How the G20 can ensure the renewable revolution leaves no country behind

Accelerating the clean energy transition will usher in one of the most significant economic and industrial transformations in modern times.Delivering the COP28 commitment to triple renewable energy capacity and double annual energy efficiency improvements by 2030 can get the world fully two-thirds of the way to a Paris-aligned energy system, creating a generational opportunity to deliver decent jobs, durable economic growth, and sustainable prosperity for all.However, this is only possible by urgently scaling clean energy finance for emerging markets and developing countries (EMDCs). Together, these countries will represent more than 50% of emissions by 2030.Clean energy investments need to double in advanced economies and China by the early 2030s, and they need to rise sixfold in other EMDCs (excluding China) – to reach around US$1.6 trillion per year by 2030, according to updated analysis from the Independent High-Level Expert Group.Facing a choice As G20 meet in Rio de Janeiro this week, they face a choice. Either they can drive inclusive progress towards global energy goals by prioritising renewable energy investment in EMDCs or risk a future where the clean energy transition leaves the world’s poorest countries behind, and we collectively fail to limit global warming in line with the Paris Agreement.The good news is that falling costs and improving technology are making clean energy the most viable path to economic growth for countries in urgent need of sustainable development. Collectively, EMDCs have the most abundant renewable resources, with Latin America, Africa, South Asia and Southeast Asia holding around 70% of the world’s solar and wind potential.Based on this potential and their higher energy needs, EMDCs could account for over 60% of the absolute increase in clean energy over the next 10 years. This will present outsized opportunities for them to attract private finance, given that around 90% of energy investment is flowing into cleantech, RMI data shows.New data from the Mission Possible Partnership's Global Project Tracker shows that half of the announced pipeline for low-carbon industrial projects is in the Global South.However, many lower-income countries risk being left behind. Africa, for example, has received less than 2% of the global investment in clean energy over the past five years, despite accounting for about 60% of the world’s best solar resources.They face a range of barriers, including weaker supply chains and higher costs, limited implementation capacity, and crucially, lack of access to and higher costs of capital. The challenge, therefore, is to foster the enabling conditions to ramp-up investment and mobilise finance of the right scale, of the right kind and at an affordable cost.Bridget the gapG20 nations now have a window to help bridge the investment gap and power up emerging economies through five key levers:Platforms: More and better-coordinated country-level platforms, based on well-articulated transition frameworks and plans, can help to channel support and make it easier for countries to scale up investments and to access finance. For example, Brazil recently launched an investment platform to mobilise US$10.8 billion of international financing for projects including clean energy.Pipeline: Preparation support is needed to build bankable pipelines of projects across EMDCs to get finance flowing faster. This calls for refreshing the institutional architecture for project preparation by scaling up both public and private initiatives, including the G20-led Global Infrastructure Facility. Project preparation funding can typically leverage 20 to 50 times the initial investment. Positive efforts are under way, including by the U.N. Climate Change High-Level Champions to develop a pipeline of investable projects, including clean energy projects.Policies: It’s vital that countries develop investment-positive plans and policies that break down barriers to attract and accelerate investment. Crucial will be the wider adoption of carbon pricing, elimination of fossil fuel subsidies, appropriate feed-in tariffs, and regulations that support accelerated decarbonization. Data shows that countries that have progressive energy policies attract many times the level of investment capital, highlighting the opportunity for both G20 countries and the need for the international community to support countries outside of the G20.Unlocking private finance: A concerted push is needed to unlock both domestic and cross-border private finance and reduce the cost of capital through stronger collaboration between countries, development finance institutions (DFIs) and the private sector. They need to co-create investment opportunities, reduce actual and perceived risks, including foreign exchange risk, scale and deploy the right mix of de-risking and credit enhancement instruments, and tackle supply-side regulatory and incentive barriers.A COP29 whitepaper, from Howden, Boston Consulting Group and the U.N. High-Level Climate Champions, illustrates the enabling role of insurance across financial risk reduction and mobilisation of capital. Multilateral development banks and local DFIs have a crucial role to play in unlocking private finance but also in supporting the expansion that will be needed in public infrastructure, including the expansion and modernisation of grids.Just transition: Critically, these measures must ensure that countries can fully maximise the economic and social opportunities of the just energy transition and manage the social impacts. This includes, where possible, proactive strategies to harness opportunities to better deliver local jobs, economic growth and prosperity, such as supporting the developments of domestic supply chains and industries.Through concerted and cooperative action on these five priorities, G20 leaders can help make renewable energy accessible to all and close the energy investment gap.At COP29, several key developments showed the momentum underway, including the launch of a two-year finance mission under the Global Clean Power Alliance, led by the UK and Brazil, to help mobilise funding towards clean energy projects within EMDCs. While the private sector further demonstrated its support for ambitious government action, including the 45 utilities and power sector suppliers under the Utilities for Net Zero Alliance (UNEZA).By working together, we can ensure that the promise of a sustainable energy future is realised for all.*Amar Bhattacharya is a senior fellow at the Global Economy and Development Programme at the Brookings Institution and a visiting professor in practice at the London School of Economics. - REUTERS

How the G20 can ensure the renewable revolution leaves no country behind

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Namibian Sun 2024-12-04

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How the G20 can ensure the renewable revolution leaves no country behind

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Namibian Sun 2024-12-04

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