At a high level panel discussion on “Energy Transition Pathways in Emerging Economies” at the fifteenth session of the International Renewable Energy Agency (IRENA) Assembly in Abu Dhabi, participants said more needs to be done to support renewable financing in emerging economies and IRENA could facilitate a scale up of resources so that the world could achieve the target of tripling renewable energy capacity by 2030.

IRENA’s concept note said that as energy demand in emerging economies is projected to rise significantly during the period to 2050 and in particular in the current decade to 2030, the role of emerging economies is pivotal for the success of the global energy transition that is itself crucial for realizing the Net Zero ambitions.

That is why IRENA has set the target of tripling renewable energy capacity by 2030 while the rate of annual energy efficiency increases must double by 2030, which would require cumulative investment of $31.5 trillion (R597trl) in renewable power, electrical networks, flexibility measures, energy efficiency, and conservation by 2030. The role of emerging economies will be key in achieving the levels of investments in energy transition infrastructure.

While most emerging economies have committed to achieving net zero greenhouse gas emissions, there is a critical need to scale up energy transition investments from both public and private sources in the years to 2030, in other words more needs to be done to support renewable financing in emerging economies

One way of achieving this would be to de-risk and leverage private capital and to offer low-cost long-term capital for energy transition investments and in this respect IRENA and its partner governments could help.

The panel members identified four major points that could help emerging economies access funds to promote renewable energy projects in the transition to a just energy policy.

– The first point is to encourage access to climate and finance clean energy funds such as green bonds to local financial institutions, including in local currencies.

– The second point is to provide technical assistance to local financial institutions and local financial regulators, so that a vibrant local market in green bonds can be established.

– The third point is access concessional finance and grants for early stage feasibility studies that can then be turned into bankable feasibility studies for countries looking to kick start new projects.

– The fourth point is to create policy frameworks such as South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) that creates a level playing field for private sector investors.

As an example of the first point, Ethiopia’s Grand Ethiopian Renaissance Dam (GERD) was financed domestically by issuing low denomination local currency bonds, but this depends on the level of trust in the political leadership and the absence of corruption.

The panel discussed improved coordination through nationally led country platforms, policy reform, and capacity building to unlock private investments in developing nations.

Among the questions addressed by panel members was what were the critical elements of your country’s energy transition strategy to bring down emissions and achieve net zero commitments? Are there any challenges that you encountered in implementation? How are you addressing the need for long-term low-cost capital for your energy transition? How successful have you been in attracting private investments at the required scale? How are you working with forums such as G20, BRICS etc. to drive international cooperation in energy transition, what works well in this regard, and in which respects could collaboration be enhanced? Do you expect geopolitical developments, including trade disruptions, to affect the pace and nature of the energy transition?

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