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$4 Trillion Funding Gap for Global South Keeping Green Transition Out of Reach: UN
"A green transition will remain out of reach if the world doesn't help developing countries attract more investment in clean energy."
Jul 05, 2023
Wealthier nations must do much more—including implementing debt relief—to bridge a $4 trillion annual gap in funding needed to meet the United Nations' sustainable development goals, the world body's agency in charge of promoting Global South trade interests said in a report published on Wednesday.
In its annual World Investment Report, the United Nations Conference on Trade and Development (UNCTAD) calls for "urgent support to developing countries to enable them to attract significantly more investment for their transition to clean energy."
"Developing countries need renewable energy investments of about $1.7 trillion annually but attracted foreign direct investment in clean energy worth only $544 billion in 2022," the report states. "Developing countries face an investment gap of $2 trillion annually for the energy transition, out of a $4 trillion annual funding gap for the sustainable development goals."
"Debt relief is urgent to give developing countries fiscal space to make the necessary investments for a clean energy transition and to attract international private investment by lowering country risk ratings," UNCTAD added.
The U.N.'s sustainable development goals (SDGs) form the core of the 2030 Agenda for Sustainable Development, which was adopted by all U.N. member states in 2015. The 17 sweeping goals include eradicating poverty and hunger, achieving gender equality, boosting education and public health, and taking urgent action on climate change.
The UNCTAD report showed that international investment in renewable energy production, including solar and wind, grew 8% in 2022, down from 50% growth reported in 2021, while battery manufacturing tripled to more than $100 billion last year.
"We are at least a decade late in our efforts to combat global warming," warned U.N. Secretary-General António Guterres in the report's introduction.
"Investments in energy infrastructure and efficiency still fall far short of what is needed."
"Investment in renewable energy in developing countries is therefore essential and often the most economical way to bridge the energy gap," the U.N. chief added. "But while the transition to renewable energy is a global priority, investments in energy infrastructure and efficiency still fall far short of what is needed."
UNCTAD Secretary-General Rebeca Grynspan said that "the scale of the challenge is enormous."
"So is the range of actions needed to boost investment in sustainable energy in developing countries," she added.
"The growth of green finance in global capital markets, with sustainable bonds growing fivefold in five years, shows that the appetite among private investors to fund climate change mitigation is there," Grynspan asserted. "The task is now to channel those funds to where they are most needed to support the transition and to provide affordable access to electricity for all."
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