Phase-out of fossil fuels & finance for Global South must for meeting renewables target: 350.org

Report by 350.org says that renewable energy will play key role in meeting climate goals

As the world gears up for the UN Climate Talks to be held under COP28 in Dubai, where a global renewable energy target is poised for adoption, environmental activist group 350.org has called for a comprehensive package that includes the phase-out of fossil fuels and a finance package for the Global South in order to increase global renewable energy production capacity.

In its report, Power Up for Climate Justice: Financing and Implementing a 1.5°C – Aligned Global Renewables Target, 350.org says that as experts warn 2023 will almost certainly be the hottest year on record, limiting global heating to within 1.5°C is of utmost urgency, and cannot be achieved without a global renewable energy target.

It adds that however, in order for the global renewable energy transition to be implemented at the speed, scale, and equitability necessary, it must be accompanied by a package for the Global South.

‘‘For the global renewable energy target at COP28 to address global energy needs and redress fossil fuel dependency, it must include commitments to triple fair, safe and clean renewable energy capacity by 2030 and deploy 1.5 TW per year thereafter, double energy efficiency by 2030, and completely phase-out of fossil fuels by 2050. This target must be also accompanied by rapid and at scale equitably finance,’’ says May Boeve, Executive Director of the group.

‘‘To achieve the proposed global renewable energy target by 2030, massive growth in financial investment into renewable energy is required in the Global South outside China, from both private and public sources. Barriers such as debt and the inequitable cost of capital in the Global South, significantly hinder investment in renewable energy. To facilitate the global renewable energy transition, we need debt cancellation at scale, $100 billion in concessional finance per year, and $200 billion in grants per year,’’ says Andreas Sieber, Associate Director of Global Policy.

“A renewable energy target at COP28 will only constitute a meaningful step towards climate justice if it is accompanied by a clear roadmap for implementation that includes equitable mechanisms and commitments in the financial and policy realms, as well as an urgent and equitable phase-out of fossil fuels. Without these, any agreement would represent a hollow, ‘easy win’ for the COP28 President Al Jaber, and risk allowing polluting countries to hide behind a renewables goal while continuing to emit fossil fuels,” adds Seiber.

The report outlines further demands for COP28’s final decision text. It says the final text must be underpinned by a legal framework, rely solely on proven renewable energy technologies like wind and solar, and include commitments by all parties to the conference to implement the mechanisms and conditions necessary to facilitate the success of a global renewable energy target and a just transition away from fossil fuels.

The report says that for the global renewable energy target to holistically address global energy needs and redress fossil fuel dependency, myriad organisations have agreed the target must contain provisions for several quantitative goals. First, by 2030, to have tripled fair, safe and clean renewable energy capacity to over 11 terawatts (TW), and from 2030 onwards, add a yearly deployment of 1.5 TW of renewable energy capacity. By 2030 at the latest to have doubled yearly energy efficiency gains. By 2050, to have achieved a complete, just, and equitable phase out of all fossil fuels, namely coal, oil and gas, and by 2030, to have reduced greenhouse gas emissions by 42 pc relative to 2019 levels.

The report says that COP28 must underpin the tripling of renewables with tangible political commitments and processes to unlock the finance required. ‘‘To power up renewables swiftly, we need to deliver finance equitably, rapidly, and at scale, both within and between countries. In their 2023 leaders communiqué, the G20 Heads of State agreed on the need to invest approximately USD 4 trillion by 2030 to meet the goal of tripling renewable energy capacity by 2030. While this is a significant amount, it should be viewed as an investment in the truest sense of the word, as the social, health, ecological, and financial opportunity costs of not investing are disastrous, particularly for the most climate vulnerable communities least responsible for the climate crisis. In 2022, only USD 260 billion was invested in the Global South despite it being home to approximately 5 billion people,’’ says the report.

Matter of money

According to the International Energy Agency (IEA), to stay on track for 1.5°C of global heating, and meet these energy needs, investment in the Global South needs to rise by 2030 to around USD 1.9 trillion annually, reflecting a sevenfold increase. It is clear that to meet the goals of an ambitious global renewable energy target will require significant large-scale finance programmes. While overall investment into renewables is increasing, and should be celebrated, without a significant shift in the global finance architecture, the transition cannot occur at the scale and speed necessary, nor be equitable.

While finance is the key to unlocking a rapid energy transition at scale, it can also present significant barriers. Overcoming these is critical to progress. The global financial system carries a heritage of colonialism, extractivism and bias against the world’s poorest people. It is a system that continues to produce myriad disadvantages for the Global South, including cycles of debt and a higher relative cost of capital – barriers which significantly hinder the prospects for an equitable energy transition. As a result, investment into renewables in the Global South needs to increase at an accelerated rate in comparison to the Global North, and requires a crucial combination of favorable domestic policies and international support.

The report also tackles the issue of debt of the developing nations and says that cancelling external sovereign foreign debt is a necessary initial step to free up the significantly constrained fiscal space of the Global South. Debt cancellation will enable governments to provide the framework to support the power up of renewables and provide clean energy access to their people.

It says that while COP28 itself cannot make these decisions, the negotiated outcome at COP28 should recognise these constraints and call on relevant bodies and fora to cancel external debt in order to enable climate action. It should also call for providing an estimated USD100 billion in concessional finance for the Global South without increasing unsustainable debt levels. It says that one form of redress for inequalities inherent in the cost of capital in the Global South is the provision of concessional finance, something that has too often been obscured in climate finance discourse, as an Oxfam study exposed. Estimates predict the need for USD 100 billion in yearly concessional finance to unlock the projected USD 1.14 trillion in private investment needed for the global energy transition by 2030.

It has also asked for a significant scale up of USD 200 billion per year in grants for the Global South. Of the USD 1.9 trillion in total yearly investment needed for the energy transition in the Global South, an estimated 40 pc must come in the form of public finance, approximately USD 760 billion per year.

It says that reaching USD 760 billion per year will require an additional USD 500 billion in yearly public investment, if this USD 500 billion is highly concessional, reflected by a 40 pc grants ratio, then a further USD 200 billion will be needed in yearly grants.