Annual renewables investment is currently half of what is needed to reach net zero, finds a new report from French think tank Ren21, released on Thursday.
In 2023, investment in renewables stood at $632bn – representing an 11% increase on the previous year, but falling $677bn short of the $1.3trn that will be required annually between 2024 and 2030, the think tank finds.
REN21 has based its annual investment required up until 2030 on a net-zero scenario provided by the International Renewable Energy Agency (IRENA), accounting for the existing shortfall.
Global renewable capacity additions in 2023 reached 473GW – an increase of 36% compared with the year before, but still well short of the 1,000GW per year required to meet the global climate targets, the think tank adds.
As a result, renewables rollout is not keeping up with rising demand for energy, leading to a 1.1% increase in energy-related carbon dioxide (CO₂) emissions in 2023.
In addition to a lack of sufficient investment in the sector, another key barrier preventing the necessary growth in renewables capacity is that the global financial landscape "continues to put low-income countries at a significant disadvantage", with the cost of capital for renewable energy projects reaching as high as 10%, compared with less than 4% in high-income countries, the think tank notes.
"Instead of supporting developing countries’ efforts to leapfrog fossil fuels and
establish renewables-based economies, this situation exacerbates inequality and prevents these countries from benefitting from the huge opportunities presented by renewables – not only to address energy access, but also to drive economic and industrial development," the report reads.
At COP28 in December, more than 110 countries committed to tripling global renewable energy capacity by 2030, while all parties to the conference signed a landmark agreement to "transition away" from fossil fuels.
However, observers noted that the final agreement lacked the necessary climate finance commitments to aid reaching that goal. For example, while countries agreed to operationalise a Loss and Damage Fund to help climate-vulnerable countries adapt to climate-related impacts, the $700m committed by a handful of countries at the conference remains a drop in the ocean compared with the $580bn vulnerable countries are expected to face in damages by 2030.
