Government plans in place today call for investing almost US$98 trillion in energy systems over the coming three decades. The economic stimulus packages announced so far would direct US$4.6 trillion into sectors that have a large and lasting impact on carbon emissions, namely in agriculture, industry, waste, energy and transport, of which less than US$1.8 trillion is green.
To ensure a sustainable, climate-safe and more resilient future, significant investments need to flow into an energy system that prioritises renewables, electrification, efficiency and associated energy infrastructure. At the same time, those investments must not lead to lock-in effects that are not compatible with the 1.5°C Scenario. IRENA’s 1.5°C Scenario could be achieved with an additional US$33 trillion over the planned investments, for a total investment of US$131 trillion over the period to 2050. Over 80% (US$116 trillion for the period to 2050 or around US$4 trillion per year on average) needs to be invested in energy transition technologies (excluding fossil fuels and nuclear) such as renewables, energy efficiency, end-use electrification, power grids, flexibility innovation (hydrogen) and carbon removal measures.
The 1.5°C Scenario shows that cumulative investments of over US$24 trillion should be redirected from fossil fuels to energy transition technologies over the period to 2050. In annual terms, an over two-fold rise in energy sector investments to US$4.4 trillion per year until 2050 would be needed compared to US$1.8 trillion invested in 2019 – nearly 5% of global estimated gross domestic product today. Compared to the Planned Energy Scenario (PES)*, US$1.1 trillion additional energy sector investments would be needed in the next three decades. Over the more immediate term, up to 2030, cumulative investments in the energy system, including infrastructure and efficiency, would reach US$57 trillion. In addition to money for research and development, equipment and infrastructure, investments in people are needed, including for training and reskilling, labour market programmes, economic development and social protection measures.