IEA works to reduce cost of renewable energy in developing countries

The International Energy Agency will work to ensure the World Bank, regional development banks and others prioritise the cost of investing in clean energy in developing countries following the COP28 summit last week, its Executive Director said.

World governments agreed to triple renewable energy generation capacity by 2030 and transition away from fossil fuels at the COP28 United Nations climate conference in Dubai. But no mechanism was agreed to finance the transition to clean energy in developing countries.

Clean energy investments in emerging and developing countries have been flat since 2015, whereas globally it almost doubled, with most of the growth coming from China and advanced economies, IEA Executive Director Fatih Birol said on Friday on the sidelines of an energy conference in Istanbul.

"For the IEA, the main story between now and Baku, will be how we can find de-risking mechanisms to make sure there is a flow of capital to developing and emerging countries," Birol told Reuters. The next climate summit will be held in Baku next year.

Risks mean that the cost of capital for solar plant investments in the developing world could be up to four times higher compared with that in advanced economies, preventing flow of capital, Birol said.

"It will be our job to make sure that the financing of clean energy, de-risking those investments, providing concessional funding is a key priority for the World Bank, regional development banks and also the finance sector."

"We have more than enough capital in the world now. If the World Bank, regional development banks and financial institutions provide some guarantees, de-risking mechanisms, the money will flow very quickly as the potential is huge," he said.