percent of the world’s total recovery measures are green.
“It’s an existential issue for humankind whether or not we are to successfully green the economic stimulus measures put in place to recover from the COVID-19 pandemic,” he warned.
Glemarec provided examples of clean energy implementation where GCF finances are helping to achieve this aim.
Partnering with Acumen, GCF has provided USD 30 million of equity in the USD 60 million Energy Access Relief Facility to ensure liquidity problems faced by African clean power companies because of COVID-19 do not force them into insolvency. In Southeast Asia, GCF has contributed USD 300 million, joining with the Asian Development Bank (ADB), in the USD 3.7 billion ASEAN Catalytic Green Finance Facility (ACGF) to support green COVID-19 recovery.
Noting the importance of recognising diverging national conditions, Costa Rica First Lady Claudia Dobles Camargo told the energy transition forum that “each road map for decarbonisation is going to be completely different because of different countries’ contexts and challenges.”
She noted that while 99 percent of Costa Rica’s electricity supply is based on renewables, the country needs to transform its transport sector – still highly reliant on fossil fuels - to achieve its decarbonisation goal.
The First Lady said that Costa Ricca is working with GCF to progress national decarbonisation in a USD 1.9 billion initiative, together with the Central American Bank for Economic Integration (CABEI), that will take advantage of Costa Rica’s green energy grid to build a low-emission metropolitan light rail system.
GCF will consider discussions during this COP26 forum to see how its provision of climate finance can direct far bigger flows of investment to developing countries to ensure the green power revolution reaches all parts of the planet.
Other participants in the forum were
- Ricardo Pulti, Vice President of Infrastructure at the World Bank,
- Abdulmajid Nsekela Group CEO and Managing Director of Tanzania’s CRDB Bank
- Devendra Karki, from Nepal’s Ministry of Energy, Water Resources and Irrigation.
- Kevin Kariuki, Vice President of the African Development Bank (AfDB)
- Miguel Angel Méndez Castellanos, Head of Partnerships and International Cooperation, Financial Division, CABEI,
- Mareledi Maswabi with Botswana’s Energy Department and
- Jorim Schraven, Director of Dutch development bank FMO.