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$286 billion invested in renewable energy - not enough

Staff writer |
In 2015, $286 billion was invested in renewable energy. That is an enormous sum of money by many measurements, but is it enough, and are we on track to meet the energy demands of the future with renewables?

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“Unfortunately it’s not even close to enough,” said Joanne Jungmin Lee of International Renewable Energy Agency's (IRENA) Knowledge, Policy, and Finance Centre. “More money must be invested in renewables to meet the world’s growing energy demand and to realise their socioeconomic and environmental benefits.”

IRENA estimates that deploying renewables on the scale necessary to limit global temperature rise below 2 degrees would require current investment to double by 2020, and triple by 2030 to around US$ 900 billion annually.

Lee admits it’s a huge sum but thinks it’s achievable — given renewable energy’s increasing cost-competitiveness — if sound policies and targeted financial instruments are used to enable markets and attract more investment from the private sector.

“It’s unlikely that more money can come from the public sector above its current levels, which is about 15% of total investment in renewables, so we must focus on attracting private investors by making renewables more attractive” she said.

Making renewables more attractive for investors means removing market barriers and mitigating risks. Governments and public finance institutions can provide technical assistance and grants for project preparation and development, while structuring and designing on-lending and co-lending options can improve access to finance and build local lending capacity.

“Through public finance institutions, private investors and lenders can get access to risk mitigation instruments like guarantees, currency hedging instruments and liquidity facilities,” explains Lee.

“However, the use of guarantees in renewable energy investment remains limited. In 2014 IRENA completed a survey of different public finance institutions around the world, and found that on average these institutions only spent around 4% of their total infrastructure risk mitigation issuance value on renewables.”

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