Global renewables investment needs to double to achieve carbon neutrality
Countries coming out of the pandemic-induced economic crisis will have to double their current investment in renewables and issue clear policies if they are to achieve carbon neutrality mid century in line with the Paris Accord, the head of the International Renewable Energy Agency (IRENA) said 9 November.
"We estimate we will need, in the short-term, $2-trillion investment in the next three years to get to where we have to be," IRENA Director General Francesco La Camera said during an online discussion with International Energy Agency Executive Director Fatih Birol.
Both energy industry leaders discussed the role renewables would play in a sustainable global economic recovery from the coronavirus pandemic and meeting the 2015 global agreement on climate change.
Substantial investment is needed by national governments to move countries toward a decarbonized economy, especially as renewable energy has shown itself to be resilient as a low-cost source of power during the pandemic.
Beyond 2023, countries would need to invest several trillion dollars each year until 2030 to realize the Paris agreement goal to limit global temperature rise to 1.5 degrees Celsius, he said. "Naturally, this is a high bar" as it represents nearly double the government investment to date, La Camera said.
The pandemic caused global energy demand to drop by at least 5% in 2020 when compared with the global financial crisis of 2008-2008, Birol said, citing the most recent IEA statistics.
"We saw a decline in all fuels, but not in renewable energy, which was much more resilient," Birol said.
Global demand for renewables in contrast saw an overall increase of 1% in 2020, owing to long-term contracts, priority access to the grid and continuous installation of new plants, the IEA's latest report on renewables shows.
In the electricity sector, for instance, renewables grew by a robust 7% globally, mostly due to capacity expansion in low-cost solar and wind power, according to Birol, who declared "solar to be the new champion of electricity generation."
La Camera agreed, saying, "The energy system was shaken this year to the core, but renewable energy has shown itself to be resilient."
In March, IRENA said renewable energy would fare better than any other energy source, "and that has proven to be true."
IRENA also has estimated that in 2021, 1,200 GW of existing coal power generating capacity will cost more to operate than it will be to install utility-scale solar capacity, La Camera added.
Currently, renewable energy is responsible for more than 25% of global power generation, and this share must increase to 95% if the world is to reverse the effects of global climate change and reduce carbon dioxide emissions by 45% by 2030 and to net zero levels by mid-century.
The IEA estimates that renewable power is on track to add record capacity in 2020 alone to reach nearly 200 GW, driven by a race to install in China, where onshore wind and solar tax credits expire this year, and the US, where onshore wind tax credits expire in 2021. Offshore wind tax credits expire in 2021 in China.
Recent carbon pledges
La Camera, however, was encouraged by the recent pledges by Japan, South Korea and China and other countries, but said "the bar is very high."
"We need to make massive shifts in end use to decarbonize the energy sector," La Camera said.
The solutions already exist, such as electrifying the transport sector, modernizing the grid, using more artificial intelligence and shifting toward green hydrogen.
These countries will need clear target-oriented policies to redeem their pledges to achieve carbon neutrality by mid-century to align their plans with the Paris Accord.
"The most important thing is clarity," La Camera responded.
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