Emmanuel Addeh in Abuja
A green future will remain out of reach if the world doesn’t help developing countries close a $4 trillion gap in investment towards an energy transition, the UN Conference on Trade and Development (UNCTAD), has warned.
UNCTAD Secretary General, Rebeca Grynspan, said in a report that said that a “significant increase” in material support for renewable energy in developing countries is “crucial” for the world to reach its climate goals by 2030.
While investment in renewables has nearly tripled since the adoption of the Paris Agreement almost eight years ago, poorer nations have been largely left out.
Grynspan said that more than 30 developing countries have not registered a single international investment in utility-size renewable energy generation since the landmark climate change treaty was adopted in 2015.
According to UNCTAD, the amount of foreign direct investment in clean energy attracted by developing countries in 2022 stood at $544 billion – well below needs.
Some good news from the report is that energy companies among the top 100 multinationals have been increasingly turning towards renewables and divesting fossil fuel assets at a rate of about $15 billion per year.
However, the report also shows an overall slower pace of investment in renewable energy in 2022, “as international project finance deals declined”.
In developing countries, the largest gaps in Sustainable Development Goal (SDGs)-related investments were in energy, water and transport infrastructure, UNCTAD said.
Foreign direct investment (FDI) is also on the decline, according to UNCTAD, as global flows fell by 22 per cent in 2022, to $1.3 trillion. In Least Developed Countries, the vast majority of which are in Africa, FDI inflows dropped by as much as 16 per cent.
UNCTAD’s report says that the slowdown was driven by “overlapping crises”: the war in Ukraine, high food and energy prices and debt pressures.
With these factors still in play during 2023, the agency said that it expects “downward pressure on global FDI” to continue this year.
