Accelerating the energy transition in emerging markets and developing economies (EMDEs) is a critical step in limiting global temperature increase to 1.5°C above pre-industrial levels by the end of this century. The global energy transition can bring significant development opportunities for EMDCs by unlocking their resources and potential as part of a just and inclusive global energy transition.

However, enabling the energy transition in EMDEs requires a paradigm change in energy investment, which remains concentrated in a handful of countries and regions. This is the result of higher real and perceived investment risks – such as political instability, grid integration problems, regulatory barriers, unreliable off-taker arrangements, foreign currency volatility and a shortage of skilled workers. Such risks drive up the cost of capital and limit the flow of finance to those regions most in need, which in turn hampers socio-economic development.

This report explores ways to identify and mitigate investment risks in the EMDEs, and identifies the role of energy planning in attracting greater investment in renewable energy. In addition, the report also highlights the important role sustainable fuels will play in delivering the energy transition, due to their unique role of in decarbonisation – particularly in hard-to-abate sectors. The report also discusses the challenges associated with delivering a just and inclusive energy transition, as well as the opportunities that the energy transition can bring for those in need of access to modern energy services and clean cooking.

Report by the International Renewable Energy Agency