The energy transition is “off track”: investments in clean energy must be quadrupled, potentially using tools like the global wealth tax proposed by Brazil at the G20. The commitments made by world governments are completely misaligned with a trajectory to limit global warming to 1.5°C.
The pace must change, and it must be done immediately.This is the message delivered by the International Renewable Energy Agency (IRENA) in the World Energy Transition Outlook 2024 report, released on November 11 during the opening day of COP29 Climate in Baku, Azerbaijan.
Where We Stand Today
The current commitments and plans proposed by governments in their Nationally Determined Contributions (NDCs) and long-term strategies (LT-LEDS) are “far from” the correct trajectory for limiting global warming to 1.5°C. Even if these plans are fully implemented, by 2050 they will leave a gap of 16 billion tons of CO2 (GtCO2) in emissions.
In total, national plans will at best reduce CO2 emissions by 6% by 2030 and 56% by 2050, compared to 2022 levels. However, staying on track for 1.5°C requires a reduction of about 37 GtCO2 from 2022 levels and the complete decarbonization of the energy sector by 2050.
The world is still behind or significantly behind on 75% of the renewable energy indicators assessed by IRENA, meaning 9 out of 12 indicators. In particular, there is a lack of progress in the following areas:
- Renewable capacity increase: 975 GW per year is needed by 2030, but in 2022, only 295 GW were added.
- Annual solar photovoltaic additions: 551 GW per year is needed until 2030, but only 191 GW per year are currently being added.
- Annual wind power additions: 329 GW per year is needed by 2030, but only 75 GW per year are currently being added.
- Share of renewables in final energy consumption: This must rise from 17% in 2022 to 35% by 2030.
- Solar thermal: Global capacity must increase from 585 million m² per year to 1,552 million m² by the end of the decade.
- Direct bioenergy use (final uses and district heating): This must rise from 21 to 46 EJ.
- Geothermal energy: This must rise from 0.9 to 1.4 EJ.
- Renewable district heating: This must rise from 0.9 to 4.3 EJ.
- Investments for final renewable energy uses and district heating: Annual investments must increase from 13 to 290 billion dollars.
It is important to note that in IRENA’s 1.5°C Scenario, global annual additions of renewable energy capacity should average 1,066 GW per year from 2023 to 2050.
Quadrupling Investments for the Energy Transition
How much money is needed to achieve the energy transition in line with the Paris Agreement goal? In total, IRENA estimates $150 trillion by 2050. This translates to an average of $5 trillion per year. As of today (2022), we are at $1.3 trillion, which is already a record level.
“To stay on track with the 1.5°C climate target, annual investments must more than quadruple,” warns the report.
The problem is not only the overall volume. Investments in renewable energy remain concentrated in a limited number of countries and are directed mainly toward a few technologies, emphasizes the agency based in Abu Dhabi.
Two figures illustrate the scale of this problem. Geographical disparity: 85% of investments currently benefit less than 50% of the global population. As a result, renewable capacity additions are highly unequal. Africa, for example, adds only 1% of the global total each year.
Technology disparity: 95% of investments go to photovoltaic and wind power. Other solutions crucial for a more balanced energy transition, such as biofuels, hydropower, geothermal energy, off-grid renewables, and non-electric sectors like heating and transport, are neglected and left behind.
Investments in renewable energy, grids, flexibility, energy efficiency, and conservation must increase “drastically” to meet renewable energy and efficiency goals, totaling $31.5 trillion from 2024 to 2030.
Read the World Energy Transition Outlook 2024 report.