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MOBILISATION OF FINANCING RESOURCES FOR RENEWABLE INVESTMENTS

Erstellt: 26. September 2022

INVESTMENTS IN AFRICA, INDIA AND SOUTH AMERICA TO REACH THE 1.5°C GOAL

This paper highlights that without appropriate long-term financing schemes most investments for energy supply in countries like Africa, India and South America unfortunately will be undertaken in fossil technologies. The simple reason is the fact that the investment necessary for a given quantity of energy per year is by a factor of ~5 less for fossil compared to renewable technologies. In an “ideal” world – zero Carbon emissions and equal energy per capita globally in the 2050s – the needed investments are 1,700 bn € annually starting in 2025 with a peak of 2,500 bn € in the mid-2030s and going to zero in the 2060s. Two additional scenarios (“medium” and “pessimistic”) shift the peak towards the mid-2060s and mid-2090s, respectively. While this gives a reduction for the annual investment of ~1/3 and 2/3, respectively, there is an increasing danger for an unforeseeable migration of desperate people from Africa to Europe and South America to North America. If all investments are done with fossil technologies there is a cumulated amount of up to 5,000 bn t of CO2 released into the atmosphere. Comparing this with the residual amount of 301 and 1,050 bn t CO2 for the 1.5 and 2.0°C goal, respectively, the urgent need for investment support from the industrialized countries is obvious. Fortunately there is enough money from private people and institutional investors available, but which can only be mobilized, if the risk is minimized by governmental institutions (KfW, EIB, world bank etc). Today these banks give only for a period of 5-6 years support, while at least 15, better 20 years are necessary for such infrastructure projects like electrifying Africa, India and South America. Based on a project in Mali we could prove that with PV mini grids the electricity infrastructure can be implemented with private money, but substantial changes have to be foreseen by governmental organizations to mobilize the huge needs of private capital in the coming years. One potential financing model is discussed.

Download: 220926_WCPEC 8_Milano_Africa_India_SA_RE investment.pdf


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