The International Renewable Energy Agency (IRENA) told participants at the Berlin Energy Transition Dialogue this week that $5.4 trillion a year is needed to support the global transition to renewable energy sources. Kenyan President William Ruto, on the other hand, called for a fair energy partnership between Europe and Africa.
Investment barriers are becoming the biggest obstacle to achieving the world’s 1.5 C climate goal. To achieve this, global investment in the energy transition needs to quadruple to more than €5 trillion ($5.42 trillion).
This is one of IRENA’s main conclusions in the World Energy Transition Outlook, which the agency presented at the Berlin Energy Transition Dialogue this week in Germany.
“Two years ago we said the window of opportunity was closing,” said IRENA director general Francesco La Camera. “Last year we demanded a dramatic change in the way we use energy, and this year we see no reason for optimism.”
In 2022, the share of renewable energy in global electricity distribution exceeded the 80 percent mark.
“But this is the only positive graphic I’m showing,” La Camera said at the opening press conference of the Berlin Energy Transition Dialogue, which is held every year at the German Federal Foreign Office in Berlin to bring together policymakers and renewable energy companies from all over. world.
IRENA said that the current growth rate is not enough to meet the goals of the Paris Agreement. By 2030, the share of fossil fuels must be reduced from 79 percent in 2020 to 60 percent. For this, the annual increase in renewable energy should be tripled.
It is not just about expanding production capacity, but all countries must be involved. A big challenge is to reduce investment inequality. German Foreign Minister Annalena Baerbock also noted such inequality and said that investment interest rates in some countries are sometimes four times higher than in Germany.
“It’s unfair,” said Baerbock, adding that the leading G7 economies have launched a fund at the World Bank for climate investment.
Investments in renewable energy, however, need companies and electricity buyers, not just capital.
“Development must therefore go hand in hand with investments in renewable energy sources,” said La Camera.
Kenyan President William Ruto echoed similar sentiments.
“Unlike Europe, Africa must first increase demand,” Ruto stated, noting that Africa has huge potential in electricity production with renewable energy and a young population, while Europe, on the other hand, cannot meet its energy needs alone.
Baerbock said the world should not repeat the mistakes of the past, when countries were treated as pure raw material suppliers. He noted the example of lithium mining in Chile. Currently, a large amount of global lithium supplies come from Chile. Baerbock noted that 78 percent of production goes to China, which he says is the antithesis of supply chain diversification.
“The decisions we make now will affect hundreds of millions of people over the next 1,000 years,” said German State Secretary Jennifer Morgan.