The globe will require about $35 trillion for transition technology by 2030, including increased efficiency, electrification, grid expansion, and flexibility, according to the International Renewable Energy Agency (IRENA).
According to IRENA, by 2050, around 41% of projected energy investments would still be made in fossil fuels, and new investment decisions “new investment decisions should be carefully assessed to simultaneously drive the transition and reduce the risk of stranded assets” they added.
The value of businesses that extract, distribute, or substantially rely on fossil fuels may not completely account for the danger of stranded assets. A dramatic decline in value may happen if this risk were factored in, posing a risk to owners and investors.
With cascading effects on businesses that rely on fossil fuels, those who have invested in fossil fuel corporations, especially those who have bought their stocks or bonds, are most at danger.
By 2030, according to IRENA, around $1 trillion/year of planned investments in fossil fuels must be switched to infrastructure and transitional technologies in order to keep the Paris Climate Agreement’s target within reach.
The Agency stated on Tuesday that in order to uphold pledges set under the Paris Climate Accord, annual global expenditures in energy transition technologies must more than treble.
The organization examined two energy scenarios: a 1.5°C global warming scenario in line with the Paris climate objective and one based on governments’ energy plans with a focus on G20 countries.
In a sneak peek of its World Energy Transitions Outlook (WETO), which was released yesterday, it stated that in order to stay on track to limit temperature rises to 1.5°C, in line with the most ambitious goal under the 2015 Paris Agreement, global investments in energy transition technologies, including energy efficiency, electrification, grid expansion, and flexibility projects, need to quadruple to over $5 trillion/yr from $1.3 trillion in 2022.
According to IRENA, the deployment of renewable energy must increase from its current annual average of about 3,000 gigawatts to over 10,000 GW by 2030, with more equity between industrialized and developing nations required in this expansion.
Two-thirds of installed renewable energy capacity came from new projects in China, the European Union, and the United States last year; only 1% came from renewable energy projects in Africa.
Francesco La Camera, Director General of IRENA, urged financial institutions to allocate more funds to energy transition projects with better conditions, calling for a fundamental change in the way that aid is provided to developing countries to place a greater emphasis on energy access and climate adaptation.
