A $33 trillion financing gap stands between the world and its goal of limiting energy-related emissions enough to keep global temperature rise to no more than 1.5°C by 2050. However, if we make the right choices, cooperate and act now, we can avoid the worst effects of an overheated planet and create a more resilient and prosperous world.
Following COP26, where world leaders came together to make commitments to safeguard our climate and stimulate global economies, it is now crucial to ensure that concrete steps are taken to increase the pace of meeting these goals. So how can this accelerated timetable – and additional investment – be achieved?
Here are the five key energy choices world leaders must make now.
Invest in the future of energy
Aunque existe un amplio consenso en que el gasto en infraestructuras sostenibles es crucial para reconstruir la economía mundial tras la pandemia del COVID-19, los planes existentes están muy por debajo de las cantidades necesarias para la transición energética.
El análisis de IRENA demuestra que se necesitan 131 billones de dólares de inversión de aquí a 2050, 33 billones más de gasto en energía que los comprometidos actualmente. Pero gran parte de los 98 billones de dólares previstos requiere una reasignación, ya que sólo una parte se destina actualmente a las energías renovables, lo que aumenta el riesgo de activos bloqueados y pone en peligro los objetivos climáticos.
Para lograr la neutralidad del carbono en 2050, sólo las inversiones en energías renovables deben triplicarse, pasando de una media de 300.000 millones de dólares anuales a más de 800.000 millones. El gasto relacionado con los combustibles fósiles, incluso en medio de una crisis energética, debe reducirse.
Focus on the benefits, not the costs
Beyond the climate imperative, there are strong incentives to direct investment towards the energy transition. According to IRENA, for every additional dollar invested in the transition, the global economy earns a return of between $2 and $5.5. Every $1 million spent on the transition creates three times as many jobs as the same amount invested in fossil fuels. By 2050, the total number of jobs in the energy sector would increase significantly, from 60 million today to around 120 million. But the benefits are not limited to the long term. The investment may be front-loaded, but so is the return.
There are also important secondary benefits. Renewable energy technologies now dominate the global market for new electricity generation capacity, as they have become the cheapest sources of electricity in many markets. And 80% of the world’s population lives in countries that are net energy importers. In most cases, moving towards a renewables-based electricity system means harnessing domestic renewable sources, which provides vital security of energy supply, insulating households and businesses from volatile fuel prices.
Harness existing technologies
o reach the 1.5º target, most of the emissions reductions will come from three pillars: the transition to renewable energy, electrification of end uses such as vehicles and heating, and reduction of energy intensity.
Most of the technologies needed to achieve these goals already exist. Mature technologies, such as AI optimization, electric vehicles, solar panels and wind turbines, simply need faster and broader deployment.
Others, such as green hydrogen, need further innovation to reduce costs and will provide a critical opportunity to decarbonize more difficult sectors such as shipping, aviation and industry.
In any case, the right support can significantly accelerate the timeline. Solutions are available and operational in countries, cities and communities around the world. They just need to be scaled up.
Forge meaningful partnerships for an inclusive transition
Intergovernmental and cross-sectoral partnerships are achieving carbon neutrality targets globally. While public policy and investment are essential to drive the market, much of the implementation work will fall to the private sector.
Without substantial international cooperation, the energy transition also risks being uneven. For example, where green hydrogen is more advanced in places like China and the EU, zero-emission transport could be achieved more quickly than in countries with less advanced hydrogen capabilities.
Initiatives such as the Climate Investment Platform (CIP)-announced in 2019 by the United Nations Development Programme (UNDP), IRENA, Sustainable Energy for All (SEforALL) and the Green Climate Fund (GCF), and IRENA’s work with the Abu Dhabi Fund for Development-are therefore critical to redirect climate capital to promising, investment-ready initiatives in developing countries to support an inclusive, just and equitable transition.
Be a leader, act now
We are running out of time to safeguard the future of humanity. The first step to avoid the worst effects of climate change is to reduce emissions to just 45% of 2010 levels by 2030. Current plans are projected to fall far short of this target.
The implications are clear. Immediate action is needed. While any agreement at COP26 will be welcome, it must be followed quickly by concrete policy implementation and financing.
The technology is already available. The roadmap is clear. Agencies like IRENA can connect the dots between countries, sectors and organizations to unlock barriers and establish practical, national pathways. Ultimately, the transition leads to greater prosperity, not less. The world is not waiting for solutions. It is waiting for leadership.
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