{"id":49397,"date":"2023-10-30T13:00:21","date_gmt":"2023-10-30T13:00:21","guid":{"rendered":"https:\/\/www.climatechangenews.com\/?p=49397"},"modified":"2023-10-30T13:00:21","modified_gmt":"2023-10-30T13:00:21","slug":"to-triple-renewable-energy-the-global-south-needs-finance","status":"publish","type":"post","link":"https:\/\/www.climatechangenews.com\/2023\/10\/30\/to-triple-renewable-energy-the-global-south-needs-finance\/","title":{"rendered":"To triple renewable energy, the Global South needs finance"},"content":{"rendered":"<p dir=\"ltr\"><strong>With one month to go until Cop28, ministers meet in the UAE this week and a global target to triple renewable capacity by 2030 to over 11,000 gigawatts is poised to take centre stage.<\/strong><\/p>\n<p dir=\"ltr\">This offers hope in our battle against climate chaos. The target is not only aligned with limiting temperature to 1.5C, it is reasonably likely to be agreed in Dubai.<\/p>\n<p dir=\"ltr\">But to realise this aspiration necessitates a significant increase in financial support and financial reform.<\/p>\n<p dir=\"ltr\">The good news is that upscaling renewable energy will to some extent <a href=\"https:\/\/www.sciencedirect.com\/science\/article\/abs\/pii\/S0960148122000763\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"0\">displace fossil fuels <\/a>by <a href=\"https:\/\/www.nature.com\/articles\/s41467-023-41971-7\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"1\">outperforming<\/a> oil, coal and gas economically.<\/p>\n<p dir=\"ltr\">Yet, to phase out fossil fuels at the speed and scale needed to keep global warming to 1.5C, we need a managed decline and a decision and implementation plan to deliver the phase out.<\/p>\n<blockquote>\n<p dir=\"ltr\"><a href=\"https:\/\/www.climatechangenews.com\/#:~:text=Menu-,China%20objects%20to%20UN%20fund%20warnings%20on%20solar%E2%80%99s%20forced%20labour%20risks,-27%20October%202023\" target=\"_blank\" rel=\"noopener\"><strong>China objects<\/strong> to UN fund warnings on solar\u2019s forced labour risks<\/a><\/p>\n<\/blockquote>\n<p dir=\"ltr\">These decisions, and in particular the fast-tracked scale-up of renewable energy must be anchored with concrete processes and resources to implement it. Above all, this means finance for the Global South.<\/p>\n<p dir=\"ltr\">Along with a global target to triple renewable energy, G20 leaders acknowledged this needs a yearly investment of $4 trillion by 2030 in their <a href=\"https:\/\/www.g20.org\/content\/dam\/gtwenty\/gtwenty_new\/document\/G20-New-Delhi-Leaders-Declaration.pdf\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"2\">communique<\/a> &#8211; not a mundane reckoning.<\/p>\n<p dir=\"ltr\">Yet, the G20 went on to say that these goals would be met &#8220;within existing policies&#8221;, an absurd claim.<\/p>\n<h3 dir=\"ltr\">Flatlining finance<\/h3>\n<p dir=\"ltr\">Surely, the G20 leaders are briefed well enough to know the opposite is true &#8211; rather some G20 leaders wanted to deflect pressure on updating their national targets by 2030. To not end up with a hollow renewable target and energy package at Cop, we need finance.<\/p>\n<blockquote>\n<p dir=\"ltr\"><a href=\"https:\/\/www.climatechangenews.com\/#:~:text=Climate%20diplomats%20pay%20tribute%20to%20Pete%20Betts%2C%20EU%20negotiator%20who%20helped%20land%20Paris%20Agreement\" target=\"_blank\" rel=\"noopener\"><strong>Climate diplomats<\/strong> pay tribute to Pete Betts, EU negotiator who helped land Paris Agreement<\/a><\/p>\n<\/blockquote>\n<p dir=\"ltr\">Across the Global South outside of China, we are confronted with a stark reality: Investment in renewable energy has remained more or less flat since the Paris Agreement.<\/p>\n<p dir=\"ltr\">If we are to reach $4tn investment in renewables, numbers needs to more than double from the <a href=\"https:\/\/www.iea.org\/reports\/world-energy-investment-2023\/overview-and-key-findings\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"3\">current $1.7 trillion <\/a>allocated to clean energy.<\/p>\n<p dir=\"ltr\">Out of these $1.7tn, only about 15% are invested in the Global South outside China &#8211; despite that being where roughly 7 out of 10 humans live today.<\/p>\n<p dir=\"ltr\">The International Energy Agency estimates that by 2030 we will need around <a href=\"https:\/\/www.iea.org\/reports\/scaling-up-private-finance-for-clean-energy-in-emerging-and-developing-economies\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"4\">$1.9 trillion yearly investment <\/a>in the Global South outside China.<\/p>\n<p dir=\"ltr\">It estimates that three-fifths ($1,14tn) of this will need to come from private and two-fifths ($760bn) from public sources. But what is hindering renewables really taking off in so many countries?<\/p>\n<blockquote>\n<p dir=\"ltr\"><a href=\"https:\/\/www.climatechangenews.com\/2023\/10\/20\/small-islands-struggle-to-get-help-from-uns-flagship-climate-fund\/\" target=\"_blank\" rel=\"noopener\"><strong>Small islands<\/strong> struggle to get help from UN\u2019s flagship climate fund<\/a><\/p>\n<\/blockquote>\n<p dir=\"ltr\">It&#8217;s not low renewable energy potential. For example, Africa is home to <a href=\"https:\/\/www.iea.org\/reports\/africa-energy-outlook-2022\/key-findings\" target=\"_blank\" rel=\"noopener\">three-fifths<\/a> of the top solar sites in the world but in the last two decades <a href=\"https:\/\/www.irena.org\/publications\/2022\/Jan\/Renewable-Energy-Market-Analysis-Africa#:~:text=Among%20the%20findings%3A,renewables%20jobs%20are%20in%20Africa.\" target=\"_blank\" rel=\"noopener\">just 2%<\/a> of global investments in renewable energy were made in Africa.<\/p>\n<p dir=\"ltr\">In high-income countries, 81% of green investment is funded by the private sector. <a href=\"https:\/\/www.climatepolicyinitiative.org\/wp-content\/uploads\/2023\/06\/An-FX-Guarantee-Mechanism-for-the-Green-Transformation-in-Developing-Countries.pdf\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"8\">In emerging and developing countries, the private share is a mere 14%<\/a>.<\/p>\n<h3 dir=\"ltr\">Structural injustice<\/h3>\n<p dir=\"ltr\">There are structural and historical injustices pertaining to the global financial system, including debt and ongoing extractivism.<\/p>\n<p dir=\"ltr\">One aspect of this is the high cost of capital: The interest rate to finance renewable energy in rich countries has historically been around 3-4% while usually exceeding 10% in emerging and developing economies. This difference matters.<\/p>\n<blockquote>\n<p dir=\"ltr\"><a href=\"https:\/\/www.climatechangenews.com\/#:~:text=money%20from%20it-,World%20Bank%20controversy%20sends%20loss%20and%20damage%20talks%20into%20overtime,-20%20October%202023\" target=\"_blank\" rel=\"noopener\"><strong>World Bank controversy<\/strong> sends loss and damage talks into overtime<\/a><\/p>\n<\/blockquote>\n<p dir=\"ltr\">These interest rates can be broken down into micro-risks &#8211; those directly related to the project &#8211;\u00a0 and macro-risks &#8211; those that account for risks like governments and currency risks.<\/p>\n<p dir=\"ltr\">The interest rates for a project itself (micro-risk) tend to be lower than in rich countries, but then you pay an additional 5-10% simply for investing in a certain country (macro-risk).<\/p>\n<p dir=\"ltr\">Usually, the cost of capital is unfairly biased against the Global South, not providing a \u201crational\u201d cost of capital. For example, <a href=\"https:\/\/www.climatepolicyinitiative.org\/wp-content\/uploads\/2023\/06\/An-FX-Guarantee-Mechanism-for-the-Green-Transformation-in-Developing-Countries.pdf\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"9\">overestimating exchange risks<\/a>.<\/p>\n<p dir=\"ltr\">Cop28 must underpin the tripling of renewables with tangible political commitments and processes to unlock finance: debt cancellation at scale, $100bn in concessional finance, and $200bn in grants yearly.<\/p>\n<p>Grids and transmission lines are usually predominantly financed by public finance and illustrate clearly why public and private investments are heavily interdependent as private investment requires functioning grids.<\/p>\n<h3>Energy access<\/h3>\n<p>Another critical role of public investment will be providing energy access. <a href=\"https:\/\/www.iea.org\/reports\/sdg7-data-and-projections\/access-to-electricity\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"10\">Over 760 million people <\/a>are suffering from a lack of access to electricity, the majority, 600 million on the African continent.<\/p>\n<p>More than half (55%) of those households which are yet to gain access to electricity will require mini-grid and off-grid solutions. Clearly, decentralized renewable energy is the best-fit.<\/p>\n<blockquote><p><a href=\"https:\/\/www.climatechangenews.com\/#:~:text=US%20power%20grab-,China%E2%80%99s%20Belt%20and%20Road%20gets%20%E2%80%98green%E2%80%99%20reboot%20and%20spending%20boost,-19%20October%202023\" target=\"_blank\" rel=\"noopener\"><strong>China\u2019s Belt and Road<\/strong> gets \u2018green\u2019 reboot and spending boost<\/a><\/p><\/blockquote>\n<p>This will need heavy public investment if we don&#8217;t want to leave these people by the mercy of revenue calculations.<\/p>\n<p>Grids and access are just two examples of necessary investments at scale, which will need support of grants &#8211; even with significant debt cancellation. To reach $760bn public investment will need additional $500bn in public investment in renewables yearly in the Global South outside China.<\/p>\n<p>If these $500bn are seen as highly concessional (reflected by a 40% grants ratio), one calculates this will need another $200bn+ in yearly grants.<\/p>\n<p>Some of this is within the realm of Cop, some of this the United Nations climate convention can only call on to be set in motion.<\/p>\n<p>One may say, this is politically impossible or there is no money. But such claims are both cynical and not grounded in facts.<\/p>\n<p>The <a href=\"https:\/\/www.iisd.org\/publications\/report\/fanning-flames-g20-support-of-fossil-fuels#:~:text=Fossil%20fuel%20subsidies%20from%20G20,at%20least%20USD%201%20trillion.&amp;text=G20%20countries%20announced%20USD%20265,between%202020%20and%20June%202023\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"11\">G20 countries alone provided $1.4 trillion in direct subsidies<\/a> to fossil fuel companies, and global fossil fuel consumption subsidies last year.<\/p>\n<p>The wealthiest 3m000 people work at the \u201cedge of legality\u201d preserving their obscene wealth, taxing it at only 2% &#8211; significantly below what such wealth is expected to provide in yearly returns &#8211; would <a href=\"https:\/\/www.taxobservatory.eu\/publication\/global-tax-evasion-report-2024\/\" target=\"_blank\" rel=\"noopener noreferrer\" data-auth=\"NotApplicable\" data-linkindex=\"12\">provide $250bn each year<\/a>.<\/p>\n<p dir=\"ltr\">There is no hope without vision. In fact, taking a step back one realizes the proposals above are less visionary than pragmatic. Global access to just and fair is very much possible.<\/p>\n<p dir=\"ltr\"><em>Andreas Sieber is the associate director of global policy &amp; campaigns at 350.org<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"A renewable energy target will be debated at Cop28 but financial reforms are needed for the Global South outside China to meet that target","protected":false},"author":130,"featured_media":44998,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2443,4951],"tags":[],"coauthors":[5034],"class_list":["post-49397","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-comments","category-cop28","type-comment"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>To triple renewable energy, the Global South needs finance<\/title>\n<meta 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