Daily Management Review

UNCTAD: Developing countries need $1.7 trillion a year in clean energy investments


UNCTAD emphasized the need of "reducing the risks of energy transition investments in developing countries through loans, guarantees, insurance instruments, and equity participation as a public sector".

Clean energy investments in developing nations are required to total $1.7 trillion annually. According to a report released on Wednesday in Geneva by the United Nations Conference on Trade and Development (UNCTAD), this is much higher than the $544 billion they brought into the sector in 2022.

UNCTAD noted that "developing countries need about $1.7 trillion in renewable energy investment annually, but they have attracted only $544 billion in foreign direct investment in clean energy in 2022," adding that the majority of the increase in international investment in renewable energy, which has nearly tripled since the Paris Agreement was adopted in 2015, has come from developed countries.

The authors of the study claim that "the overall financing needs for the energy transition in developing countries are much larger and include investments in electric grids, transmission lines, storage, and energy efficiency."

"Significant increases in investment in sustainable energy systems in developing countries are critical if the world is to meet climate goals by 2030," UNCTAD Secretary General Rebeca Grynspan remarked in conjunction with the report's release. For poor countries, UNCTAD recommended "reducing the risks of energy transition investments through loans, guarantees, insurance instruments, and equity participation both from the public sector—through public-private partnerships and blended finance—and from multilateral development banks."

Partnerships between foreign investors, the public sector, and multilateral financial institutions, according to the research, "can significantly lower the cost of capital for clean energy investments in developing countries." Additionally, according to UNCTAD, debt relief is essential to giving poor nations "the investment space required for making the transition to renewable energy.

source: unctad.org