Report highlights 2 Egyptian projects among major clean energy ventures in N.Africa
A report by Energy Capital & Power highlighted two Egyptian projects – Suez Wind Power ...
Report: Annual SDG investment gap in developing states widened from $2.5 to $4 trln
The World Investment Report 2023 said the annual SDG investment gap in developing countries has widened from $2.5 trillion in 2015 to an alarming $4 trillion The increase stems from both inadequate investment and additional needs.
Developing countries’ energy investment needs, estimated at $2.2 per year – make up more than half the gap. This refers to investment in energy generation, energy efficiency and low-carbon transition technologies and sources. Large gaps also exist for water and transport infrastructure, according to the report issued by the United Nations Conference on Trade and Development (UNCTAD) in July.
The widening SDG investment gap in developing countries stands in contrast to positive trends observed in sustainable investment in global capital markets. The sustainable finance market grew 10% to $5.8 trillion in 2022.
Although renewable energy investments have nearly tripled since the adoption of the Paris Agreement in 2015, most of the money has gone to developing countries.
While developing countries need about $1.7 trillion each year in renewable energy investments – including for power grids, transmission lines and storage – they only attracted about $544 billion in 2022.
The report shows that more than 30 developing countries still haven’t registered a large international investment project in renewables.
The value of the sustainable finance market – which includes bonds, funds and voluntary carbon markets – grew more than 10% to $5.8 trillion in 2022, despite a turbulent economic environment of high inflation, rising interest rates and the looming risk of a recession.
Notably, sustainable bond issuance has grown fivefold over the past five years. The sustainable bond market was worth $3.3 trillion in 2022.
In 2022, the top 100 sovereign wealth and public pension funds monitored by UNCTAD improved their disclosure of climate actions, including investment in sustainable energy and divestment from fossil fuels. Also, two thirds of reporting funds have committed to achieving net zero in their investment portfolios by 2050.
The report highlights that institutional investors, pension funds and sovereign wealth funds are ideally placed to help finance clean energy in developing countries.
But they often lack access to investment opportunities in developing countries because they are prevented from financing non-investment-grade projects.
Also, while sustainable funds outperform their conventional peers on environmental, social and governance criteria, greenwashing remains a challenge. At least a quarter of funds fail to live up to their sustainability credentials.
Enhancing exposure to developing countries and addressing concerns surrounding greenwashing are key priorities for the sustainable finance market.
The report proposes a Global Action Compact for Investment in Sustainable Energy for All. It contains a set of guiding principles covering the three objectives of the energy transition – meeting climate goals, providing affordable energy for all and ensuring energy security.
It puts forward six action packages covering national and international investment policymaking; global, regional and South–South partnerships and cooperation; financing mechanisms and tools; and sustainable finance markets.
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