GENEVA: The United Nations (UN) has called for significant investment in clean energy in developing countries, highlighting that without such action, achieving global climate goals by 2030 would remain an elusive target. The UN’s trade and development agency, UNCTAD, stated that developing countries require approximately $1.7 trillion in annual renewable energy investments. However, in 2022, they only attracted $544 billion in foreign direct investment in clean energy.
UN Secretary-General Antonio Guterres emphasized the need for substantial private sector investment in renewable energy in developing countries, stating, “We cannot fulfill the world’s energy needs and safeguard our planet and our future without huge private sector investment in renewables in developing states. While the transition to clean energy is a global priority, energy infrastructure and efficiency investments still remain far short of what is needed. We are at least ten years late in combatting global warming.”
UNCTAD’s annual World Investment Report highlighted that international investment in renewable energy nearly tripled since the signing of the Paris climate accord in 2015. However, the majority of this growth occurred in developed nations. The report revealed that 31 developing countries, including 11 least developed countries, have yet to register a single utility-sized international investment project in renewables or other energy transition sectors.
Challenges to Achieve Climate Goals by 2030
“The scale of the challenge is very huge,” UNCTAD chief Rebeca Grynspan said. “A significant increase in investment in sustainable energy infrastructures in developing countries is needed for the world to reach climate goals by the year 2030.” The agency also asked for debt relief to provide fiscal space for developing countries to invest in clean energy transitions.
The report further emphasized that global fossil fuel subsidies reached a record $1 trillion in 2022, which is eight times the value of subsidies provided to renewable energy. UNCTAD highlighted that these subsidies create a disincentive for investment in the energy transition, hindering the competitiveness of renewable energy. While acknowledging the complexity of phasing out fossil fuel subsidies, especially for developing countries, the report emphasized that doing so would encourage investment in renewable energy.
UNCTAD’s report also noted a decline in overall global foreign direct investment (FDI) by 12% in 2022, amounting to $1.3 trillion. The decrease was attributed to factors such as the war in Ukraine, high food and energy prices, and debt pressures. FDI in developing countries, however, increased by four percent to $916 billion, representing over 70% of global flows.
Despite this growth, FDI in smaller developing countries remains stagnant and flows to the least-developed countries fell by 16% from an already low base, according to Rebeca Grynspan. The top ten host economies for FDI inflows in the year 2022 were the United States (US), China, Singapore, Brazil, Australia, Canada, India, France, Hong Kong, and Sweden.
