Investment needs for the global energy transformation
The transformation of the global energy system needs to accelerate substantially to meet the objective of the Paris Agreement to limit the rise in average global temperatures to well below 2°C, and ideally to 1.5 °C, by the end of the century, compared to pre-industrial levels. Renewable energy supply, increased electrification of energy services, and energy efficiency can deliver more than 90% of global emission reductions needed in the energy sector.
To advance the global energy transformation investment in renewable energy needs to be scaled up significantly and urgently. In its latest analysis, Global energy transformation: A roadmap to 2050 (2019 edition), IRENA estimates that to put the world on track with the objectives of the Paris Agreement, cumulative investment in renewable energy needs to reach USD 27 trillion in the 2016-2050 period.
In the power sector, the global energy transformation would require investment of nearly USD 22.5 trillion in new renewable installed capacity through 2050. This would imply at least a doubling of annual investments compared to the current levels, from almost USD 310 billion to over USD 660 billion.
Investment needed to implement the renewable energy targets in NDCs
Nationally Determined Contributions (NDCs) constitute a cornerstone of the Paris Agreement on climate change. Most signatories to the Paris climate accords have included renewable energy in their NDCs, recognising that accelerating the energy transition will be key to achieving the climate goals.
In its report, Untapped potential for climate action: Renewable energy in Nationally Determined Contributions, IRENA estimates that around USD 1.7 trillion will be needed between 2015 and 2030 for the implementation of renewable energy targets in NDCs, or on average almost USD 110 billion per year. More than 70% of total investment needed (or USD 1.2 trillion) will have to be mobilised to implement the unconditional targets. A further USD 500 billion will be required in developing countries in the form of international finance to support the conditional targets.