Renewable sources of energy can help countries mitigate climate change, build resilience to volatile prices, and lower energy costs. This is especially critical now as spiking fossil fuel costs, triggered by the war in Ukraine, are debilitating poor energy importing countries. Contact online >>
Renewable sources of energy can help countries mitigate climate change, build resilience to volatile prices, and lower energy costs. This is especially critical now as spiking fossil fuel costs, triggered by the war in Ukraine, are debilitating poor energy importing countries.
For decades, economic and scientific organizations have urged leaders to create policies to promote renewable energy as part of vital global efforts to fight climate change. In addition to reducing carbon emissions, large-scale renewable power projects also provide demonstrable economic benefits for investors, governments, and especially consumers who need reliable, low-cost electricity.
While developing countries may not have the public funds to build sufficient new infrastructure, well-crafted, larger-scale renewable power projects can, and do, attract the private investment needed to get plants up and running.
For years, fossil fuels were relatively inexpensive. So, investing upfront money in new clean energy infrastructure was difficult for countries, as well as for individuals.
Take, for instance, an individual investing in an electric car. While it may be more expensive to buy the new electric car, over the life of the vehicle, the savings from reduced costs for fuel and less servicing, will more than pay for the higher initial cost. Transforming the high up-front capital outlays to longer term benefits and dealing with the affordability question of higher initial costs, requires access to finance. In fact, the availability of credit and leasing options for vehicles in developed countries, is making possible a significant number of the sales of expensive electric cars.
But in developing countries, lack of access to finance under reasonable terms, makes the costly upfront investments in renewable energy unaffordable. In addition, macroeconomic and political uncertainties discourage private sector investors from supporting renewable energy. Breaking free from fossils fuels is even harder during the current crisis as countries scramble to ramp up short-term solutions for fuel shortages.
Renewables are the path we must choose
Fortunately, there has been increasing interest in building modern, large-scale infrastructure. In 2020 alone, the public and private sectors invested over $300 billion in renewable energy, although annual investments in clean energy need to more than triple by 2030 to reach net-zero emissions by 2050.
To attract vitally needed private financing, developing countries must deploy a pipeline of large-scale renewable infrastructure projects that ensure a return on investment, while also keeping costs affordable for consumers, even for the poorest.
At the 2022 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) we heard from some countries that are blazing new paths toward self-sufficiency and economic growth through renewable resources.
Morocco is moving ahead full steam towards a sustainable futureMorocco has developed renewable energy projects that now contribute almost 40 percent of its installed energy capacity, and it is targeted to exceed 50 percent by 2030. Dr. Leila Benali, Morocco''s Minister of Energy Transition and Sustainable Development shared that her country set out more than a decade ago to craft comprehensive policies in support of renewable infrastructure that has created 60 projects attracting more than $5 billion in investments. The pipeline of viable large-scale renewable infrastructure projects is supported by government policies, giving private investors confidence to supply needed capital.
"We are trying to ensure that the return on capital invested on projects, particularly those most competitive in wind, solar and now hydrogen, improves so that it is a sustainable strategy," Dr. Benali told us.
Morocco''s Noor Ouarzazate Solar Complex is the largest concentrated solar power plant in the world, spread over 3,000 hectares of desert and with an overall capacity of 580 MW of power, enough to meet the energy needs of a million households. The country has also developed more than a dozen large-scale windfarms, as well as provided incentives for businesses and residences to invest in their own solar panels to save on energy costs.
Another example comes from India, which has achieved the fastest-growing rate of renewable electricity growth in any major economy. Indu Shekhar Chaturvedi, the country''s Secretary of the Ministry of New and Renewable Energy, shared that India adopted a proactive approach by providing incentives and risk-management instruments early on, so that utilities could incorporate renewable sources of energy without suffering economic losses.
These examples serve as a guiding light to other countries, which still lack a reliable pipeline of bankable projects. Challenges include grid integration technical constraints, inadequate regulatory frameworks, and weak procurement and planning capacity. Governments need to pave the way for the private sector by setting ambitious clean energy targets, developing investor-friendly regulations, and bringing in international financial institutions to mitigate risk.
The World Bank Group supports Morocco, India and other countries in developing renewable energy resources cheaper, faster, and better by unlocking a pipeline of bankable renewable energy projects.
In the last few years, the World Bank has invested more than $8 billion in clean energy, renewable energy access, and related infrastructure, and catalyzed over $20 billion in private investments in renewable energy generation capacity. Our financing for distributed renewable energy solutions has been rising, with investments already exceeding $2 billion, most of them in Sub-Saharan Africa.
Weaning the world off fossil fuels may seem daunting in these troubled times, but it will only become costlier the longer it takes. We have the technology and financial tools needed to create a greener world, while also boosting economies and resilience. We must invest in our future now, not later.
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Global Director for the World Bank Energy and Extractives Global Department
Following are UN Secretary-General António Guterres'' remarks to the High‑level Dialogue on Energy, held today:
Welcome to the High‑level Dialogue on Energy. This event is long overdue. It has been 40years since we last discussed energy at the highest level.
Today, we face a moment of truth. Close to 760million people still lack access to electricity. Some 2.6billion people lack access to clean cooking solutions. And how we produce and use energy is the main cause of the climate crisis. Emissions from energy account for about 75percent of total greenhouse gas emissions. So, we have a double imperative – to end energy poverty and to limit climate change.
And we have an answer that will fulfil both imperatives:affordable, renewable and sustainable energy for all. This is the objective of Sustainable Development Goal7 - investing in clean, affordable energy for all will improve the well‑being of billions of people. It can create the green jobs that we urgently need for COVID‑19 recovery. It will advance all the Sustainable Development Goals. And it is the single most important solution to avert climate catastrophe.
We have the tools we need. Solar photovoltaics are now the cheapest power source in most countries. And renewables yield three times more jobs than the fossil fuel sector. Solar and wind are the stars of our energy system. During the COVID‑19 pandemic, they have been the only sources of energy that continued to grow.
But it''s not nearly fast enough. We are still a long way from being able to provide affordable and clean energy for all. In 11sub‑Saharan countries alone, one quarter of health facilities lack access to electricity. Globally, as many as 9out of 10people breathe polluted air, leading to some 8million premature deaths each year. And disasters made worse by climate change are increasing. Access to clean, renewable energy is, quite simply, the difference between life and death.
We must solve these challenges this decade. And we must start today. Without deep and rapid decarbonization of our energy systems over the next 10years, we will never reach the Paris Agreement goal of limiting temperature rise to 1.5°C. This will be fatal to the Sustainable Development Goals, to us all and the planet. Billions of people will be condemned to more poverty and more ill‑health while the ecosystems we all rely on collapse. This is a profound injustice to current and future generations.
But this bleak future is not inevitable. Science has shown us exactly how to avoid it. To limit temperature rise to 1.5°C we must reduce emissions by 45percent below 2010levels by 2030and reach net‑zero emissions by2050.
All countries have a role. Developing nations need to see the promised mobilization of $100billion dollars a year for climate action. And we must ensure 50percent of climate finance is directed towards adaptation and resilience to the climate disruption that is to come.
Today''s meeting presents a historic opportunity. I count on all countries – especially major emitters – to rise to this moment along with the major players from the world of business and finance. I am pleased to see several of the major emitters – countries and sectors – demonstrating leadership through the High‑level Dialogue process along with bold commitments to act.
I see four priorities for a sustainable energy future. First, we must close the energy access gap by2030. That means cutting in half the number of people without access to electricity by2025. And it means providing over 1billion people with access to clean cooking solutions by2025. The cost of closing the energy access gap is modest:around $35billion dollars a year for electricity access and $25billion dollars a year for clean cooking.
Second, we must rapidly shift to decarbonized energy systems. By2030, solar and wind capacity should quadruple to respectively 630and 390gigawatts added annual capacity. And we must intensify our efforts to improve energy efficiency. There must be no new coal plants built after2021. The Organisation for Economic Co‑operation and Development(OECD) countries must commit to phasing out existing coal capacity by2030, with all other countries following suit by2040.
There is no reason for countries or investors to finance new fossil fuel exploration, licensing or production infrastructure. These will become stranded assets. Clean, renewable energy solutions provide the best business opportunities. International cooperation must be dramatically scaled up to catalyse the finance and investment needed to accelerate such energy transitions, especially in developing countries and small island developing States.
Third, to reach universal energy access by2030 and maintain a net‑zero trajectory by mid‑century, we must mobilize predictable finance at scale and promote technology transfer to the developing world. We need to triple investment in renewable energy and energy efficiency to $5trillion dollars a year. And access to finance by developing countries must be simplified, facilitated and expedited.
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