‘$2tn a year sounds like a cost, but it’s really a choice. We’re set to invest over $6tn in fossil fuels over this decade – more than enough to close the tripling investment gap. Faced with this choice, I’d go with the safest, best value option – renewables,’ says the report’s lead author Dr Neil Grant.

The study calculates how fast different regions need to act to triple global renewables based on current capacities and future needs. It finds that renewable capacity in sub-Saharan Africa needs to scale rapidly by a factor of seven relative to 2022 (double the global average). The region is forecast to add 300 GW but will need an extra 260 GW of capacity additions by 2030, due to historic underinvestment and energy access needs.  

Meanwhile, the OECD is forecast to double its renewables to 4.3 TW, but it needs to triple, adding an extra 2.9 TW. Accelerating action in line with this would close 60% of the 2 TW global gap between forecast capacity in 2030 and the tripling goal.

‘The OECD needs to triple renewables but is currently way off target. Countries in the region claiming to be climate leaders need to walk the talk, not just by ramping up renewables at home, but by coming through for other regions which need finance to contribute to the tripling goal,’ says Claire Fyson, co-author on the report and Head of Policy, Climate Analytics.

Asia needs to scale slightly faster than the OECD, almost quadrupling its renewable capacity by the end of the decade by adding 3.9 TW on top of the forecast 5.3 TW or 47% of the capacity additions needed globally by 2030. In terms of renewables growth from 2014–2022, Asia is the only region broadly on course for the tripling goal, driven mostly by policies in China and India. However, the significant coal and gas pipelines in these countries risk creating stranded assets or slowing the transition. ‘As renewables are set to grow strongly in the region, new fossil fuel plants are not needed and should be avoided’, the study warns.  

Tripling renewables by 2030 is not the end of the story – the report finds renewables need to continue growing strongly beyond the end of the decade, scaling up five times by 2035 relative to 2022, to limit warming to 1.5°C. As governments start to develop their 2035 targets for the next round of Nationally Determined Contributions (NDCs), they should consider how to follow through on the tripling ambition collectively agreed at COP28 in Dubai.

Green finance hole

Meanwhile, new research by the Institute for Climate Economics (I4CE) has identified an annual investment gap of €406bn that must be filled if the European Union’s (EU) 2030 climate goals are to be met. At least €813bn will be needed annually across 22 sectors of the economy in order to meet the decarbonisation target.

‘As real-economy investments reached €407bn in 2022, this leaves a European climate investment deficit of €406bn per year, or 2.6% GDP,’ the report states, adding that investments ‘must still double for the EU to hit 2030 climate targets’.

In other words, current levels of public and private investments represent half of total investments needed every year to deliver on the EU 2030 targets for the energy, buildings and transport sectors. Yet doubling those investments is essential to deliver the economic, geopolitical and climate benefits EU policy makers are committed to.

The research finds that in only two sectors, hydropower and battery storage, were 2022 climate investments higher than the annual investment needs. All other sectors suffer from a climate investment deficit, of varying proportions. For instance, 2022 investments in wind power represent only 17% of total annual investment needs. Conversely, investments in solar panels represent 78% of total annual investment needs, according to the report.  

Closing the green investment gap will require ‘a comprehensive approach’ involving regulations, carbon pricing policies, and ‘some additional EU public funding’, the I4CE says.