Energy Investment Needs For Fulfilling The Paris Agreement
To accelerate the global energy transition, there is an urgent need to significantly increase investment in renewable energy. In its latest analysis Global energy transformation: A roadmap to 2050 (2019 edition), IRENA estimates that cumulative investments in renewable energy must reach $27 trillion between 2016 and 2050 to put the world on track and meet the goals of the Paris Agreement. Instead, if we move towards “well below 2°C”, low-carbon investments will surpass fossil investments worldwide by 2025 or before and increase thereafter. In the energy sector, the global energy transition would require nearly $22.5 trillion in investments in new renewable energy installed by 2050. This would mean at least a doubling of annual investments from the current level, from nearly $310 billion to more than $660 billion. Riahi, K. et al. Shared Socioeconomic Pathways and their effects on energy, land use and greenhouse gas emissions: an overview. Glob. Surrounded. Amendment 42, 153-168 (2017). In its report “Untapped potential for climate action: Renewable energy in Nationally Determined Contributions”, IRENA estimates that around $1.7 trillion will be needed between 2015 and 2030 for the implementation of renewable energy targets in NDCs, averaging nearly $110 billion per year.
More than 70% of the total investment needed ($1.2 trillion) must be mobilized to achieve the unconditional goals. An additional $500 billion is needed in developing countries in the form of international financing to support conditional targets. The transformation of the global energy system needs to be significantly accelerated to achieve the Paris Agreement`s goal of limiting the rise in global average temperatures to well below 2°C by the end of the century and, ideally, to 1.5°C above pre-industrial levels. Renewable energy supply, increased electrification of energy services and energy efficiency can provide more than 90% of the global emission reductions needed in the energy sector. McCollum, D.L., Zhou, W., Bertram, C. et al. Energy investments are necessary to achieve the Paris Agreement and the Sustainable Development Goals. Nat Energy 3, 589-599 (2018). doi.org/10.1038/s41560-018-0179-z The pursuit of the 1.5°C target requires a significant increase in low-carbon capital beyond the future by 2°C. Measures compatible with an energy transition would increase the cost of achieving energy access and food security objectives, but would reduce the costs of achieving air quality objectives. This perspective highlights investment opportunities by 2050, guidelines for transitio. Low-carbon investments are needed to accelerate the transformation of the energy system, required by both the Paris Agreement and the Sustainable Development Goals..
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