Bold, revolutionary actions that consider the current situation’s urgency are necessary for a successful energy transition. According to a top IRENA (International Renewable Energy Agency) official citing the World Energy Transitions Outlook 2023 Preview, investment and comprehensive policies across the globe and in all sectors are necessary to grow renewable energy and trigger the structural changes needed for the energy transition.
IRENA Director-General Francesco La Camera stated at the Berlin Energy Transition Forum that the World Energy Preview calls for a severe course correction for the energy transition (BETD) towards renewable sources.
The report also urged a deliberate adjustment in the number and kind of investments to prioritise the energy transition and warned that a lack of progress will significantly increase investment demands.
A record USD 1.3 trillion was invested globally in energy transition technologies in 2022, but to stay on the 1.5°C track, annual investments must more than quadruple to exceed USD 5 trillion.
According to Francesco La Camera, cumulative investments must reach USD 44 trillion by 2030, of which transition technologies must account for 80% (USD 35 trillion), focusing on efficiency, electrification, grid expansion, and flexibility.
The preview demonstrates how far short of the 1.5°C pathway the scale and depth of change are. Nevertheless, progress has been made in the electricity sector, where renewables account for 40% of installed power generation globally and will contribute to an astounding 83% of global power additions in 2022.
Yet according to the top official, deployment levels must increase from about 3,000 gigawatts (GW) from the 2023 level to over 10,000 GW in 2030, or 1,000 GW on average yearly.
Moreover, deployment is restricted to specific geographic regions. He continued that China, the European Union, and the United States made two-thirds of all additions in 2022, further lagging poorer countries.
Francesco La Camera also emphasised that the focus needs to change from supply to demand to remove the structural barriers preventing advancement.
He continued, “IRENA’s Preview outlines three priority pillars of the energy transition, the physical infrastructure, policy and regulatory enablers, and a well-skilled workforce, requiring significant investment and new forms of cooperation for all actors to engage in the transition optimally.”
He said any new investment choices should be carefully considered to facilitate the transition and reduce stranded assets’ danger.
By 2050, 41% of investments will still be made in fossil fuels. However, to keep the 1.5°C target within reach, he added, almost USD 1 trillion in yearly fossil fuel expenditure anticipated by 2030 must be shifted towards transitional technologies and infrastructure.
The official also added that public sector action is necessary to direct investments towards nations equally, while stating that less than half of the world’s population benefited from 85% of global investments made in renewable energy in 2022.
Francesco La Camera also emphasised that it was time to overhaul international collaboration rules, as he remarked, “Stronger international cooperation is necessary to implement the energy transition, including coordinated efforts to increase funding for developing nations. More emphasis must be placed on energy access and climate adaption as part of a fundamental change in the way developed countries are supported.”
Talking about the days ahead, he said, “Multilateral financial institutions need to allocate more money, at better terms, towards energy transition projects and establish the physical infrastructure necessary to sustain the growth of a new energy system.”