Some developing countries are lighting up with solar power

It is widely acknowledged that investments in energy efficiency and renewable energy, from both governments and the private sector, will be required for the transition to a sustainable energy future in order to achieve climate goals and the UN global goal of access to affordable and clean energy by 2030.

In its 2018 World Energy Investment Report, the International Energy Agency (IEA) examine global investment trends and report a drop for the third consecutive year. In 2017, investments have seen a 2% decline to USD 1.8 trillion. A joint report from the United Nations Environment Program (UNEP) and Bloomberg New Energy Finance that examines renewable energy investment trends, reported only 12% of global power in 2017 coming from clean energy sources. But when we look closer at the data, it isn’t all bad news.

While global net investments are down, investments in emerging markets are increasing at a significant pace. In fact, according to the UNEP report, across Latin America, Africa and Southwest Asia, renewable investments are on the rise. In 2017, China was the leader in renewable energy investments, representing 45% of the global share. Investments in renewable energy in India also surpassed that of fossil fuels last year. Falling costs of renewable energy, especially solar, have a big role in these results.

“The extraordinary surge in solar investment, around the world, shows how much can be achieved when we commit to growth without harming the environment,” said Head of UN Environment Erik Solheim. “By investing in renewables, countries can power new communities, improving the lives and livelihoods of the people who live in them, and at the same time cleaning up the air they breathe.”

Energy efficiency investments stayed relatively neutral globally, even having a bump in Europe in 2017. In private investments, government also plays a critical role here, specifically through energy performance standards, which stimulate the market and thereby attract investors.

Both reports make a clear call for a boost in investment in the energy sector, specifically in energy efficiency, renewable energy and electrification. Private capital and new models to attract it will be required to ensure that the shift happens fast enough. Governments will also need to make more favourable conditions and improved policy frameworks to allow for these investments.

Referring to the study findings, IEA Executive Director Fatih Birol commented: “The decline in global investment for renewables and energy efficiency combined could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.”