The developing world attracted just 15 per cent, or roughly $75 billion, of the total investments in renewable energy (RE) globally in the last calendar year, a recent report by International Renewable Energy Agency (IRENA) and Climate Policy Initiative (CPI) said. Moreover, the report states that annual investments to developing countries have been falling since 2018.

The region, which is home to roughly 70 per cent of the world’s population, continues to receive comparatively low investments. Brazil, Chile and India recieved the bulk of these investments, it added.

The report, Global landscape of renewable energy (RE) finance 2023, also pointed out that global investments in the sector hit a record high of $500 billion in 2022.

Developing countries net losers

The report states that the share of RE investments going to developing countries has been progressively declining year on year. For instance, investments declined from 27 per cent of the total investment in RE in 2017 to 15 per cent in 2020.

“In absolute terms, annual investments have been declining precipitously since 2018 at an average rate of 36 per cent. Countries defined as least developed by the Intergovernmental Panel on Climate Change attracted only 0.84 per cent of RE investments on average between 2013 and 2020,” it added.

A break down of the investments on a per capita basis highlights this disparity. For instance, in East Asia and the Pacific, investment per capita increased by 19 per cent between 2015 and 2021 from $88 per person in 2015 to $105 in 2021. However, the bulk of the increase took place in China, and the region excluding China experienced a 20 per cent decline.

Similarly, in South Asia, investments per capita fell 26 per cent between 2015 and 2021. The true extent of the decline is masked by India, where investment per capita grew by 34 per cent in the same period. Excluding India, investment per capita declined by 76 per cent from $20 per person in 2015 to $5 in 2021, it added.

Investments falling short

IRENA Director General Francesco La Camera said, “While global investment in renewable energy, specifically, reached a record high in 2022 at $0.5 trillion, it represented less than 40 per cent of the average investment needed each year between 2021 and 2030 according to IRENA’s 1.5°C Scenario.”

As per IRENA’s World energy transitions outlook 2022, the world will require annual investments of $5.7 trillion on average between 2021 and 2030, and $3.7 trillion between 2031 and 2050 to meet the target.

In 2022, global investments in energy transition technologies – RE, energy efficiency, electrified transport and heat, energy storage, hydrogen and carbon capture and storage – hit $1.3 trillion. Investments were up 19 per cent from 2021, and 50 per cent from 2019. Yet, the current pace of investment is not sufficient; annual investments need to at least quadruple, the report pointed out.