Jakarta – Fatih Birol, Executive Director of the International Energy Agency (IEA), highlighted the stagnation of renewable energy investment in developing countries since 2015. Although the global development of renewable energy has almost doubled, the increase has mainly come from China and developed countries.
At the milestone COP28 climate summit in Dubai, United Arab Emirates, the International Energy Agency (IEA) took a strong stand to ensure that major financial institutions, including the World Bank and regional development banks, prioritise lowering the cost of renewable energy investments in developing countries.
While the resulting agreement at COP28 aims to triple global renewable energy capacity, there has yet to be a concrete agreement on financing the energy transition in developing countries.
Birol emphasised the need to find risk reduction mechanisms to ensure sufficient capital flows to developing countries. For example, the capital required to invest in solar power plants in developing countries is currently four times the cost in developed countries.
This hampers investment attractiveness in developing countries, seriously hindering renewable energy development there.
“For the IEA, the main story between now and Baku will be how we can find de-risking mechanisms to make sure there is a flow of capital to developing and emerging countries,” Birol told Reuters, referring to the next UN Climate summit in the Azerbaijan capital.
Furthermore, he said, providing guarantees, creating risk reduction mechanisms, and providing concessional funding should be top priorities for the World Bank, regional development banks, and the financial sector.
Birol emphasised that the world has sufficient capital to develop renewable energy globally. However, with the support and commitment of financial institutions, this huge potential can be realised more quickly and efficiently, accelerating the transition to renewable energy worldwide.
Agreement without action is a challenge, and the IEA urges that concrete steps be taken to support developing countries in realising their renewable energy potential. (Hartatik)
