World 'way off track' stopping climate catastrophe, rich nations urged to spend more on clean energy

Climate disaster can still be averted if governments, the energy sector and multilateral lenders make significant investments in renewables to push the world's transition away from hydrocarbons, according to policymakers and industry leaders.

Global investments in renewables are currently falling far short of the levels required to curtail carbon emissions and slow the pace of climate change, they warned, despite receiving a boost recently on the back of energy security concerns arising from the war in Ukraine.

Constraining average global temperature to 1.5 degrees Celsius above pre-industrial levels by 2030 would require three-fold growth in renewables, the experts said, and for the production of low-carbon hydrogen - the leading renewable candidate to replace oil, gas and coal in power generation - to more than double.

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"We need to do all this in an accelerated time frame against a fast-approaching deadline," said Sultan Ahmed al-Jaber, the United Arab Emirates' industry minister and president-designate of the COP28 United Nations Climate Control Conference (UNCCC) that will be held later this year.

At the current pace, the world was "playing catch-up" in its efforts to meet carbon emissions reduction goals agreed at the UNCCC in Paris in 2015, al-Jaber said.

To achieve the Paris Agreement goal, global emissions must fall 43 per cent by 2030, he said at the Atlantic Council Global Energy Forum in Abu Dhabi on Saturday, adding that it was evident the world was "way off track".

The tools of climate change mitigation - nuclear, solar, geothermal and wind power; green hydrogen; carbon capture, utilisation and storage; and energy efficiency technologies - needed to be dramatically scaled up, he said.

Al-Jaber noted demand for renewables had skyrocketed. Wind and solar power projects added record growth of 550 gigawatts between 2020 and 2022, and are "on course to grow more over the next five years than over the last 20 combined".

"The market is telling us something here. We are at a turning point in history," he said. "Low-carbon growth is the future, but we must get there much faster."

US special presidential climate envoy John Kerry said the major impediment was that "we're either not trying to do it or we're trying to do it on the cheap, and the result is that we're not doing it".

Developed countries have fallen far short of the US$100 billion a year they committed in 2009 to mobilise in support of carbon emissions curbing projects in developing countries.

"The system is broken in terms of how we're trying to fix this and we need to respond more effectively," Kerry said on Sunday to the Atlantic Council conference.

Only half the US$4 trillion of investment in renewables required by 2030 for countries to meet their carbon net-zero goals by their target dates of 2050 and 2060 is on track to be made, the International Energy Agency (IEA) reported last year.

Investment in the renewables sector surged 21 per cent in 2022 to overtake the oil and gas industry for the first time, Oslo-based business intelligence provider Rystad Energy said.

But in a report published on Friday last week, it estimated that the pace of growth in global spending on low-carbon power generation projects would dip to under 11 per cent year-on-year to US$620 billion in 2023 - largely because of slowing interest in the hydropower sector.

That was because record price inflation across much of the world over the last two years had forced "cost-conscious" developers to "tighten their purse strings", Rystad said, adding that spending was expected to rebound as inflationary pressure weakened.

But accelerated investments remain constrained by a lack of policy alignment by the world's major economies.

Despite being battered by record energy prices after acting to drastically reduce its dependency on Russian gas supplies, the European Union is at odds with the United States over President Joe Biden's decision last year to approve hundreds of billions of dollars in subsidies for renewables projects, because they could put European firms at a commercial disadvantage.

Similarly, there are growing concerns that renewables supply chains could come to be dominated by a handful of countries.

According to the IEA, China accounts for more than half the world's production of refined cobalt and lithium, both key elements in renewables projects.

"I don't know a single business that ever wants to rely on one supplier for all its products, so this is not about who's ahead, the US or China," said Amos Hochstein, US special presidential coordinator for global infrastructure and energy security.

Arifin Tasrif, Indonesia's minister of energy and mineral resources, said critical minerals and their supply chains had become a "bristling issue" that had to be addressed through "global collaboration".

Recent extreme weather events like Pakistan's superfloods in August last year and the "bomb cyclone" that froze the US in December serve as clear reminders that climate change does not discriminate.

Despite this, the hundreds of billions of investments in renewables were increasingly being deployed "only in OECD and developed countries, and not in developing countries and middle-income countries", Hochstein said.

Commodity, currency and reputational risks remain a major barrier to finance for the developing world, he said. "Therefore, the easier dollar is always going to be spent somewhere in the US or in Germany or in Australia, or in Chile, and that's as far down as we go when it comes to the developing and middle-income countries."

Similar risk-based concerns were to blame for the deep reluctance with which rich nations accepted the G77's demands at COP27 in November to begin talks on establishing a loss and damage fund for developing countries suffering the most from climate change.

Al-Jaber called for climate adaptation finance for these countries to be doubled to US$40 billion by 2025 to "ensure that our global food system is resilient to the changing weather patterns that threaten farmers around the world".

To make this happen, "we need to answer the call from the international community for inclusive reform" of multilateral development banks and international financial institutions, he said.

This article originally appeared on the South China Morning Post (SCMP).

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