The Institute for Energy Economics and Financial Analysis (IEEFA) has urged global action at the 29th Conference of Parties (COP29), emphasizing a $400 billion annual investment gap to meet renewable energy targets by 2030. Labelling COP29 as the “climate finance COP,” IEEFA’s new briefing highlights the need for policies incentivizing banks to redirect lending toward renewables.
IEEFA’s report notes a significant rise in global renewable energy investments, increasing by 73%-78% from $329-424 billion in 2019 to $570-735 billion in 2023. However, this figure remains short of the required $1-1.5 trillion annually needed from 2024 to 2030. Vibhuti Garg, IEEFA’s Director for South Asia, remarked that with only six years remaining, the 2030 targets may seem challenging but could be achievable through enhanced cooperation between developed and developing nations and supportive policies.
The report highlights a continuing flow of bank credit to fossil fuels, with $967 billion in 2022 compared to $708 billion for renewables. Shafiqul Alam, Lead Analyst for Bangladesh Energy at IEEFA, suggests that reorienting capital toward renewables could close the investment gap.
IEEFA recommends that banks prioritize renewables in lending practices, provide credit enhancements, integrate climate factors into policies, and adopt mandatory emissions disclosures. Labanya Prakash Jena, IEEFA Consultant on Sustainable Finance, added that governments can help by introducing partial credit risk guarantees to reduce banks’ perceived risks in renewable investments.
Central banks are also encouraged to promote clean energy financing, urging commercial banks to reduce investments in thermal power.