Global investments in renewable energy must quadruple in order to stay in line with commitments made under the Paris climate accord.
This news is according to a report published on Tuesday by the International Renewable Energy Agency (IRENA).
According to Reuters, while investments in renewable energies reached a record $1.3 trillion last year, that figure must rise to around $5 Trillion annually to even come close to meeting the key Paris accord target of limiting temperature increases to 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial levels, says IRENA.
In total, the world needs around $35 trillion for transition technology by 2030, including improving efficiency, electrification, grid expansion, and flexibility, IRENA said.
“We are off track,” Francesco La Camera, director general of IRENA, told CNBC’s “Squawk Box Europe” on Tuesday. LaCamera said that renewable energy deployment must grow from around 3,000 gigawatts annually today to over 10,000 GW in 2030.
The agency also noted that deployment is limited to certain parts of the world, with China, the EU, and the U.S. accounting for two-thirds of all additions in 2022, leaving low-income nations further behind.
With the relentless increase in global greenhouse gas emissions, the U.N.’s Intergovernmental Panel on Climate Change (IPCC) said earlier this month that the unprecedented challenge of keeping global warming to 1.5 degrees Celsius had become even greater.
“The process we are assisting on is unstoppable. So, we are moving to a new energy system that will be largely dominated by renewables, complimented by hydrogen — mainly green hydrogen — and the sustainable use of biomass,” La Camera told CNBC.
“In the medium to long term, this will happen, so the question is not where we are going,” he added. “It is important to understand that the most important variable is time.”
IRENA warning on stranded assets
To be sure, notes CNBC, the burning of fossil fuels such as coal, oil, and gas, is the chief driver of the climate crisis. And big Oil raked in record profits last year, as fossil fuel prices soared following Russia’s full-scale invasion of Ukraine.
In the meantime, Saudi Arabia’s state-controlled oil giant Aramco on Sunday announced plans to build a $10 billion refining and petrochemical complex in northeast China over the next three years, saying the company is seeking to support Beijing’s growing demand across fuel and chemical products.
Asked about companies choosing to invest in the traditional oil and gas sector, and whether this equates to a lost investment in renewables, La Camera replied, “There is no doubt that from our point of view, this is not the right direction. It will produce stranded assets.”
The bottom line is that all these companies hanging on to fossil fuel assets have been warned for years about the likelihood of ending up with stranded assets. And we are talking about billions of dollars.
Half the world’s fossil fuel assets could be worthless by 2036 as the world moves towards net-zero emissions, according to research from the University of Exeter. The report said producing more oil and gas than required could leave $11 trillion to $14 trillion in stranded assets.
