An "alarming shortage" of clean energy and low carbon infrastructure projects in developing countries and emerging markets poses a major threat to meeting the global climate goals contained in the Paris Agreement, fresh research has warned.
Delivering on global climate finance goals requires a 30 percent increase in the number of low carbon projects that can attract private investment in developing nations by the end of the decade, yet the study warns the number of such projects is actually shrinking, with an average 10 percent reduction annually since 2015.
The research, published last week by the Tony Blair Institute for Global Change, highlights a significant shortfall in the number of investable low carbon projects in developing and emerging nations, which it estimates would need to increase seven-fold annually to meet climate finance goals.
It points to weak renewable energy markets in many developing economies, with data suggesting the size of wind, solar and other clean energy pipelines has been contracting overall in recent years, with growth concentrated in a handful of leading emerging economies.
Brazil, India and South Africa are collectively home to almost half all renewable energy projects that receive private investment in emerging and developing countries worldwide, according to the research.
Emerging and developing nations only receive around $85 billion to $114 billion from international sources of private investment.
The situation facing developing nations contrasts sharply with trends among Organization for Economic Development and Cooperation (OECD) economies. While investment in renewables projects in the former has fallen at an average annual rate of 11 percent, with the size of project pipelines following the same trend, it is rising by four percent annually in OECD nations, the research estimates.
As such, the authors warn that unless far more financing for green infrastructure projects is targeted towards emerging and developing nations, both richer nations' climate finance goals, as well as the broader global net zero transition, are at risk of failure.
"Climate finance is key to turning commitments to climate targets into reality in a way that enables a just transition to net zero and recognizes the unique needs of emerging markets and developing countries," the report states. "But there is a substantial shortfall in the investment needed to fund this transition, and what is available is often not aligned to deliver to the sectors and countries that need it most."
Climate finance is again set to be a major issue of contention at the upcoming COP28 UN climate talks, which kick off at the end of this month in Dubai, with richer nations having to date failed to deliver on their $100 billion a year collective commitment.
There is an urgent need to secure more private sector investment and climate finance in developing and emerging countries.
Countries are also struggling to reach agreement over the establishment of a new Loss and Damage fund to support countries already facing the worst impacts of the climate crisis, and unless common ground can be found there are fears it could lead to climate talks collapsing altogether at COP28. A draft agreement was brokered over the weekend following a series of fraught negotiations, but poorer nations remain hugely frustrated over the failure of industrialized nations to come forward with a firmer commitment to supporting the new fund. Meanwhile, industrialized nations have expressed anger at the failure of the largest emerging economies to commit to paying into the new fund, with one diplomat reportedly noting that if Saudi Arabia can afford to pay millions of dollars a month to footballer Cristiano Ronaldo, it can afford to support the Loss and Damage Fund.
The broad view among diplomatic observers is that securing an ambitious outcome in the final COP28 text on mitigation — such as an agreed phase out deadline for fossil fuels — will also require richer nations to make good on climate finance commitments and ensure the establishment of a robust Loss and Damage Fund.
But as last week's paper from the Tony Blair Institute also demonstrates, there is an urgent need to secure more private sector investment and climate finance in developing and emerging countries, as well as the capacity and skills base required to deliver investable infrastructure projects, if the world is to stand a chance of limiting average temperature rise to 1.5 degrees Celsuis or well below 2 Celsius.
Altogether, it estimates the required global annual climate spend from the public sector, international finance institutions and private sources combined ranges from $45 trillion to $69 trillion, which it notes is around seven to 11 times larger than the curr
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