IEA-IFC report urges tripling clean energy investment in developing economies

A joint IEA-IFC report found annual clean energy investment in emerging and developing economies must more than triple, from $770 billion in 2022 to up to $2.8 trillion by the early 2030s, to meet energy demand and Paris Agreement goals. The findings underscore the private-finance mobilisation and blended-finance structures India needs to fund its own energy transition.

A report by the International Energy Agency (IEA) and International Finance Corporation (IFC), titled Scaling Up Private Finance for Clean Energy in Emerging and Developing Economies, found annual clean energy investment must rise from $770 billion in 2022 to as much as $2.8 trillion by the early 2030s. Two-thirds of finance for clean energy projects in these economies (excluding China) should come from the private sector, with current annual private financing of $135 billion needing to reach up to $1.1 trillion within a decade.

Emerging and developing economies, their energy developers, institutional investors and concessional finance providers are central to the report's findings. It identifies newer technologies needing concessional support, including battery storage, offshore wind, renewable-powered desalination and low-emissions hydrogen, estimating $80 billion to $100 billion of concessional finance required annually by the early 2030s outside China. The report highlights green, social, sustainable and sustainability-linked bonds, and aggregation-and-securitisation platforms bridging small project sizes and the minimum investment thresholds of major institutional investors.

Indian renewable developers, financial institutions and policymakers should note the report's call to strengthen regulatory frameworks, energy institutions and infrastructure to overcome high upfront and capital costs. Recommended policy reforms include addressing fossil fuel subsidies, lengthy licensing, land-use rights uncertainty, restrictions on private or foreign ownership and inadequate pricing. Indian entities should assess opportunities in blended finance, sustainability-linked bond issuance, and securitisation platforms to attract the private capital the report deems essential alongside increased public funding.

Key figure — Required annual clean energy investment: up to $2.8 trillion by early 2030s