1、Scaling up Private Finance for Clean Energy in Emerging and Developing EconomiesThe IEA examines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side management and much more.T

2、hrough its work,the IEA advocates policies that will enhance the reliability,affordability and sustainability of energy in its 31 member countries,11 association countries and beyond.IEA member countries:Australia Austria Belgium CanadaCzech Republic Denmark Estonia Finland France Germany Greece Hun

3、gary Ireland ItalyJapanKorea Lithuania Luxembourg Mexico Netherlands IEA association countries:INTERNATIONAL ENERGYAGENCYArgentinaBrazilChinaEgyptIndiaIndonesiaMoroccoSingaporeSouth AfricaThailandUkrainePlease note that this publication is subject to specific restrictions that limit its use and dist

4、ribution.The terms and conditions are available online at www.iea.org/t&c/This publication and any map included herein are without prejudice to the status of or sovereignty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territory,city or area.

5、Source:IEA.International Energy Agency Website:www.iea.orgNorway Poland Portugal Slovak Republic Spain Sweden Switzerland Republic of Trkiye United Kingdom United StatesThe European Commission also participates in the work of the IEAINTERNATIONAL FINANCE CORPORATIONInternational Finance Corporation(

6、IFC)a member of the World Bank Group is the largest global development institution focused on the private sector in emerging markets.It works in more than 100 countries,using its capital,expertise,and influence to create markets,and opportunities in developing countries.Foreword 3 Foreword IEA-IFC.C

7、C BY 4.0.A major build-out of clean energy and infrastructure is essential for emerging and developing economies to meet their growing demand for energy in a sustainable way.This is a huge opportunity for growth and employment,but too little clean energy investment is taking place in the vast majori

8、ty of these economies,as they struggle with indebtedness,food and energy insecurity,high cost of capital,and increasingly visible effects of climate change.Actions by all stakeholders governments,high-income countries,development finance institutions and private investors are needed to mobilise capi

9、tal for rapid clean energy transitions while expanding access to electricity and clean cooking fuels.To support international efforts in this process,the IEA and the IFC have joined forces to quantify the investments required to build modern,clean energy systems and identify the policy actions and f

10、inancial instruments that can deliver a major acceleration in private capital flows for the energy transition.This research also provides estimates of the quantity of concessional blended finance for the private sector that may be needed,supported by real-world case studies and insights.Urgent actio

11、n is needed,so we are pleased to be launching this report at the Paris Summit for a New Global Financing Pact,which aims to deliver concrete commitments and actions to scale up private finance for the clean energy transition.These actions must include steps to build a strong pipeline of investable p

12、rojects,put in place the relevant financial instruments and regulatory policies to mobilise private investment,and make greater use of concessional finance to enable more clean energy projects.The IEA and the IFC are committed to working with governments and the private sector to scale up climate fi

13、nance,drawing on our knowledge and track record of mobilising capital in support of development outcomes.We are thankful to the joint IEA-IFC team that has produced this report and look forward to decision-makers globally coming together around the measures outlined in the report.Fatih Birol Executi

14、ve Director International Energy Agency Makhtar Diop Managing Director International Finance Corporation Acknowledgements 5 Acknowledgements IEA-IFC.CC BY 4.0.This report was prepared by the International Energy Agency(IEA)and the International Finance Corporation(IFC).Within the IEA,the work was le

15、d by Tim Gould,Chief Energy Economist.He was supported by Jonathan Coppel,Head of the Energy Investment Unit(EIU)and Cecilia Tam,Senior Investment Analyst(EIU).Within the IFC,the work was led by Susan Lund,Vice President for Economics and Private Sector Development,and benefitted from guidance by Ro

16、umeen Islam,Senior Economic Advisor to the Managing Director.They were supported by Denis Medvedev,Director Economic Policy Research.The team of IEA authors involved Jonathan Coppel,who contributed to and co-ordinated Chapters 1 and 2.Siddharth Singh contributed analytical inputs to chapters 1 and 2

17、,and led the end use section in chapter 3.Simon Bennett contributed analytical inputs to chapter 1.Tanguy de Bienassis led the analysis on scaling up clean energy investment,Paul Grimal led the section on public and private finance for investment,and David Fischer led the section on universal energy

18、 access in chapter 2.Cecilia Tam led and coordinated Chapter 3.Ryszard Pospiech co-ordinated modelling and data across sectors.Musa Erdogan provided analytical insights to chapters 1 and 2 and data visualisation.France DAgrain,Marco Iarocci and Alana Rawlins Bilbao provided cross-cutting support.Ele

19、ni Tsoukala provided essential administrative support.The team of IFC authors involved Izak Atiyas,Tonci Bakovic,Yasser Charafi,Marcio Cruz,Francesca de Nicola,Mark Dutz,Claudio Frischtak,Elsa Le Borgne,Florian Moelders,and Alessandra Salgado for chapters 1 and 3.Jeffrey David Anderson,Cesaire Meh,K

20、ruskaia Sierra-Escalante,and Sunhye Park were the lead authors for chapter 4,with contributions from Natalia Bailey,Tonci Bakovic,Sabrina Borlini,Scott Bradley Brown,Yasser Charafi,Keshav Gaur,Pranab Ghosh,Julia Graf,Kevin Kime,Michael Kurdyla,Meera Narayanaswamy,Leo Nikitas Holtz,Francesca de Nicol

21、a,Basak Odemis,Don Purka,Alexandros Ragoussis,Friedemann Roy,Chris Richards,Jessica Anne Stallings,and Imtiaz Ul Haq for chapter 4.Elcin Akcura(World Bank)contributed with policy recommendations.Christopher Vellacott edited chapter 4,and Adama Badji,Irina Gnezdilova,and Gleice Zanettin De Marrocos p

22、rovided essential administrative and logistical support.Valuable contributions were provided by colleagues within the IEA and the IFC.From the IEA,these included Yasmina Abdelilah,Lucila Arboleya Sarazola,Piotr Bojek,Laura Cozzi,Trevor Criswell,Dan Dorner,Rebecca Gaghen,Pablo Hevia-Koch,Luca Lo Re,J

23、eremy Moorhouse,Toru Muta,Faidon Papadimoulis,Brendan Reidenbach,Vida Rozite,Gianluca Tonolo,Gerhard Wagner,and Mary Warlick.From the IFC,they included Aurelien Boyer and Aisha Elaine Williams.Thanks also to Jad Mouawad,Head of Communications and Digital Office(CDO),and to CDO colleagues Poeli Bojor

24、quez,Curtis Brainard,Astrid Dumond,Oliver Joy,Jethro Mullen,Isabelle Nonain-Semelin and Therese Walsh.Justin French-Brooks edited the manuscript and Charner Ramsey designed the cover.6 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs The IFC communications team included Steven Shalita,An

25、ne Senges,Anne Elvire Esmel,Nadya Saber,and Monica De Leon.World Bank Group Global Corporate Solutions provided translation services.The report benefitted from the guidance and feedback from a High Level Advisory Panel(HLAP),which convened to review the reports planned design and key conclusions and

26、 messages.The HLAP members are:Mark Carney UN Special Envoy on Climate Action and Finance Anne Finucane Chair,Rubicon Carbon and former Vice Chair,Bank of America,and Chairman of the Board,Bank of America Europe Masamichi Kono Senior Advisor,MUFG Bank,and Member of Global Advisory Board,Mitsubishi U

27、FJ Financial Group Ajay Mathur Director General,International Solar Alliance Amlie de Montchalin Permanent Representative of France to the OECD Vera Songwe Chair of the Liquidity and Sustainability Facility and former Executive Secretary,United Nations Economic Commission for Africa Nicholas Stern I

28、G Patel Professor of Economics and Government,London School of Economics Many other experts from inside and outside of the IEA and IFC served as advisors to the report,peer reviewed it,and commented on the underlying analytical work.Their comments and suggestions were of great value.They include:Man

29、uel Baritaud European Investment Bank Tom Bui Global Affairs Canada Alice Carr Glasgow Financial Alliance for Net Zero Rebecca Collyer European Climate Foundation Issa Faye International Finance Corporation Bertrand Heysch de la Borde International Finance Corporation Harald Hirschhofer The Currency

30、 Exchange Fund Paul Horrocks Organisation for Economic Co-operation and Development Acknowledgements 7 Maximilian Jonsson Swedish International Development Cooperation Christopher Marks Mitsubishi UFJ Financial Group Sonia Medina Childrens Investment Fund Foundation Nazmeera Moola Ninety One Megumi

31、Muto Japan International Cooperation Agency Demetrios Papathanasiou World Bank Vivek Pathak International Finance Corporation Ilhem Salamon International Finance Corporation Nick Robins Grantham Research Institute Gireesh Shrimali Oxford University Gagan Sidhu Council for Energy Environment and Wate

32、r Michael Sinocruz Department of Energy,Philippines Kelvin Wong DBS Bank This publication has been produced with the financial assistance of the European Union as part of the Clean Energy Transitions Programme,the IEAs flagship initiative to transform the worlds energy system to achieve a secure and

33、 sustainable future for all.Table of contents 9 Table of contents IEA-IFC.CC BY 4.0.Foreword .3 Acknowledgements.5 Executive summary.11 Chapter 1.Scaling up clean energy in EMDEs.19 1.1.Introduction.20 1.2.EMDE clean energy transitions in context.25 1.3.Organising framework.33 References.41 Chapter

34、2.Clean energy investment in EMDEs.43 2.1.Introduction.44 2.2.The clean energy investment landscape in EMDEs.44 2.3.Scaling up clean energy investment to 2035.58 2.4.Public and private finance for investment.69 2.5.Implications.74 References.76 Chapter 3.Improving risk-adjusted returns.77 3.1.Risk-a

35、djusted returns a key metric for private investors.78 3.2.Risks affecting energy transition investment.82 3.3.Regulation and policies for energy transitions in power,fuels and end use.89 3.4.Regulation and policies to address cross-border issues and supply chain challenges 116 References.122 Chapter

36、 4.Financial instruments.125 4.1.Introduction.126 4.2.Concessional finance to attract private capital:How much is needed and where?.126 10 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs 4.3.Innovative financial instruments to expand climate finance in EMDEs.138 Appendix A:Voluntary car

37、bon markets.149 References.157 Annexe .161 Regional and country groupings.161 Abbreviations,units and acronyms.163 Glossary.165 Executive summary 11 Executive summary IEA-IFC.CC BY 4.0.How Emerging Market and Developing Economies(EMDEs)meet their rising energy needs will be pivotal to their and the

38、worlds energy and climate future.This country grouping covers a wide variety of low-income and middle-income economies,many of whom have severe deficits of reliable,affordable energy.All of the 775 million people that lack access to electricity and the 2.4 billion people that lack access to clean co

39、oking fuels live in EMDEs.Cost-effective,clean technologies offer a compelling way forward and their use is growing,but,in most cases,energy demand is growing even faster.In a scenario based on todays policy settings,one-third of the rise in EMDE energy use over the next ten years would be met by fo

40、ssil fuels.Much more needs to be done to ensure that all countries,and all parts of societies,benefit from clean energy technologies.At present,some USD 770 billion is invested each year in clean energy in EMDEs,but most of this is in a handful of large economies.China accounts for two-thirds of thi

41、s total and the top three countries China,India and Brazil for more than three-quarters.The concentration of investment is striking:China installed 100 GW of new solar PV capacity in 2022,adding,in a single year,ten times as much as the 11 GW of operating solar PV capacity in the whole of Africa.Gro

42、wth in clean energy investment is a precondition not only for tackling climate change,but also to help reach a range of other sustainable development goals(SDGs),such as poverty reduction,health and education.Quantifying clean energy investment needs To meet rising energy needs in ways that align wi

43、th the Paris Agreement,annual investment,public and private,in clean energy in EMDEs will need to more than triple from USD 770 billion in 2022 to USD 2.2-2.8 trillion per year by the early 2030s,remaining around these levels to 2050.If China is excluded,the increase is even steeper,amounting to as

44、much as a seven-fold rise in annual investment from USD 260 billion to between USD 1.4-1.9 trillion.This surge in investment provides a powerful opportunity to underpin sustainable economic growth,create jobs and provide full energy access.Investments in clean electrification,grid infrastructure and

45、 efficiency are the main components of the increase in spending.In scenarios that meet climate and sustainable development goals,by the early 2030s just over one-third of total EMDE clean energy investment goes into low-emissions generation,mainly to renewables.Another one-third is needed for improv

46、ements in efficiency and spending in end-use sectors,for example to boost efficient cooling and electric mobility.Just under one-quarter is needed for electricity grids and storage.Around 8%goes to low-emission fuels,such as biofuels,low-emission hydrogen,and carbon capture,utilisation and storage(C

47、CUS).These investments build up a new clean energy system while aiding the adjustment of existing high-emitting sectors.The cost of achieving universal access to electricity and clean cooking fuels by 2030(SDG 7)is around USD 45 billion per year,less than 2%of overall spending on clean energy.The bu

48、lk of this is needed to expand access to electricity,via grid extensions,mini-grids,and 12 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs stand-alone generation systems.Two-thirds of the electricity access investment is required in Africa.Some 60%of clean cooking investment,in biogases

49、,LPG,electricity and modern bioenergy via clean cookstoves,is needed in Asia.Table 1 Annual clean energy investments in EMDEs to align with sustainable development and climate goals(USD billion)Historical Annual average required 2015 2022 2026-30 2031-35 Total EMDEs 538 773 1 784-2 222 2 219-2 805 B

50、y country/region China 287 511 730-853 850-947 Southeast Asia 28 30 171-185 208-244 India and Other Asia 76 82 321-348 418-467 Africa 26 32 160-203 207-265 Latin America 63 66 150-243 209-332 Middle East and Eurasia 57 52 233-390 303-550 Share by sector in NZE Scenario Low-emission power 33%50%41%36

51、%Grids and storage 35%21%20%23%Low-emission fuels 1%1%7%8%Efficiency and end-use 31%29%32%34%Source:IEA.Notes:The range is derived from two IEA scenarios that meet energy-related SDGs but achieve a different pace of emissions reductions,aligned with the Paris Agreement.The higher bound comes from th

52、e Net Zero Emissions(NZE)by 2050 scenario,which reaches global NZE by 2050 and limits global warming to 1.5 degrees;the lower bound is from the Sustainable Development Scenario,which achieves global NZE in the 2060s.The sum of sector shares may not add up 100%due to rounding.Both public and private

53、investment need to increase to deliver clean energy at the scale required,but public resources alone will not suffice.In 2022 finance by public entities accounted for about half of EMDE clean energy spending,compared with less than 20%in advanced economies.We estimate that around 60%of the finance f

54、or EMDE clean energy investment(outside China)will need to come from the private sector:this requirement for private sector financing amounts to USD 0.9-1.1 trillion annually by the early 2030s,up from only USD 135 billion today.Bringing in private capital at the scale and pace needed will require d

55、eveloping a much larger flow of clean energy projects that match investors risk and return expectations.For the moment,the cost of capital for a typical utility-scale solar project can be two or three times higher in key emerging economies than in advanced economies or China,reflecting real and perc

56、eived risks at the country,sectoral and project levels.Tackling these risks and bringing down the cost of capital will require new and better ways of working between the public and private sectors.Executive summary 13 Strategies to accelerate EMDE energy transitions have to be grounded in specific c

57、ountry starting points and circumstances.The low-and lower-middle-income countries,for instance,are home to more than 40%of the worlds population but account for only 7%of global spending on clean energy.Some EMDE economies are highly dependent on coal;Indonesia,Mongolia,China,Viet Nam,India and Sou

58、th Africa stand out in this regard.Innovative strategies are needed to clear the way for cost-effective and cleaner options to enter the energy system and address the social dislocation associated with moving away from coal.Other EMDEs are major resource-owners,including oil and gas producers and ex

59、porters,and will need to transition away from high dependence on hydrocarbon revenues.Yet others stand to benefit from the clean energy transition,as they are rich in the critical metals and minerals that it demands.The current international context presents additional complexities for the clean ene

60、rgy transition in EMDEs.New policies in Europe,the United States and other advanced economies are attracting significant new investments in clean energy,spurring technology learning and innovation but making it more challenging for EMDEs to compete for private capital.Rising global interest rates ad

61、d to EMDE government debt burdens and also raise investors required returns for clean energy projects.The commitment by advanced economies to mobilise USD 100 billion per year in finance for climate mitigation and adaptation in EMDEs was due to have been met in 2020,but is likely to be met only in 2

62、023.Scaling up private finance for the clean energy transition Coordinated action on four fronts is needed to mobilise private finance in the scale and timeframe required.(i)EMDE governments will need to create the enabling environment for private investment and strengthen the institutions that are

63、responsible for energy sector operation and governance;(ii)Significantly larger quantities of concessional finance will be needed to mitigate country and project risks,enhance credit quality,and improve financing terms to attract private investors to many clean energy projects;(iii)New green financi

64、ng instruments and platforms,such as green bonds,sustainability-linked loans,project aggregation platforms,and voluntary carbon markets will need to be enhanced/redesigned to attract international investment capital at scale in support of credible and robust transition plans;and(iv)Deeper capital ma

65、rkets and financial systems in EMDEs will be necessary to scale domestic private investment in clean energy.The key role of concessional finance Concessional finance must be significantly scaled up and used strategically to mobilise the largest possible amounts of private capital in support of EMDE

66、development and climate goals.Concessional funds(guarantees,senior or subordinated debt or equity,performance-based incentives,interest rate or swap cost buydowns,viability gap funding or other investment grants)are not a substitute for needed policy action or institutional reforms,but when used jud

67、iciously can mobilise private capital for clean energy projects that otherwise would not be financed.This includes projects:that involve newer technologies that have yet to scale and are not yet cost-competitive in many markets,such as battery storage,offshore wind,renewable-powered desalination,or

68、low-emission hydrogen;that are in frontier 14 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs markets with higher levels of country and political risk;or that involve macroeconomic risks,such as foreign exchange risk,that raises the cost of the project.To enable the amount of private fi

69、nance required for the energy transition in EMDEs outside China(USD 0.9-1.1 trillion annually),we estimate that some USD 80-100 billion of concessional finance per year will be needed by the early 2030s.These figures are estimated considering the varied shares of public and private financing in diff

70、erent geographies and sectors,the specific types of clean energy technologies that may require concessional finance to be viable,and variations in the amount of concessional finance needed to attract private finance in different types of projects and country contexts.These figures exclude China.Tabl

71、e 2 Estimated need for concessional finance in blended finance structures in the NZE Scenario(USD billion)Annual average required 2026-30 2031-35 Total EMDEs(without China)83 101 By country/region Southeast Asia 7 9 India and other Asia 16 20 Africa 37 46 Latin America 13 15 Middle East and Eurasia

72、10 11 By sector Low-emission power,grids and storage 44 53 Low-emission fuels 10 12 Efficiency and end-use 29 36 Notes:These figures cover only the concessional finance that mobilises private capital.They do not cover other potential needs for concessional funding,e.g.,to SOEs that rely on public fi

73、nancing.Source:IFC estimates based on IEA NZE Scenario investment requirements.New financing instruments Financing instruments such as green,social,sustainable and sustainability-linked(GSSS)bonds have the potential to mobilize private capital at scale by attracting institutional investors that do n

74、ot typically invest in individual projects.Today there is more than USD 2.5 trillion in ESG-related investment funds,but almost none of that capital flows to EMDEs.GSSS bonds offer one opportunity to attract some of that capital,but issuances remain heavily concentrated in advanced economies.In 2022

75、,USD 136 billion of GSSS bonds were issued by EMDEs,with more than half of those issued in China.Growing this market will require robust third-party certification and monitoring,standardised industry guidelines,harmonised taxonomies,cost-effective regulation,and better instrument design.Project aggr

76、egation platforms and securitisation vehicles can overcome the asymmetry between the relatively small size of most energy transition projects in EMDEs and the Executive summary 15 relatively large minimum investment size that major institutional investors require.These platforms,such as the Managed

77、Co-Lending Portfolio Program(MCPP)One Planet,aggregate large numbers of smaller projects and may use concessional finance to mitigate some of the credit risk.The result is a standardised,investment-grade,multi-asset portfolio that can attract the largest institutional investors.However,regulatory pr

78、ovisions in advanced economies affecting some institutional investors,such as public pensions and insurance companies,limit investments and/or portfolio exposure to EMDEs.Voluntary carbon markets have the potential to attract private capital,including from corporations,to the EMDE energy transition,

79、but need strong oversight to grow from todays low base.Carbon credits linked to real,verifiable emissions reductions and removals could be a valuable revenue stream for EMDEs.These have the potential to attract not only financial investors,but also to mobilise capital from large companies seeking to

80、 offset the portion of their corporate emissions that cannot immediately be eliminated.But much work still needs to be done on standards and monitoring,reporting,and verification processes.Moreover,companies must commit to and embark upon credible emissions reductions plans to avoid the perception t

81、hat carbon credits merely enable them to continue polluting.Better data is also essential to enable private investors to assess the true risks associated with EMDE investments.Poor information feeds high risk perceptions that push up the cost of capital in EMDEs.One step to improve this situation is

82、 through the database of the Global Emerging Markets Risk Database(GEMs)consortium,started in 2009.It pools credit information between multilateral development banks(MDBs)and development finance institutions(DFIs)to provide aggregate risk statistics.Efforts are currently underway to expand access to

83、 these data to other investors.Country efforts to improve data and its availability will be important in attracting investors.Deepening local capital markets and financial systems Deeper local capital markets and financial systems are necessary to scale up domestic private investment in the clean en

84、ergy transition.In some EMDEs,such as China and India,domestic capital-rather than foreign capital-has been the major source of private capital for the clean energy transition thus far.Developing domestic bond,equity,and derivatives markets(e.g.,currency swaps)can enable domestic funding of climate

85、projects.Project-related revenue streams from energy transition projects in EMDEs are typically denominated in local currency.International investors who bring foreign currency therefore create foreign exchange risk for either themselves or for EMDE borrowers.Whilst swaps are needed to hedge currenc

86、y risk,this can be expensive and a range of options may be needed to defray the costs of foreign currency hedging,including use of concessional finance.Credible transition planning Financing for clean energy projects will not flow without credible climate transition commitments and planning by gover

87、nments:a point of departure is country commitment to ambitious Paris-aligned goals,converted into clean energy transition plans and targets.This vision for the energy sector,including universal access to modern energy where this 16 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs remains

88、 to be achieved,needs to be consistent with energy sector reform and planning so that it provides meaningful signals to private markets.A regional perspective can reduce costs,especially in the power sector where cross-border trade creates a wider balancing market for renewable-rich systems.Integrat

89、ed planning,policy and regulatory reform,and capacity building can turn high-level commitments into a pipeline of bankable clean energy projects.Strong pricing signals are crucial:a price on carbon,or regulatory and policy measures with equivalent effect,are needed to help steer investment decisions

90、 towards cleaner and more efficient technologies.Among issues deterring investors are subsidies that tilt the playing field against clean energy investments,unpredictable procurement practices,lengthy procedures for licensing and unclear land rights;arbitrary or weak contract enforcement;restriction

91、s on private or foreign ownership;and poor creditworthiness of counterparties.Support for capacity and institution-building is vital to improve energy sector governance and to enhance clean energy knowledge and relevant skills.Good policies provide the signal to investors With the right policy envir

92、onment,the cost-competitiveness and maturity of renewable technologies for electricity generation mark them out as a major opportunity for scaling up private sector investment.For utility-scale renewables,the key success factors have included competitive auctions for new capacity,combined with long-

93、term power purchase agreements(PPAs)with a creditworthy off-taker and reliable land and grid access.Removing barriers to corporate PPAs,through which companies contract directly with renewable power producers,is another way to unlock strong incentives for privately driven investments.Public financia

94、l support can be justified to develop confidence in new markets or to mitigate specific risks,for example,guarantees that limit the risk of non-payment.In coal-dependent power systems,innovative financing mechanisms with international backing that refit,repurpose or retire existing coal plants creat

95、e room for the beneficial expansion of low-emissions generation.Mini-grids or distributed generation such as residential rooftop solar are likewise a channel for private investment.Investments in clean energy generation are dependent on the timely expansion of grids,alongside energy storage and othe

96、r options to allow for the integration of variable renewables.In many EMDEs,weak electricity infrastructure results in unreliable access for users and is a major risk for investors.More than 90%of investments in EMDE grids are the responsibility of SOEs,many of which are facing severe financial stra

97、ins and lack access to capital.Private sector participation in electrical grids is limited in most cases to the distribution sector,although private sector financing for energy storage projects is on the rise.Early network investment planning,public support and public-private partnerships,and measur

98、es to strengthen the operational and financial performance of utilities can ensure that grid infrastructure becomes an enabler,rather than a bottleneck,for expanding renewables.Executive summary 17 Low-emissions fuels are important in the clean energy transition,especially in sectors where direct el

99、ectrification is not feasible or cost-effective.There is burgeoning investor interest in low-emission hydrogen,especially for production via electrolysis in countries with low-cost solar or wind potential.Commercial viability is in its early stages and,for the moment,supply-side initiatives in Afric

100、a,Latin America,and the Middle East are not matched by a comparable level of commitments from buyers,putting a premium on secure offtake arrangements to underpin investments.Sustainable biofuels and CCUS are the other main investment avenues.Policy incentives and mandates in Brazil,China,India,and I

101、ndonesia have underpinned a strong rise in EMDE biofuels production,encompassing both liquid biofuels and biogases.Investment in more efficient and electrified technologies in buildings,transportation and industry is a crucial component of energy transitions.Almost 70%of EMDEs have set specific targ

102、ets for deploying electric vehicles.Regulatory policies such as building codes,minimum energy performance standards(MEPS),fuel efficiency and quality standards,alongside non-regulatory policies such as labels and information campaigns,and financial incentives are important to enable sustainable choi

103、ces by consumers.Efficient cooling needs to be a particular focus,given rising global temperatures and the huge scope for increased cooling demand as EMDE incomes rise.Many of the investments in this area are relatively small and bespoke;standardisation and aggregation are important to bring in priv

104、ate capital.Clean energy supply chains,including batteries,solar panels and wind turbines,represent a growing opportunity for private sector investors in EMDEs.While most countries rely on imports,China manufactures three-quarters of the worlds batteries and solar PV modules and has an exceptionally

105、 strong position in processing and refining of critical minerals.Other major EMDE markets for clean energy,such as India,are now providing incentives for domestic clean energy manufacturing.Countries in Africa,Latin America,and Southeast Asia are leading resource holders of battery metals,copper and

106、 rare earth minerals,and are seeking ways to move beyond primary production.A call to action A redoubled effort is needed to put EMDEs on a pathway to higher clean energy investment and full participation in what the Independent High-Level Expert Group on Climate Finance rightly called the“growth st

107、ory of the 21st century:sustainable,resilient and inclusive”.The urgency of tackling climate change demands it,but it is far from the only reason to move faster.Other benefits include improved air quality and sharp reductions in pollution-related healthcare costs and premature deaths.This reports an

108、alysis highlights why private initiative is an essential part of the solution but the report is also clear-eyed on what it takes for private investors to commit capital.Sound regulations and public policies,strengthened institutions and greatly expanded international support are the keys to unlock p

109、rivate financing for clean energy in EMDEs at scale.Chapter 1|Scaling up clean energy in EMDEs 19 Chapter 1 IEA-IFC.CC BY 4.0.Scaling up clean energy in EMDEs Setting the scene The case for building tomorrows energy systems around clean technologies is compelling,enabling Paris Agreement emission ta

110、rgets and energy access goals to be met while underpinning sustainable economic growth and job creation.Although high-income economies account for the majority of past emissions,without sufficient focus on the transformation of their energy systems EMDEs will continue to account for the largest sour

111、ce of future emissions growth.Currently,about 775 million people in EMDEs still lack access to electricity and 2.4 billion people lack access to clean cooking fuels.With EMDEs leading population growth in the coming decades,the need for economic growth to generate enough quality jobs will result in

112、further demands for energy.Promoting policies to facilitate the energy transition through the diffusion and adoption of clean energy technologies can spur productivity,increase standards of living and boost resilience to climate change-related shocks.The pace of innovation in clean energy technologi

113、es is promising,with much of the sector seeing significant increases in capacity and declines in cost.However,much of this push has taken place in advanced economies and China,and more recently other large emerging economies.This leaves many other developing economies still struggling with accessibi

114、lity and high costs of capital.A large scale-up of clean energy deployment across all EMDEs will require an increase in all sources of finance:public and private,domestic and international,concessional and non-concessional.In 2022 finance from public entities accounted for about half of EMDE energy

115、spending,compared with less than 20%in advanced economies.Public institutions will remain prominent in areas like electricity networks and low-emission fuels,and will need to take the lead in ensuring access to electricity and clean cooking fuels.However,EMDE fiscal space is constrained by slowing g

116、lobal growth,rising borrowing costs and higher indebtedness,necessitating a major scale-up in private finance to support a broad and rapid rise in clean energy investment.The mobilisation of private finance on a scale consistent with the achievement of SDGs and net zero goals requires new regulation

117、s and policies,including additional concessional finance to mitigate risk at the country,sector and project level,and to enhance returns where investors are not able to capture the full social return.In addition to sound regulations and policies,policy predictability and commitment to an announced t

118、ransition path are critical to increase private finance.Advancing policies,including regulation,finance and other incentives,can help mitigate political and other risks.S U M M A R Y 20 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs 1.1.Introduction The worlds energy and climate future

119、,more than ever,is dependent on decisions made in emerging market and developing economies(EMDEs).Reliable,affordable and modern energy in these economies could enable productive industries,well-functioning cities and efficient infrastructure to underpin economic development,as well as support bette

120、r health and education outcomes.However,if economic growth in EMDEs is carbon-intensive,as historically witnessed among advanced economies,then greenhouse gas(GHG)emissions would be locked in for longer,leading to unavoidably severe impacts from climate change.Although high-income economies account

121、for most of the stock of emissions,without sufficient focus on the transformation of their energy systems EMDEs would account for the largest source of future emissions growth.Accelerated investment in clean energy technologies and infrastructure could lead to greater prosperity and job creation wit

122、hout an associated steep rise in GHG emissions.Prospects to move along this pathway ultimately depend on mobilising investment in EMDEs the rationale for this report,conducted jointly by the International Energy Agency(IEA)and the International Finance Corporation(IFC).This initiative seeks to bring

123、 together the respective strengths of the two organisations and shed light on the critical issue of what it will take to scale up clean energy investment in EMDEs,in particular from the private sector.Why the focus on the private sector?Unlike in advanced economies,clean energy investment in most EM

124、DEs is currently heavily dependent on public entities,largely by state-owned enterprises(SOEs).In 2022 finance by public entities accounted for about half of EMDE clean energy spending,compared with less than 20%in advanced economies(Figure 1.1).1 SOEs are likely to remain significant in areas like

125、electricity networks,where they currently account for more than three-quarters of EMDE capital expenditure,or in low-emission fuels,especially where large national oil companies are important forces behind energy transition investment.Public institutions will also need to take the lead in vital area

126、s such as ensuring access to electricity and clean cooking fuels.However,EMDEs are not in a position to rely on scarce national public funds to support a broad scale-up in clean investment in full.If all of the investment required to get on track with energy-related Sustainable Development Goals(SDG

127、s)and the Paris Agreement were to come from the EMDE public purse,this would mean devoting well over 10%of aggregate EMDE tax and non-tax revenue to clean energy investment this decade,and considerably higher for many low-income countries.This is much too high a share to be reasonable,given that gov

128、ernments have to allocate scarce resources across a wide range of priorities.Clean energy projects are only one part of the picture,even when it comes to the response to climate change;there are major needs in areas like adaptation and resilience,land use and afforestation,and sustainable agricultur

129、e.In addition,todays environment is particularly 1 The methodology for the IEAs investment analysis is available in the World Energy Investment 2022:Methodology Annex(IEA,2022).Chapter 1|Scaling up clean energy in EMDEs 21 1 IEA-IFC.CC BY 4.0.challenging for many EMDEs,as rising borrowing costs,high

130、er fuel import bills and growing indebtedness further limit the fiscal capacity to support capital-intensive clean energy projects.Figure 1.1 Clean energy finance in EMDEs by public and private sources in 2022 IEA.CC BY 4.0.Around half of clean energy investment in EMDEs is financed by public entiti

131、es,but a scale-up will require a much greater role for the private sector There is a strong case for developed economies to deepen their engagement with EMDEs on access to international finance,on a bilateral and multilateral basis,especially given their historical responsibility for the bulk of emi

132、ssions.This will be essential to catalyse the necessary investment in critical areas and to support longer-term reform processes.A starting point is the commitment made by developed countries at successive United Nations Climate Change Conferences(or Conferences of the Parties)to mobilise USD 100 bi

133、llion per year in climate finance,a figure which covers bilateral and multilateral public climate finance,as well as climate-related export credits and private finance mobilised by the public climate funds.This commitment was made for 2020 but is now likely to be met only in 2023,three years past th

134、e target date.Moreover,the success of this public funding in mobilising private finance has been“lower than anticipated,with most mobilised in middle-income countries with relatively conducive enabling environments and low-risk profiles”(OECD,2022a).The delivery of this commitment remains essential

135、to avoid further erosion of trust among EMDEs,but the USD 100 billion figure should not be understood as a measure of the required level of international support.As the report of the Independent High-Level Expert Group on Climate Finance noted,this figure was“negotiated,not deduced from analyses of

136、what is 20 40 60 80Middle EastOther AsiaASEANAfricaEurope and EurasiaIndiaLatin America 100 200 300 400CleanfuelsGridsEnd-useCleanpower 125 250 375 500ChinaPrivateDevelopment finance institutionsPublicBillion USD(2022)22 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs necessary for a pu

137、rpose”(Songwe,Stern and Bhattacharya,2022).Our own analysis suggests that the need for external financing of clean energy investment in EMDEs is considerably higher,in the order of USD 500 billion to USD 700 billion per year,from both public and private sources,by the early 2030s.The international a

138、spect is a vital part of the solution,but must be considered in the context of a central message of this report:all sources of finance for clean energy will need to expand significantly if EMDEs are to reach energy-related SDGs as well as align with the Paris Agreement ambition to limit global tempe

139、rature rise to 1.5C above pre-industrial levels.These sources include public and private,domestic and international,concessional and non-concessional.Each of them has particular characteristics that,in different blends and combinations,can be an appropriate match for projects across different parts

140、of the energy sector and different country circumstances.The current status of private sector investment in clean energy in EMDEs varies widely by country,but some parts of the clean energy economy in EMDEs are already seeing significant private sector financing.Investment in clean sources of electr

141、icity generation is the best example.SOEs dominate certain segments,such as hydropower,nuclear and industrial plants(given the dominance of China),but the majority of low-emission power assets for example in wind and solar PV have been developed by private entities.Technology risk in these areas is

142、relatively low and this means that where supportive policies are in place,these projects can be an attractive option for private investors.The task is to broaden and accelerate this private sector involvement.An increasing number of private entities are seeking to contribute to addressing climate ch

143、ange,as witnessed by the breadth of participation in coalitions like the Glasgow Financial Alliance for Net Zero(GFANZ).To unlock greater private sector investment,there will need to be complementary public policy reform,the balancing of risk and return,and the judicious use of expanded public fundi

144、ng including from advanced economies.Such public funding can improve the feasibility of clean energy investments and bring in larger volumes of private capital,especially in sectors and countries that are perceived as higher risk.As such,public interventions need to de-risk projects as well as direc

145、tly finance them,and to invest in complementary infrastructure such as electricity grids and storage,in order to prepare and structure a flow of viable and bankable projects that can attract finance(or co-finance)from the private sector.1.1.1.Scope and structure of the report This report covers the

146、investment and financing requirements for clean energy in EMDEs.The time horizon considered in this analysis is the period to 2035.Each of these aspects requires clarification and definition.By clean energy we mean a range of efficient,low-or zero-emission technologies and necessary infrastructure t

147、hat can put countries on a path consistent with reaching the Chapter 1|Scaling up clean energy in EMDEs 23 1 IEA-IFC.CC BY 4.0.energy-related SDGs and longer-term decarbonisation objectives,such as net zero emissions by 2050.We group these elements into three categories:Low-emission power,which incl

148、udes renewables and nuclear,as well as the required associated electricity grids and storage.Low-emission fuels,mainly sustainable biofuels,low-emission hydrogen,and CCUS and related infrastructure.Energy efficiency improvements and decarbonisation of end-use sectors,such as transport,industry,and b

149、uildings.The projected investments include those that are needed to ensure universal access to electricity and clean cooking fuels.The numbers put forward for clean energy investment do not,however,cover all energy-related capital expenditure.Substantial additional investments in fossil fuels,in EMD

150、Es and in other countries,play a part in the supply and unabated use of fossil fuels;they are not the subject of this report,but are an important part of the broader energy picture.Scenarios that meet climate goals see steady reductions in fossil fuel investment,but some continued spending is needed

151、 in all the scenarios that we examine in this report(Box 1.1).The extent of this requirement depends on how quickly clean energy investment scales up.Some fossil fuel infrastructure,notably in the case of natural gas,supports the scale-up of wind and solar PV generation by providing a valuable sourc

152、e of flexibility for power system operation.This report explores the clean energy investment needed to align EMDEs to pathways consistent with long-term sustainable development and Paris Agreement targets.The report does not address other investments that form part of the broader response to climate

153、 change,such as spending on adaptation and resilience,loss and damage,sustainable agriculture,afforestation and conservation,and biodiversity.Not all the clean energy investments included in this report immediately deliver zero-emission energy or energy services.The analysis considers investments in

154、 infrastructure and technologies that have a supporting role to play in decarbonisation,such as enabling infrastructure(e.g.grids)that are essential for reliable and secure electricity systems and can be used for all generation technologies.The emissions associated with investment in electrified end

155、 uses,such as electric mobility,depend on the eventual decarbonisation of power generation.Some investments in efficiency,for example more fuel-efficient trucks or more efficient industrial processes,provide emission reductions but do not bring them down to zero.Nonetheless,they are critical in the

156、pathway to greater efficiency and lower emissions.Adequate financial channels need to be available to support a wide range of clean investments across all parts of the energy sector.Those energy technologies that do not play a direct or supporting role in decarbonisation are excluded from the analys

157、is.Additionally,while the early retirement of coal-fired power generation plants does contribute to decarbonisation,it is not included in the quantitative analysis of this report.24 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs Box 1.1 Scenarios used in this report Three scenarios are

158、 referenced in this report:The Stated Policies Scenario(STEPS)explores the implications of todays policy settings,based on a detailed sector-by-sector assessment of what policies are actually in place or are under development by governments around the world.This scenario does not automatically assum

159、e that ambitious net zero or other climate targets are met.Emissions in the STEPS do not reach net zero and the rise in average temperatures associated with the STEPS is around 2.5C in 2100.The Sustainable Development Scenario(SDS)achieves key energy-related UN SDGs,but reaches global net zero emiss

160、ions in the 2060s(with many countries and regions reaching net zero much earlier).This scenario is aligned with the Paris Agreement objective of“holding the increase in the global average temperature to well below 2C.The Net Zero Emissions by 2050(NZE)Scenario sets out a pathway to the stabilisation

161、 of global average temperatures at 1.5C above pre-industrial levels,showing what is needed for the global energy sector to achieve net zero CO2 emissions by 2050.Like the SDS,it also meets the key UN SDGs related to universal energy access,alongside major improvements in air quality.The SDS and the

162、NZE Scenario are normative scenarios that show the pathways to reach specific outcomes.Between the two,the NZE Scenario represents the safer pathway to ensuring the Paris Agreement goals are met.This report focuses on emerging market and developing economies in Africa,Europe,Latin America and the Ca

163、ribbean,the Middle East,and Asia(together referred to in this report as EMDEs).This largely coincides with the countries that are not members of the Organisation for Economic Co-operation and Development(OECD);however,for the purposes of this report the EMDE grouping includes four OECD member countr

164、ies:Chile,Colombia,Costa Rica and Mexico.2 The material in this report is structured as follows:Chapter 1 sets the scene,discusses the developmental,macroeconomic and technological context,outlines the scope of the report,and provides an organisational framework for the analysis that follows.2 A pre

165、vious report by the IEA on Financing Clean Energy Transitions in Emerging and Developing Economies(IEA,2021)did not include the Peoples Republic of China(hereafter,“China”)in the EMDE grouping,as the dynamics of energy investment in China are quite distinctive,but China is included in the EMDE aggre

166、gate in this report.Chapter 1|Scaling up clean energy in EMDEs 25 1 IEA-IFC.CC BY 4.0.Chapter 2 assesses the current clean energy investment landscape in EMDEs and then quantifies the investment and finance needed to 2035 to reach energy-related SDGs and get on track for climate targets.The analysis

167、 includes an assessment of the future split between public and private financing.Chapter 3 considers the key bottlenecks and market failures limiting private capital mobilisation for the energy transition in EMDEs.It surveys the various risk factors that face private investors and considers the type

168、s of policies and regulation that can reduce these risks and enhance returns for investors in EMDEs,with case studies that illustrate good policy practice.Chapter 4 examines the measures and financial instruments that can enlarge the pool of private funding for clean energy projects in EMDEs.It prov

169、ides estimates of concessional finance that will be required to crowd in private funding for clean energy,considers where and how concessional funding can be most effective,the potential for local currency financing,and some innovative options including green,blue,social,sustainability,and sustainab

170、ility-linked bonds,carbon markets,and syndication platforms.1.2.EMDE clean energy transitions in context EMDEs span a wide range of country circumstances and levels of development and substantial variations in economic performance(Table 1.1).They include major suppliers and consumers of energy,count

171、ries where the majority of investment is already in clean energy(e.g.China,India and Brazil)and others where for every dollar of energy expenditure,less than 20 cents is spent on clean energy investment.The diversity of country contexts means that EMDEs have a range of different possible pathways,sp

172、eeds and technology choices as they continue to develop their energy systems and integrate ever-larger amounts of low-emission technology.The focus of this report is on identifying the most effective ways to scale up private sector clean energy finance in these markets and how to frame the issues,ta

173、king into account the specific opportunities and barriers to energy investment in EMDEs.1.2.1.Development context The three decades prior to the Covid-19 pandemic were marked by significant improvements across a range of EMDE development outcomes.The global poverty rate,measured by the share of the

174、population living below the World Banks extreme poverty line,had dropped from 38%in 1990 to 8.5%by 2019,reflecting a reduction from more than 2 billion to about 660 million people(World Bank,2023).Average life expectancy has increased from 46 years in 1950 to 71 years in 2021.Average years of school

175、ing have significantly improved in many countries;for example,in India they jumped from about 3 years in 1990 to 6.4 years in 2017.26 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs Table 1.1 Key economic and energy indicators for selected EMDEs Clean energy investment 2021%of total ene

176、rgy i 26 68 65 67 67 67 34 57 38 25 48 42 34 48 48 22 15 48 63 45 45 Energy Investment 2021%of GDP 1.8 3.1 3.5 1.9 3.6 1.9 2.8 2.6 1.8 6.1 2.4 1.5 2.8 2.4 2.4 4.4 5.7 2.4 1.7 2.5 2.5 Share of renewables in power mix 2020%26 2 84 49 28 66 12 21 19 11 94 20 18 84 24 20 0.2 12 5 17 35 Electricity consu

177、mption per capita 2020 kWh/capita 2 814 498 2 541 4 151 5 262 1 506 1 544 928 980 5 513 166 2 218 908 392 134 6 838 10 311 322 3 538 2 770 2 321 Energy demand per capita 2020 GJ/capita 68 11 56 82 104 34 36 26 36 147 22 58 24 15 32 220 276 12 88 80 42 CO2 emissions 2020 Million tonnes 149 84 389 84

178、10 081 73 188 2 075 532 204 16 351 62 6 88 1 552 484 8 388 243 294 GDP per capita 2021 USD/capita,PPP 23 650 6 494 16 031 28 685 19 338 16 819 12 706 7 242 13 027 28 685 5 211 20 277 8 853 1 348 5 408 32 863 48 711 3 840 14 624 18 761 11 676 Access to clean cooking 2021%100 23 96 100 81 92 100 64 82

179、 92 18 85 98 5 14 86 100 24 87 84 65 Urban population 2021%92 39 87 88 63 82 43 35 57 58 28 81 64 38 53 75 85 49 68 52 38 Population 2021 million 46 167 214 20 1 412 50 104 1 391 275 19 55 128 37 32 211 144 35 17 60 70 98 Argentina Bangladesh Brazil Chile China Colombia Egypt India Indonesia Kazakhs

180、tan Kenya Mexico Morocco Mozambique Nigeria Russia Saudi Arabia Senegal South Africa Thailand Viet Nam Note:PPP=purchasing power parity.Source:IEA calculations;World Bank(2022).Chapter 1|Scaling up clean energy in EMDEs 27 1 IEA-IFC.CC BY 4.0.Yet most EMDEs have been struggling to reach robust and s

181、ustained levels of long-term economic growth or graduate towards high-income status.The improvements observed in recent decades have been uneven across countries and within them,with only a few examples of countries that shifted their income status from low and middle to high income.Some of the sign

182、ificant improvements in global development indicators were driven by the achievements of a few large economies.Discussions around middle-income traps and the policies needed to facilitate the path towards economic development are the subject of an active debate among policy makers and global develop

183、ment institutions.3 The need for major gains remains,with a large incidence of poverty in regions that will be driving demographic changes and the increasing demand for energy.Despite significant improvements in global poverty reduction prior to the Covid-19 pandemic,the share of the population livi

184、ng below the poverty line in Africa and South Asia is still far from the SDG of eradicating poverty in all its forms by 2030.The socio-economic impact of the Covid-19 pandemic has been felt particularly acutely among EMDEs.Several indicators,including energy access,nutrition,poverty and indebtedness

185、,have shown a marked deterioration following the pandemic and made the SDGs even more challenging to reach.In several cases,historic improvements were wiped out due to the twin impacts of the pandemic and the energy crisis.EMDEs now have development path opportunities in a new context where climate

186、change is at the centre of economic decisions.Despite its relevance,this topic was absent from most of the policy decisions and actions to enhance long-term economic growth in previous decades.This scenario has changed,driven by increasing evidence that the rise in temperature is an important threat

187、 to global prosperity and convergence in the positions of key global actors from the scientific community to governments and the private sector.The average global temperature is set to continue rising to 2050,even in a scenario that reaches net zero emissions by 2050,as concentrations of CO2 in the

188、atmosphere continue to rise until such time as any residual emissions are balanced by removals from the atmosphere.Currently,almost three-quarters of global CO2 emissions are from the production and use of energy,and energy-related CO2 emissions reached a new high in 2022 at 36.8 billion tonnes(Gt)(

189、Figure 1.2).Around 40%of this comes from fuels used in power generation,followed by emissions from industry(25%),transport(21%)and buildings(8%).EMDEs account for around two-thirds of todays energy-related CO2 emissions,and China alone for around one-third.If China is excluded,then average per-capit

190、a emissions in EMDEs are under one-third of the level in advanced economies.3 This will be the central topic of the World Banks forthcoming 2024 World Development Report,focusing on economic growth in middle-income countries.28 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs Figure 1.2

191、Global energy-related CO2 emissions by scenario and share of energy in total emissions IEA.CC BY 4.0.Achieving net zero emissions and the stabilisation of the global average temperature will require a huge acceleration in the pace of clean energy deployment Sources:IEA;Ritchie,Roser and Rosado(2020)

192、.With EMDEs leading population growth in the coming decades,the need for economic growth to generate sufficient quality jobs will result in further demands for energy(Figure 1.3).Currently,about 775 million people in EMDEs still lack access to electricity and 2.4 billion people lack access to clean

193、cooking fuels.Moreover,some regions with a lower incidence of poverty or population growth,such as the Latin America and the Caribbean and East Asia,still face large challenges with inequality and the need to reach higher and inclusive economic growth.These challenges reinforce the need for major bu

194、ild-out of clean energy infrastructure to meet the rising demand for energy services in a sustainable way.However,almost all the increase in clean energy investment to date has been in advanced economies and China(see Chapter 2),underscoring the need for faster clean energy transitions in EMDEs beyo

195、nd China.Clean energy transitions are ready to form a key pillar of sustainable long-term growth.In addition to lowering GHG emissions,the accelerated deployment of clean energy and energy efficiency technologies and policies contributes to facilitating universal access to energy,boosting productivi

196、ty growth and creating new jobs,while promoting a circular economy that minimises waste and helps improve material efficiency and the reduction of air pollutants.Energy:73%Agriculture,land use,forestry and other:27%10 20 30 402000200402050STEPSNZESDSShare of global CO2emissionsGlobal ener

197、gy-related CO2emissions Gt CO2 Chapter 1|Scaling up clean energy in EMDEs 29 1 IEA-IFC.CC BY 4.0.Figure 1.3 Select development indicators for EMDEs,1990-2022,and global population projections,1990-2035 IEA.CC BY 4.0.Higher incomes and a growing population especially in Africa and South and Southeast

198、 Asia are set to bring rapid increases in demand for energy services Note:Poverty rate here refers to the share of the global population living under USD 2.15 per day.Sources:IEA;poverty data from World Bank.Many EMDE economies are also particularly vulnerable to climate change,especially those that

199、 rely largely on agriculture as the main sector driving economic growth and absorbing large numbers of workers.Evidence across countries suggest that droughts and extreme heat during the period 1964-2007 significantly reduced national cereal production by around 10%(Lesk,Rowhani and Ramankutty,2016)

200、.Without additional action on adaptation,each degree Celsius increase in global mean temperature would,on average,reduce global yields of wheat by 6%,rice by over 3%,maize by over 7%,and soybeans by over 3%(Zhao,Liu and Piao,2017).1.2.2.Macroeconomic context After the pandemic-related decline in 202

201、0,global economic activity rebounded strongly in 2021,reflecting the relaxation of lockdowns,gradual recovery of international trade and substantial fiscal stimulus in most countries.This recovery was,however,disrupted in early 2022 by the repercussions of Russias invasion of Ukraine,including furth

202、er damage to international trade and financial linkages,sharp increases and greater volatility in food and energy prices,and heightened risk and uncertainty.Higher prices for fossil fuels played a key role in accelerating inflation,which had already risen during the 2021 recovery with the upswing in

203、 demand amid ongoing disruptions to supply chains and the exit of significant numbers of labour force participants.50 100 150 200 25002020Key indicators among EMDEsIndex(1990=100)2 4 6 8 035World populationBillion peopleGDP per capitaEnergy demandPopulationEnergy demand per cap

204、itaPoverty rate(global)Rest of the worldEMDEs2022 30 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs Inflation pressures were given further impetus by surging prices for food and fertilisers,following the spikes in the global price of oil and natural gas as well as supply disruption cau

205、sed by Russias invasion of Ukraine.As a result,the worldwide tightening of monetary policy needed to re-anchor inflation,conditioned by the actions of the US Federal Reserve Board,has had to be stronger than many had expected.This led,by early 2023,to(i)a sizeable correction of global equity markets

206、,(ii)reduced bond issuance,especially by lower-rated issuers,amid expectations of renewed recession in advanced economies,including the United States and Europe,and(iii)a further slowdown in global GDP growth.Among EMDEs,slower growth has been accompanied in many instances by reduced inflows of priv

207、ate foreign capital,which has weakened exchange rates,boosted inflation,and reinforced the need for tighter monetary policy and higher interest rates.Against this background,inflation appeared to have peaked in most countries by late 2022 and may fall toward monetary authorities target levels by lat

208、er in 2023.There are important exceptions,however,in countries where fiscal imbalances and inadequate monetary policy responses are leading inflation to continue rising toward 100%or more.Overall,the headwinds confronting growth are well known.Factors that cushioned economic activity during the pand

209、emic and early recovery have diminished,including large-scale fiscal stimulus,access to cheap credit,and new and expanded financial support from international financial institutions and multilateral development banks.Most countries face limits to fiscal support,owing to accumulated government debt a

210、s high interest rates and tightening credit conditions undermine consumption and investment,and slowing growth in partner countries weakens export prospects(Figure 1.4).Despite important innovations in recent years,competition has increased for a constrained pool of multilateral funding.Figure 1.4 G

211、eneral government debt in EMDEs as a percentage of GDP IEA.CC BY 4.0.High and rising levels of government debt,especially in Asia,constrain the possibilities for governments to finance clean energy investments 20%40%60%80%100%200022ChinaLatin America and the CaribbeanEMDEs Euro

212、peMiddle East and Central AsiaSub-Saharan AfricaEMDEs AsiaEMDEs Chapter 1|Scaling up clean energy in EMDEs 31 1 IEA-IFC.CC BY 4.0.The June 2023 edition of the World Bank Group report Global Economic Prospects projects global GDP growth to decline from 3.1%in 2022 to 2.1-2.4%in 2023-2024.Outlooks for

213、 individual economies vary widely,however.Growth in Asia is expected to rebound strongly,while growth in Africa may remain around 2022 levels(with widely diverging performance within the region).Growth in Latin America and the Caribbean,the Middle East and Central Asia,and Europe is not expected to

214、pick up.In all regions,full recovery of the ground lost during the pandemic is not likely to happen soon.By the end of 2024 real GDP in EMDEs would be about 6%lower than the levels projected before the pandemic.This provides a difficult context for moving forward with clean energy transitions.Downsi

215、de risks to the outlook include the possibility of a renewed upturn and greater volatility in food and energy prices,the persistence of elevated inflation leading to longer-than-expected tightening of global financial conditions,a broadening of financial sector stresses already experienced in many a

216、dvanced economies,and the potential consequences of growing geopolitical fragmentation.Moreover,the combination of low growth,elevated debt levels and high interest rates has intensified debt distress across a growing number of EMDEs.Roughly a quarter of EMDEs are now at high risk of debt distress,a

217、nd over half of low-income countries are at high risk of,or already experiencing,debt distress.Such a macroeconomic backdrop increases the complexity of achieving energy-and climate-related SDGs as well as longer-term decarbonisation targets among EMDEs.1.2.3.Technological context Technology plays a

218、 key role in enabling energy transitions.By providing alternatives to traditional fossil fuels in the form of more sustainable and renewable sources of energy that deliver more reliability,greater efficiency and lower costs,technological progress is essential to offering affordable and sustainable s

219、olutions for energy transitions across EMDEs.Innovation and diffusion are the two main channels through which technological change drives energy transitions.These channels are complementary,but they entail different challenges and have diverse implications in the context of EMDEs.A portfolio of poli

220、cies for innovation can generally be thought of as having both supply-side technology push elements that reduce the cost of knowledge creation in advance of commercialisation,and demand-side market pull elements that enhance net revenue from sales after commercialisation,spurred by market competitio

221、n.Innovation usually requires an ecosystem with a complex set of complementary factors,including knowledge and human and physical capital,combined with enabling institutions and a supportive policy environment;many of these complementary capabilities are more widely available in advanced economies.I

222、nnovation in EMDEs often involves the adaptation to local contexts of technologies initially developed in advanced economies or in larger emerging economies such as China.Diffusion of technologies typically occurs through international trade,foreign direct investment or technology licensing channels

223、;additional mechanisms include patent buyouts,compulsory licensing,patent pools and open-source 32 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs approaches.Diffusion involves both large-scale adoption enabled by national or corporate programmes,and a more decentralised process involvi

224、ng individual decisions of adoption by firms and households.The pace of innovation in clean energy technologies is promising.The number of priority patent applications in the past 20 years,split by technological field and invention year,indicates that the speed of clean energy technology innovation

225、has been increasing faster than other technologies on average(OECD,2022b).Furthermore,corporate R&D spending by clean energy technology companies(including renewables,hydrogen,battery and energy storage companies)has been growing faster than R&D spending by fossil fuel companies,illustrating a growi

226、ng interest in and potential pipeline of innovative clean energy technologies in the marketplace(Figure 1.5).Figure 1.5 Global corporate R&D spending and clean energy technology prices IEA.CC BY 4.0.Growing R&D spending globally on renewables and batteries along with economies of scale from manufact

227、uring and improved supply chains have contributed to falling costs In recent years,some clean energy technologies have seen significant increases in capacity and declines in costs.For example,prices for solar PV modules and EV batteries dropped by over half between 2015 and 2022,making them much mor

228、e affordable.However,much of the push that enabled technological advances and economies of scale in clean energy has taken place in advanced economies and China.For many EMDEs,fossil fuel technologies continue to remain relatively more accessible and affordable in several sectors.Many households in

229、EMDEs still do not have access to electricity and a large number of firms do not have reliable sources of energy without significant disruption.This reflects the challenges of translating energy-related innovation into technologies that are widely 50 100 150 200 25020022Index(2015=100)Ren

230、ewables,battery and hydrogen corporate R&Dspending Fossils,thermal power and combustion corporate R&D spending EV battery priceSolar PV module price Chapter 1|Scaling up clean energy in EMDEs 33 1 IEA-IFC.CC BY 4.0.adopted by firms and households.Evidence from EMDEs,including Kenya and Pakistan,show

231、 that more than 75%of enterprises face electricity outages in these countries(World Bank,2022).A global effort to facilitate the diffusion,adoption and intensive use of clean energy technologies is needed to overcome the incentives still favouring the use of fossil fuel-linked technologies and speed

232、 up energy transitions across EMDEs.Fossil fuel-related technologies have benefited from well over a century of innovation and diffusion,with well-established supply chains globally.As the dominant sources of energy supply in the world,fossil fuel technologies are mainstream and available“off the sh

233、elf”for consumers to purchase where they need them.Additional energy transition policies and other forms of support are needed to facilitate the diffusion of clean energy technologies in ways that are consistent with improving the prospects of economic prosperity in EMDEs.This should also include th

234、e generation and diffusion of technologies to transform the minerals and metals critical to clean energy production.Promoting policies to facilitate energy transitions should also provide the opportunity to address the large technological divide across firms and households.Enterprises in EMDEs are,o

235、n average,far from the technological frontier.Evidence from firms across 22 EMDEs shows that both credit constraints and weak green enterprise management practices hold back corporate investment in clean energy technologies that are embodied in new machinery,equipment and vehicles(De Haas,et al.,202

236、3).These assets are not only more environmentally efficient,but they can also boost overall productivity.Moreover,green enterprise management practices are strongly correlated with the adoption of more sophisticated digital and other sector-specific technologies,which in turn enable these more capab

237、le firms to be more resilient in the face of economic shocks(Cirera,Comin and Cruz,2022).Therefore,improving private capital mobilisation and the enabling environment to facilitate the diffusion and adoption of green technologies,including green management practices among firms,can also stimulate th

238、e adoption of other technologies,spur business productivity and generate greater resilience to climate-related shocks.1.3.Organising framework Addressing climate change requires broadly two types of actions:mitigation of GHG emissions;and adaptation to minimise damage resulting from climate change a

239、nd extreme weather events.Every country needs to address both issues with priority action according to their circumstances.While both have substantial financing needs,the focus of this report is on mitigation of energy-related emissions clean energy transitions.Recognising the challenges that EMDEs

240、are likely to face in mobilising private finance for their clean energy transitions,this section introduces the principles that determine where and how public interventions can help ensure the mobilisation of sufficient private finance.It categorises the overall investment picture that is further el

241、aborated in Chapter 2.It discusses what types of additional regulatory and policy measures are required to address variations 34 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs in country-,sector-and project-specific risks,as well in the private returns on clean energy projects relative

242、 to fossil fuel production and use,as a precondition for the private bankability of projects.This sets the stage for the discussion of regulations and policies in Chapter 3.Finally,it differentiates between resources provided via policies to support projects directly(Chapter 3)and concessional resou

243、rces to lower the cost of finance and to crowd-in additional private finance(Chapter 4).It highlights the need for additional measures both to mitigate risk and to enhance returns to ensure sufficient private finance for the energy transitions in EMDEs.Three dimensions of energy transitions Public i

244、nterventions are needed to create the incentives for additional private finance in EMDEs to differing degrees across all aspects of energy transitions.These aspects can be grouped into three:on the supply side,the power and fuels transitions;and on the demand side,the end-use transition.The power tr

245、ansition involves accelerating the ongoing shift to low-emission electricity produced by renewables and nuclear power.Specifically,renewables means investment in solar PV,wind(onshore and offshore),hydro,geothermal,bioenergy and other renewable technologies.The power transition also includes investm

246、ent in strengthening and restructuring the underlying electricity grid networks(transmission and distribution).Given the intermittency of some renewable sources such as solar and wind,investment in a range of sources of flexibility in power market operation is essential,including robust grids,dispat

247、chable generation,storage(including batteries)and demand response.The fuels transition relates to the phasing down of fossil fuels,namely coal,oil,natural gas and their derivatives,and the scaling up of low-emission fuels,such as low-emission hydrogen(including hydrogen produced via electrolysis,usi

248、ng renewables),modern liquid and gaseous biofuels,and synthetic fuels.It also includes investment in carbon capture,utilisation and storage(CCUS).4 The end-use transition includes shifts in the energy used by all enterprises and households,with a focus on decarbonisation investments for three major

249、end users of fuels:industrial production;transport;and buildings.It includes investments in energy efficiency and savings,with the introduction of economic incentives for a full circular economy that minimises waste in energy and materials use.The overall package also includes investment in access t

250、o electricity and clean cooking for all excluded people.There are important commonalities and interdependencies between the transitions as they affect private investment.All three transitions require investment in substantial 4 CCUS is an umbrella term for a set of related technologies that can help

251、 to avoid greenhouse gas emissions.Includes:the separation or capture of CO2 before it can be emitted by industrial processes or power plants,or directly from the atmosphere;the transport of CO2 by pipeline or other means;the conversion of captured CO2 into saleable products;and the storage of CO2 i

252、n geological or mineral repositories for long-term isolation from the atmosphere.Chapter 1|Scaling up clean energy in EMDEs 35 1 IEA-IFC.CC BY 4.0.restructuring of existing production methods and business models,such as the transition away from fossil fuel production assets and the construction of c

253、harging infrastructure for EV batteries.They also create the risk of significant stranded assets and sunk costs,in the form of the conversion or retirement of production capacity before the end of its useful life and the associated impact on local workforces and communities.Across all three transiti

254、ons,there will be interdependent shifts in the production,transport,trade and consumption of energy and energy-consuming goods and services.Investment in renewable power projects will become more attractive in countries currently using coal-fired plants as these plants are retired,but investment in

255、the scaling up of renewables will be required before the phasing down of coal plants.Similarly,investment in low-emission hydrogen production requires demand from steel and other industrial users,while demand in turn is predicated on a market with available supply.Principles for creating demand for

256、private finance Demand for private finance in EMDEs is a derived demand.It is derived from the volume of projects that meet attractive risk-adjusted returns relative to other global bankable projects.Currently the main constraint to financing is not the supply of private finance,but the absence of p

257、rojects at a scale that is necessary for the transitions to be realised.The main reason for the absence of enough projects,in turn,is the absence of a robust policy and regulatory framework,including the needed flow of concessional resources,to close the gap between private and social returns and th

258、ereby improve relative risk-adjusted returns.An effective policy and regulatory framework is required to address those variations in country-specific costs and risks that are particularly acute in EMDEs.These are risks that raise the cost of capital in EMDEs relative to advanced countries(particular

259、ly relevant for high-CAPEX/low-OPEX projects that characterise many renewable projects),a cost that cannot be compensated for by higher,though still uncertain returns,and cannot be controlled by the project investor.They include:Macroeconomic risks and political instability of the host country.Under

260、developed markets,such as financial markets,which reduce the ability to manage financial risks such as foreign exchange risk.Policy risks,regulatory shortfalls and corruption,including renewable generation offtake risk.Higher costs of doing business due to poor infrastructure,reduced human capital,t

261、he overall business environment and investors lack of experience in many EMDE markets.There are also significant variations in costs and risks that are specific to projects across the three transitions and need to be addressed by effective policies and regulations.They include:The technology utilise

262、d and uncertainties regarding technological evolution.36 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs The importance of sunk costs(already incurred and irrecoverable)in the overall cost structure and the risk of stranded assets(that are retired to be replaced with cleaner facilities)

263、.The expected market size and profits,and uncertainties regarding their evolution.The resilience of clean energy supply chains,in particular the availability of inputs such as critical minerals and their ease of exploitation.In addition to measures to mitigate country-,sector-and project-specific ri

264、sks and costs,additional regulations and policies,including concessional resources,may in many instances be needed to enhance private returns on clean energy projects relative to fossil fuel production and use,and relative to clean energy projects in advanced countries.In choosing which projects to

265、support,policy makers should use the social rate of return on investment as the appropriate benchmark.It accounts for externalities including all environmental and social co-benefits associated with the abatement of GHGs,other market failures,and other transaction costs that lead to divergences betw

266、een private and social net benefits.A stable climate is a public good endangered by GHG emissions,which act as a negative externality.The first-best policy solution to raise clean energy returns relative to fossil fuel production is a global carbon tax,together with technology policies and compensat

267、ion payments for sunk costs and social adjustment costs(including to support relocation and retraining of workers and income assistance to those unable to adjust).However,a global solution such as a carbon tax is very difficult to implement due to information-related market failures and other transa

268、ction(especially bargaining)costs,including between current and future generations,and between people in different regions,both within and across countries(Blanchard,Gollier and Tirole,2022).For those countries where a carbon tax is not feasible and private investors are not able to capture the full

269、 social benefit of their investments,additional return-enhancement measures are needed.Revenue-enhancing measures are intended to substitute for the relative prices and the ensuing allocation of resources that would be achieved under a carbon tax,reflecting all environmental and social co-benefits.T

270、hey are needed to support the additional pipeline of projects and complementary investments that require these higher relative returns.Limited returns are indeed listed as the leading barrier to private investment in decarbonisation in Bains latest annual energy transition survey of more than 600 se

271、nior energy and natural resource executives,significantly ahead of lack of policy and regulatory support,lack of technology,slow permitting and legal processes,supply chain constraints and any supply-side shortfall of capital(Dougans,et al.,2023).The environmental and social co-benefits from clean e

272、nergy technology adoption that should be reflected in higher returns include a range of positive impacts passed on to customers.The efficient cooling systems powered by clean energy,for example,could help reduce food waste,deliver fresher food from rural to urban markets,distribute vaccines,and make

273、 work and at-home study more pleasant and effective.Chapter 1|Scaling up clean energy in EMDEs 37 1 IEA-IFC.CC BY 4.0.Some important clean energy projects require the involvement of more than one country to be viable and the most cost-effective.5 The bankability of private sector investments in thes

274、e international projects poses additional challenges and requires additional support beyond the mitigation of country-,sector-and project-specific risks and the enhancement of returns at the country level.Multi-country investments typically require multi-country governance of information flows,co-or

275、dination,and regulation to ensure joint accountability and enforceability and thereby to ensure bankability and attract private capital.Finally,in addition to sound regulations and policies,policy predictability and commitment to an announced transition path are critical to increase private finance.

276、The more predictable government regulations and policies are,the lower the risks for any investor.Political instability,corruption and conflict further increase risks.More broadly,better quality governance generally goes along with lower risk for private investors.Investors benefit from“visibility”o

277、f subnational,national and international programmes.These may include announced programmes on the procurement of new renewable generation capacity with enforceable targets,including auction dates,portfolio standards(obligations on distribution companies to buy an increasing share of low-emission ele

278、ctricity over time)and supporting regulatory reforms to lower offtaker payment risk.Political stability and good governance can also help secure environmental and social co-benefits,including energy access and inclusion for vulnerable groups and well-distributed positive outcomes across all stakehol

279、ders.Projects with varying levels of complexity Within the energy transitions,private finance in the end supports specific projects,which can be differentiated by the complexity of the challenges they pose to make them bankable.The complexity facing specific projects can be thought of as varying alo

280、ng a continuum across at least three dimensions:The extent to which the main technology is either established or fast maturing(e.g.solar PV and wind)versus emerging(e.g.low emissions hydrogen and CCUS).The extent to which,other than direct project costs,there are no associated restructuring costs or

281、 that these costs are easily recuperable in available secondary markets versus high sunk costs(e.g.non-depreciated assets with high irretrievable value that do not have valuable alternative uses,such as coal mines in the presence of bans on future energy-related use of coal).The extent to which poli

282、cy,regulation,governance and social adjustment challenges have been addressed and other public goods are in place versus significant unresolved co-ordination,information or public goods barriers to be addressed as a precondition to the projects viability.5 These include renewable generation projects

283、 as well as interconnections where supply is in a different country from the main sources of demand.A famous example is the Itaipu hydroelectric plant located at the border between Brazil and Paraguay,with power production beginning in 1984.In 2018 it supplied 15%of Brazils and 90%of Paraguays energ

284、y consumption.38 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs Some projects will be more complex along some of these dimensions and less complex among others,differentially affecting the bankability of the project.Less complex projects are more tractable and more straightforward cand

285、idates for private finance.They are often more easily replicable and scalable solutions that include investment in existing competitive renewable energy technologies where costs have been driven down dramatically in the last decade to accelerate the power transition.Investment in renewable power als

286、o benefits from established markets and proven solutions on the end-user side,for instance complementary investment in networks of EV charging stations or a battery leasing and swapping model to reduce the upfront EV costs.They also include power transmission and distribution projects in countries w

287、ith receptive business environments on the power side,as well as the decarbonisation of buildings on the end-use side.More complex projects involve more challenges,typically with a range of public-supported actions required to make the associated private investments bankable.They typically include h

288、igh sunk costs and the need to address prior contractual commitments between high-carbon fuel producers and users.They include the problem of stranded costs in power in localities and countries with a heavy dependence on coal,such as those associated with existing coal mines and processing facilitie

289、s,the phasing out of which is more complex than expanding renewable generation capacity.They are also more demanding from a technological standpoint.They may require massive restructuring on the end-user side(e.g.steel and cement producers)to substitute low-carbon for fossil fuels.In addition,they m

290、ay be complicated by the need to incorporate adjustments based on local stakeholder/community involvement.While many projects require both equity and debt finance,they need different mixes of financing sources and instruments.More complex projects involving heavy sunk costs and social adjustment cos

291、ts,including but not limited to major write-offs from power plant retirements or restructuring on the end-user side,will often require more public subsidies,equity and concessional finance.Concessional funding When considering which projects should have priority for concessional funding and how much

292、 may be required to crowd-in private finance,factors to consider include the relative importance of country-,sector-and project-specific risks and costs,and the projects return(including all environmental and social co-benefits relative to other investments).The“concessionality”gradient illustrates

293、these trade-offs in a simplified manner(Figure 1.6).The vertical y-axis represents the degree of“concessionality”needed to crowd in private investment in a particular energy transition project.Concessional resources here refer to resources that are extended at below-market terms.They may include dom

294、estic and global public or philanthropic funds extended on below-market terms both directly as project finance and indirectly by using concessional capital to catalyse investment in the project Chapter 1|Scaling up clean energy in EMDEs 39 1 IEA-IFC.CC BY 4.0.(e.g.through the use of a guarantee or a

295、 grant for project preparation).The latter,discussed in greater detail in Chapter 4,are termed“blended finance”when they mobilise multiples of additional private capital.Figure 1.6 The concessionality gradient IEA.CC BY 4.0.The need for concessional resources is determined by specific risk and cost

296、factors,including the maturity of the relevant technology The horizontal x-axis represents the state of the technology used in the project how established it is.Newer,untested and explorative technologies such as novel forms of low-emission hydrogen and CCUS are closer to the y-axis.These have great

297、er risk of failing to achieve sufficient cost reductions that would allow them to scale and be competitive with other available technological options;accordingly,expected returns are lower,all other things being equal.Concessional resources,by reducing the loss the investor might incur and/or enhanc

298、ing the return,can make them attractive enough to invest in.Given the global urgency to meet climate targets and the lack of access to technologies,especially in countries with relatively low intellectual property rights protections,concessional resources can also facilitate the transfer of specific

299、 technologies between innovators and adopters.Market forces alone are likely to be insufficient to provide the necessary technologies that are critical for the transition to net zero emissions to countries and regions.For more established technologies the extent of concession required is lower,such

300、as investment in solar panels,represented further to the right on the technology axis.Even with established technologies,some degree of concessional resource may be needed A B C D Emerging technology Established technology High concessional resources Low concessional resources 40 IEA-IFC|Scaling up

301、Private Finance for Clean Energy in EMDEs given market characteristics and the extent of externalities,other market failures,and other transaction costs that lead to divergences between private and social net benefits.The relationship between expected returns and technology is one of several relatio

302、nships that determine the need for concessional resources.In the figure,point A represents the degree of concessional resources needed for a particular technology.In countries where other risks are higher,the returns required for investment are higher(external-to-project risks such as macroeconomic

303、stability or currency depreciation risk that cannot be adequately hedged,or project risks such as higher-than-expected stranded costs).In these cases,the degree of concession offered to investors may need to be greater for the same technology,represented by point B.In the case where the technology i

304、s more established but other costs are higher(e.g.risks associated with retiring assets related to fossil fuel production and use),the degree of concession required might be at point C,the lower risks associated with the more established technology being balanced by other higher risks or costs.Conve

305、rsely,the more that countries directly support energy transition investment through a carbon tax or equivalent measure,the lower the need for additional concessional resources to incentivise private investors,resulting in a position like point D on the concessionality gradient.Besides the trade-offs

306、 between different types of risk and their implications for the need of concessional resources,the figure highlights the key role of innovation.Just as many renewable technologies have moved from emerging to mature,thereby reducing the concessional resource required to support projects with these te

307、chnologies,innovations that bring down the cost of new and emerging technologies will similarly reduce the amount of concessional resources required to support the clean energy transition,all else being equal.Chapter 1|Scaling up clean energy in EMDEs 41 1 IEA-IFC.CC BY 4.0.References Blanchard,O.J.

308、,C.Gollier and J.Tirole(2022),The portfolio of economic policies needed to fight climate change,Peterson Institute for International Economics.Cirera,X.,D.Comin and M.Cruz(2022),Bridging the Technological Divide:Technology Adoption by Firms in Developing Countries,World Bank.De Haas,R.et al.(2021),M

309、anagerial and Financial Barriers to the Green Transition,CEPR Discussion Paper.Dougans,G.et al.(2023),State of the Transition 2023:Global Energy and Natural Resource Executive Perspectives,Bain&Company,Inc.,Boston,MA.IEA(International Energy Agency)(2022),World Energy Investment 2022:Methodology Ann

310、ex,https:/ clean energy transitions in emerging and developing economies,https:/www.iea.org/reports/financing-clean-energy-transitions-in-emerging-and-developing-economies.Lesk,C.,P.Rowhani and N.Ramankutty(2016),Influence of extreme weather disasters on global crop production,Nature,Issue 529,pp.84

311、87.OECD(Organisation for Economic Cooperation and Development)(2022a),Climate Finance and the USD 100 Billion Goal,https:/www.oecd.org/climate-change/finance-usd-100-billion-goal/.OECD(2022b).Environment,Innovation in environment-related technologies,Summary indicators(database),https:/stats.oecd.or

312、g/.Ritchie,H.,M.Roser and P.Rosado(2020),Emissions by sector(database),https:/ourworldindata.org/emissions-by-sector.Songwe,V.,N.Stern and A.Bhattacharya(2022),Finance for climate action:Scaling up investment for climate and development,Grantham Research Institute on Climate Change and the Environme

313、nt,London School of Economics and Political Science,London.World Bank(2023),Poverty&Inequality Indicators(database),https:/pip.worldbank.org/poverty-calculator.World Bank(2022),Firms experiencing electrical outages(database),https:/data.worldbank.org/indicator/IC.ELC.OUTG.ZS.Zhao,C.,Liu,B.,Piao,S.(2

314、017),Temperature increase reduces global yields of major crops in four independent estimates,Proceedings of the National Academy of Sciences,Vol.114,Issue 35,pp.9326-9331.Chapter 2|Clean energy investment in EMDEs 43 Chapter 2 Clean energy investment in EMDEs Todays trends,tomorrows needs In 2022 ar

315、ound USD 770 billion was invested in clean energy across EMDEs.Although this amount is set to rise in 2023,the geographical distribution of this spending is very uneven:China accounts for two-thirds of clean energy investment in EMDEs,and the top three countries(China,India and Brazil)for more than

316、three-quarters.Outside China,spending on clean energy in EMDEs in recent years has been essentially flat at around USD 260 billion per year,a worrying trend.The largest share of clean energy investment in EMDEs is in power generation,reflecting the maturity of many clean generation technologies.Sola

317、r PV is the only technology that has seen consistent increases in investment spending.Financing costs play a major role in determining the LCOE in key emerging markets,constituting around half of the LCOE for utility-scale solar PV projects.Only China exhibited a lower overall share of financing cos

318、ts,closer to that in advanced economies.Low and lower-middle income countries,home to more than 40%of the global population,accounted for only 7%of global clean energy spending in 2022.One area where shortfalls in investment and infrastructure in EMDEs are particularly visible is energy access.These

319、 countries include all of the 775 million people that lack access to electricity and the 2.4 billion people that lack access to clean cooking fuels.Clean energy investment in EMDEs needs to grow from USD 770 billion in 2022 to USD 2.2-2.8 trillion by the early 2030s in order to meet growing demand i

320、n a sustainable way,to reach energy-related UN Sustainable Development Goals and to get on track for the outcomes targeted in the Paris Agreement.Achieving universal energy access by 2030 would take less than 3%of the overall investment amount.This more than threefold increase in clean energy invest

321、ment goes well beyond a reallocation of existing investment from fossil fuels to clean technologies.It means attracting new sources of funding to the energy sector.For the moment,with few exceptions,this surge in investment is not yet visible.Without it,EMDEs will not be in a position to meet rising

322、 demand for energy services in a sustainable way,prolonging reliance on fossil fuels and leading to consistently high global emissions.Over the next ten years,more than one-third of the clean energy investment required by the early 2030s goes into low-emission generation;another one-third is needed

323、for improvement in efficiency and other end-use spending,including electric mobility;just under a quarter is needed for electricity grids and storage;and around 8%for clean fuels.In climate-driven scenarios,we estimate that the private sector will need to finance about 60%of the clean energy spend i

324、n EMDEs.S U M M A R Y 44 IEA-IFC|Scaling up Private Finance for Clean Energy in EMDEs 2.1.Introduction The prospects for secure progress to reach the energy-related Sustainable Development Goals(SDGs)and the objectives of the Paris Agreement ultimately come down to investment.The purpose of this cha

325、pter is to explore the state of play for clean energy investment across EMDEs and then to quantify what will be required over the period to 2035,in different countries and regions,to get on track.We examine the opportunities and pitfalls facing investors,notably the wide variations in the cost of ca

326、pital.We highlight the areas that are moving more quickly,as well as those that are lagging behind,and the sources of future investment and finance that will be required.As spending shifts to generally more capital-intensive technologies,the role of financing becomes even more critical for the feasi

327、bility and affordability of the transition,especially at a time of rising debt and interest rates.The expansion and transformation of the power sector to boost the efficient use of clean electricity and ensure universal energy access is a key pillar of sustainable development.This is reflected in th

328、e rising share of final energy consumption that is met by electricity in climate-driven scenarios.The expanding role of electricity across a wide range of end uses also requires a major increase in spending on grids and storage to meet growing demand,integrate renewables and modernise power systems.

329、Some EMDEs have a lot of carbon-intensive electricity generation,notably countries in Asia that have relatively young coal-fired fleets,which under normal circumstances might have long operating lifetimes ahead of them.Reducing reliance on these polluting assets while maintaining affordable,reliable

330、 electricity supply is a key policy and financing challenge.Clean energy investment requirements go well beyond electricity.Investments that target more efficient buildings,equipment,appliances and vehicles are essential to relieve strains on the supply side and on consumer bills.Moreover,many EMDEs

331、 are urbanising and industrialising at a rapid pace.This means rapidly increasing demand for energy-intensive goods such as cement,steel and chemicals,as well as for heavy-duty transport and shipping.Traditionally,this process has been deeply intertwined with the use of fossil fuels,but achieving de

332、ep reductions in global emissions means finding a lower-emissions pathway.Clean electrification cannot take on all these tasks directly,opening up roles for investment in low-emission fuels in future EMDE pathways.Competitive costs also open up the possibility for some EMDEs to produce low-emission

333、fuels for export,as Brazil does already for biofuels and as other countries may do in the future for low-emission hydrogen.2.2.The clean energy investment landscape in EMDEs The role of EMDEs in global energy investment is growing but the trends are very uneven,both in the geographical distribution of spending and in the consistency of these capital flows with SDGs.The diversity of EMDEs in their