The International Energy Agency (IEA) said that the world needs up to $1 trillion worth of clean energy financing by 2030 to help developing economies meet net-zero emissions targets by 2050.
The funds required are nearly seven times the $150 billion spent on aiding energy transition by emerging and developing economies last year.
Spending on renewables dropped 8 percent last year, according to the Paris-based agency, which expects a recovery in 2021.
An increase in spending is likely to bring major economic and societal benefits but would require “far-reaching efforts” to improve domestic environment for clean energy investment, the agency said in its report “Financing Clean Energy Transitions in Emerging and Developing Economies”.
“In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals,’’ said Fatih Birol, the IEA’s executive director.
“Countries are not starting on this journey from the same place – many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world,” he added.
Carbon dioxide emissions from developing countries in Asia, Africa, and Latin America are expected to grow by 5 billion tons over the next two decades, complicating efforts to reach global carbon neutrality by 2050.
Countries around the world are being urged to abide by the Paris Agreement, which looks to restrict carbon emissions to well below 2°C (35.6°F) above pre-industrial levels, preferably about 1.5°C.
Several countries have adopted a net-zero policy. South Korea and Japan pledged to become carbon neutral last year. The US, the world’s biggest fossil-fuel producer, also plans to reach carbon neutrality.
The IEA said efforts undertaken by financial institutions, donors, and multilateral banks to alleviate climate change-related risk factors were not enough.