IEA report commends India’s success in green-power financing

The world needs $4 trillion more in investment to achieve the 1.5°C target set by IEA

India’s success in financing clean-energy projects has been commended in the International Energy Agency report.

The world needs $4 trillion more in investment to achieve the 1.5°C target set by IEA, that is, to keep the temperature rise within 1.5°C. But finance to deploy clean-energy projects is hard to come by, especially in developing countries.

In this context, the report has quoted India’s track record.

“There have been some notable examples of developing economies mobilising capital for clean energy projects, such as India’s success in financing a rapid expansion of solar PV in pursuit of its 450 GW target for renewables by 2030,” it read.

This is despite the challenges that the pandemic has made worse. “Funds (in developing economies) to support sustainable economic recovery are scarce and capital remains up to seven-times more expensive than in advanced economies,” the report read.

IEA’s India outlook report, released this February, had noted that a momentum in the power sector was being driven by investment in renewables. “Utility‐scale solar PV and wind have led this growth,  underpinned by supportive  policies, competitive  auctions, improved  economics  and  a  maturing industry,” it had said.

It had also stated that investments in renewable power had surpassed those in coal-powered plants for the fifth year in a row. “Spending on coal power has moderated in recent years, though it remains above $10 billion a year… a stark decline  in  final  investment decisions  for new  plants since 2016, as well  as more  constrained  bank  lending,  points to  much lower investment levels in the years ahead,” it had said.

In its latest report, released on October 14, IEA suggested that international development banks and advanced economies step in to help developing economies to meet shortage of funds, especially for investments in the transition phase.

“Alongside the necessary policy and regulatory reforms, public financial institutions – led by international development banks and larger climate finance commitments from advanced economies – play crucial roles to bring forward investment in areas where private players do not yet see the right balance of risk and reward,” the report said.

Emerging and developing markets will need 70% of the additional money needed for the world to reach its final net-zero emission (NZE) target, which is a level up from what the countries have pledged to do.