IRENA reports underscore critical role of energy planning in unlocking investment opportunities in emerging markets and developing economies; recommend de-risking and public finance leverage to scale investment

Abu Dhabi, United Arab Emirates / Foz do Iguaçu, Brazil, 2 October 2024 Current global investment not only suffers from significant disparities between advanced economies and emerging markets and developing economies but also with group of EMDEs, new IRENA reports commissioned by Brazil’s G20 presidency find.

To propel a just and inclusive transition in the Global South, investment challenges must be addressed through risk mitigation instruments and a strong leveraging of public resources. Effective national energy planning is one of the key enablers that helps to reduce overall risks and uncertainties, as to IRENA.

In many developing countries, cost-effective renewables offer greater social justice in the form of jobs and economic growth and help address deficits in access to electricity and clean cooking technologies. A just and inclusive energy transition in the emerging markets and developing economies: Energy planning, financing, sustainable fuels and social dimensions, highlights the significant role of G20 in scaling investments to meet the growing energy demand with renewables and fully harness their social dividend.

Development banks and energy planning: Attracting private investment for the energy transition; The case of Brazil, jointly done with the Brazilian Development Bank, showcases how energy planning can unlock investment. And Energy Planning Programme Highlights: Global collaboration and capacity building support presents IRENA’s programmes to leverage global efforts by G20 in enhancing effective national energy planning worldwide.

Global transition-related investments exceeded USD 2 trillion for the first time in 2023. But current patterns of investment are skewed, with most financing going to advanced economies and a handful of large EMDEs such as China, India and Brazil. The rest of the world received just 10% of global investments in 2023.

Often, investment gaps are the result of risks like political instability, grid integration problems, regulatory barriers, unreliable off-taker arrangements, currency volatility and a shortage of skilled workers. They can drive the cost of capital, limit financial flows and hamper socioeconomic development eventually.

A strong national energy planning enables national institutions to collaborate effectively with international financial institutions (IFIs), particularly in the areas of sectoral derisking, blended finance and green bonds. As demonstrated by Brazil’s success, such framework offers promising options for attracting private capital.