At the 29th Conference of Parties (COP29), the Institute for Energy Economics and Financial Analysis (IEEFA) highlighted a significant funding gap in renewable energy investments.
The organization called for a coordinated global effort to bridge an estimated $400 billion annual investment shortfall to meet renewable energy targets by 2030.
IEEFA’s recent report stresses the importance of policies that push banks to shift their lending priorities toward clean energy projects. Although global investment in renewable energy grew by 73-78%, from $329-424 billion in 2019 to $570-735 billion in 2023, this is still below the $1-1.5 trillion from 2024 to 2030 to meet international goals.
Vibhuti Garg, Director of South Asia at IEEFA, emphasized that only six years remain before closing this gap. She noted that increased cooperation between developed and developing countries and supportive policies at the local level are essential to achieving these targets.
Banks still favor fossil fuels despite growing investments in renewables, allocating $967 billion to fossil fuels in 2022, compared to $708 billion for renewables.
Shafiqul Alam, Lead Analyst for Bangladesh Energy at IEEFA, pointed out that redirecting funds to renewable energy could significantly narrow the funding gap.
The report recommends several measures, including prioritizing renewables in bank lending, offering credit enhancements, integrating climate considerations into financial policies, and enforcing mandatory emissions disclosures.
Labanya Prakash Jena, Consultant in Sustainable Finance at IEEFA, suggested that government-backed credit guarantees could minimize risks and encourage banks to support renewable projects.
IEEFA also urged central banks to use moral conversion to shift commercial banks away from thermal power investments and toward clean energy financing.
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