The United Nations on Wednesday called for massive investment in clean energy in developing countries, saying there was otherwise little hope of achieving any climate goals by 2030.
"Developing countries need renewable energy investments of about $1.7 trillion annually but attracted foreign direct investment in clean energy worth only $544 billion in 2022," the UN's trade and development agency UNCTAD said.
"We cannot fulfil the world's energy needs and safeguard our planet and our future without massive private sector investment in renewables in developing countries," said UN chief Antonio Guterres.
"We are at least a decade late in our efforts to combat global warming. Investment in renewable energy in developing countries is therefore essential and often the most economical way to bridge the energy gap.
"But while the transition to renewable energy is a global priority, investments in energy infrastructure and efficiency still fall far short of what is needed."
"International investment in renewable energy has nearly tripled since the Paris climate accord was struck in 2015," UNCTAD noted in its annual World Investment Report.
However, it said much of the growth was in developed nations.
"Since 2015, 31 developing countries, including 11 least developed countries, have not yet registered a single utility-sized international investment project in renewables or other energy transition sectors," the report said.
"The scale of the challenge is enormous," said UNCTAD chief Rebeca Grynspan.
"A significant increase in investment in sustainable energy systems in developing countries is crucial for the world to reach climate goals by 2030."
The agency called for debt relief to give developing countries fiscal space to invest in clean energy transition.
The report also said that fossil fuel subsidies around the world amounted to a record $1 trillion in 2022 -- eight times the value of subsidies provided to renewable energy.
"Fossil fuel subsidies represent a disincentive to investment in the energy transition because they make it more challenging for renewable energy to compete, especially when it does not receive the same level of support," it said.
"Although phasing them out is complex, particularly for developing countries, doing so would help encourage investment in renewable energy."
UNCTAD's report said that after a steep drop in 2020 and a strong rebound in 2021, overall global foreign direct investment (FDI) declined by 12 percent in 2022, to $1.3 trillion.
"The slowdown was driven by the global Poly crisis: the war in Ukraine, high food and energy prices, and debt pressures," it said.
International project finance and cross-border mergers and acquisitions were especially affected by tighter financing conditions, rising interest rates and uncertainty in capital markets, the report said.
UNCTAD expects downward pressure on global FDI to continue in 2023.
FDI in developing countries increased by four percent to $916 billion and represents more than 70 percent of global flows -- a record share.
However, this growth is concentrated in a small number of large emerging economies.
"FDI flows to many smaller developing countries are stagnant, while flows to the least-developed countries fell by 16 percent from an already low base," said Grynspan.
The top 10 host economies for FDI inflows in 2022 were the United States, China, Singapore, Hong Kong, Brazil, Australia, Canada, India, Sweden and France.
