Record growth in renewables

Francesco La Camera, director-general of the International Renewable Energy Agency (IRENA), talks to The Energy Year about global trends in the energy transition and the UAE’s key role. Abu Dhabi-headquartered IRENA is a 167-member intergovernmental organisation supporting countries in their transition to a sustainable energy future.

How do you see the energy transition accelerating in the post-pandemic era?
In the aftermath of the Covid-19 pandemic, and in the face of rising geopolitical tensions, it is clear that the energy transition is not accelerating as fast as it should be. It is imperative we course correct to accelerate progress and limit rising temperatures to avoid further detrimental effects on the world’s population, particularly vulnerable populations suffering from the destructive impacts of climate change.
Our 2023 World Energy Transitions Outlook (WETO) states clearly that putting the energy transition back on track requires a complete transformation in the way societies consume and produce energy. We do not have time for a new energy system to evolve gradually over centuries.
The introduction of the energy transition reduces harmful emissions, while also unlocking new investment opportunities, bolstering the economy, creating jobs, and improving energy security and affordability.
At the end of 2022, global renewable power capacity amounted to 3,372 GW, with renewable power capacity growing during the year by a record 295 GW. According to IRENA’s data, an impressive 83% of all power capacity added last year was renewable. These numbers are a testament to the resilience of renewables. Despite global uncertainties, renewables continue to grow at record levels. This must, however, accelerate if we are to stay on a path to limit global warming to 1.5 degrees Celsius. Renewable energy capacity needs to more than triple by 2030 to more than 11 TW globally.
Achieving this global renewable energy target is necessary to meet growing energy demand and to generate green jobs. Based on IRENA’s review of employment in the sector, renewable energy jobs reached approximately 12.7 million in 2022, an increase of 700,000 from the previous year. This indicates that employment in the sector remained resilient in the face of multiple, compounding crises.
If we embrace a renewables-based transition, the total number of jobs in the renewable energy sector can reach 38.2 million by 2030. This growth in jobs – if supported with holistic policies including training and upskilling workers – can support a sustainable, inclusive and just energy transition. We are excited to see the COP28 presidency supporting our call to more than triple renewable power capacity by 2030.

To what extent is electrification a driver of the energy transition and decarbonisation?
According to IRENA’s 1.5-degrees-Celsius pathway, the main drivers of the energy transition are electrification and efficiency, enabled by renewable energy, green hydrogen and sustainable biomass. As we progress along this path, we see electricity becoming the dominant energy carrier of the future, with its share of projected global energy consumption exceeding 50%, a substantial increase from its 2020 level of 22%.
In this scenario, smart electrification emerges as a transformative force for sectors such as road transport, heating and cooling, while the challenge to decarbonise hard-to-abate sectors, including long-haul shipping and manufacturing, can be effectively addressed using green hydrogen.
Our new report, Innovation Landscape for Smart Electrification: Decarbonising End-Use Sectors with Renewable Power, provides governments with a toolbox of 100 cutting-edge innovations to decarbonise end uses, accelerate the road to net zero and raise ambitions at COP28. Some of the most notable innovations included in this report are electric vehicle batteries, smart charging, heat pumps, high-temperature electricity-based applications for industry and hydrogen storage.

What challenges are found in securing project finance and investment in global renewable energy projects?
Investments in renewable energy reached USD 500 billion in 2022. However, this is only a third of the average investment needed each year in renewables under IRENA’s 1.5-degrees-Celsius scenario. Notably, 85% of global renewable energy investment benefitted less than 50% of the world’s population and only 2% of global investments in renewable energy in the last two decades were made in Africa.
One of the reasons behind this glaring disparity is policy. For many years, policies have focused primarily on mobilising private capital. However, private capital tends to flow to technologies and countries with the fewest associated risks, be they real or perceived. We need much stronger public-sector intervention to help channel equitable investments into countries and technologies. Otherwise, the gap in investment between the Global North and Global South will continue to widen.
IRENA’s World Energy Transitions Outlook offers a plan to overcome these problems. It suggests three main steps: first, building the right infrastructure, such as power grids and transport routes over land and sea, to handle new places for production, trade and demand; second, better rules and regulations guiding investment in the right direction; and third, adjusting the skills and abilities of organisations to match the kind of energy system we want to build.
We must also transform how countries collaborate. Multilateral financial institutions need to focus on building the infrastructure needed for the new energy system. This would help address development and climate goals simultaneously, leading to improved economic and social conditions. Importantly, it would also help businesses invest in countries and areas that are now struggling with high costs. Most of this funding should be in the form of loans that are easy to pay back, but for the poorest countries and small island nations, some of the funding would need to be provided in the form of grants.
IRENA has also developed an innovative approach to make affordable climate financing more accessible for developing countries. The Energy Transition Accelerator Financing (ETAF) platform is a global initiative that seeks to mobilise funds towards bankable projects in developing countries. The aim is to help achieve an inclusive and sustainable energy transition, while having a positive economic and social impact on developing countries. It provides a new formula blending finance and expertise to minimise risks and increase impact.
Backed by the UAE, this platform initially aimed to mobilise at least USD 1 billion in capital by 2030. However, thanks to the most recent partnership with the Inter-American Development Bank and IRENA, which builds on the contributions and support of other existing ETAF partners, including the Abu Dhabi Fund for Development (ADFD), the Asian Infrastructure Investment Bank (AIIB), Swiss Re, Masdar and the OPEC Fund, ETAF has surpassed this initial target, with total commitments already amounting to USD 1.25 billion. We are also expecting new partners to join ETAF before COP28.

To what extent can Middle East markets serve as breeding grounds for renewable energies?
The GCC countries, and the Middle East more broadly, have long been known for their critical role in global energy markets as major suppliers of oil and natural gas. Yet, in the past decade, the Middle East region has made striking progress in the renewable energy space. Saudi Arabia, for example, is building its first utility-scale wind power farm, Dumat Al-Jandal, which is set to be one of the largest in the Middle East. The energy transition has become a key theme running through national plans, targets and strategies in recent years, as economies in the region rapidly diversify away from a dependence on hydrocarbons.
The UAE – after Egypt, Morocco and Qatar – will soon become the fourth Arab nation to host COP. It is keen to position the summit as the turning point on climate action since it involves the first global stocktake of the Paris Agreement.
The COP28 Presidency is aiming to accelerate an energy transition that puts all economies on a path towards a sustainable economic model that is both transformational and just, while amplifying IRENA’s call to triple renewable power capacity by 2030. Reflecting the UAE’s commitment to this global goal, His Highness Sheikh Mohammed bin Rashid Al Maktoum, vice-president and prime minister of the UAE and ruler of Dubai, recently announced that in the coming seven years, the country will invest up to AED 200 billion (USD 54 billion) in renewable energy. This undertaking embodies the UAE’s unique contribution to climate action, adopting the renewable energy targets that IRENA has encouraged the international community to consider.
The UAE is making significant sustainability progress abroad, committing more than USD 50 billion across 70 countries, including 27 island nations. They have also invested heavily in integrating large-scale solar power into its energy mix, triggering a fall in the cost of solar energy and empowering other GCC countries to embrace solar power and develop other clean energy projects.

What is hydrogen’s role in the energy transition and what challenges must be overcome to realise its full potential?
IRENA has been leading the conversation around the potential of green hydrogen in the energy transition and has since collaborated with several stakeholders to build knowledge about the trade, market design, infrastructure, regulation, innovation and financing of green hydrogen. We also look at cross-cutting issues of hydrogen certification, supply chain, repurposing the gas grid, critical materials and policy measures.
As global economies aim to become carbon neutral, we have found that competitive hydrogen and synthetic fuels derived from hydrogen, such as ammonia, methanol and kerosene, will be key components of the energy mix. These fuels offer an emissions mitigation solution for industry and transport processes that are hard to decarbonise through direct electrification.
To realise the full potential of hydrogen in the energy transition, the sector will need to overcome significant challenges in areas such as infrastructure, production, storage, transportation, policy, regulation and technology. In addition to the international trade agreements needed to establish a global hydrogen market, and certifications to ensure the sustainability of low-carbon hydrogen production, the global power system’s capacity, mostly for hydrogen production, would also need to increase five-fold under IRENA’s 1.5-degrees-Celsius scenario.
By 2050, the electricity needed for hydrogen production could amount to a quarter of global power generation, and even more in some countries. However, with integrated planning we can ensure a bankable pipeline of renewable power projects to meet this growing demand for hydrogen as well as electrolysers. Hydrogen production can also be fast-tracked by implementing some of the recommendations outlined in the COP28 Presidency’s plan of action, which includes countries supporting a mutual recognition of hydrogen standards and both the private and public sector deploying capital to scale up hydrogen trade infrastructure.

In what ways is IRENA actively supporting countries in their transition to a more sustainable energy future?
IRENA is committed to taking a leading role in accelerating the global energy transition, as a global voice for renewables, to combat climate change and improve lives by powering an urgent shift towards increased energy access, reduced inequalities, improved energy security, and more prosperous and resilient economies and societies.
With this mission as our north star, we are providing countries with knowledge, data and analyses on all aspects of the energy transition and its impact at the global, regional, national, and sectoral levels. This is evidenced by our launch of the WETO report, which emphasises our unique contribution to COP28, highlighting the need to triple renewable energy capacity, which has also now become a key aspect of the COP28 Presidency’s narrative.
We are also galvanising international collaboration to provide an inclusive platform for all stakeholders to come together to foster targeted action, activities, and knowledge sharing for greater impact on the ground. This can be seen through our inclusive, multi-stakeholder platform, ETAF, which since its inception has grown its partnerships and commitments, so much so that it has already surpassed its USD 1 Billion by 2030.
We also pursue excellence in renewables innovation, development, and deployment and promote practical applications of new technologies, which is embodied by our Innovation Landscape for Smart Electrification report, providing governments with a toolbox of 100 cutting-edge innovations to decarbonise end-uses, accelerate the road to net zero, and raise ambitions at COP28.
Finally, we assist in regional and country level decision making, supporting energy transition implementation strategies and national energy plans.
We also support renewables-based solutions that can transform the lives of vulnerable communities across the most vital sectors for socio-economic development. This can be seen through our Empowering Lives and Livelihoods initiative, which will launch at COP28, representing a multi-stakeholder partnership to commit USD 1 billion towards renewables for adaptation to connect people and livelihoods through renewable solutions in agri-food and health sectors in LDCs and SIDS.

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