Investing in Renewable Energy Transition as a Key Trend in the Global Economy

Abstract

Background. Energy transition is crucial for mitigating greenhouse gas emissions and fostering sustainable global economic growth. However, with the uneven pace of energy transition across regions, businesses will encounter numerous challenges in identifying opportunities and risks while adapting to new policies and evolving market dynamics. The implementation of any strategy, particularly those related to the new transition approach with anticipated outcomes leading to conceptual shifts in interactions within both national and global economies will also require substantial investments and financing capacities. The energy transition will require huge investments over many years in renewable energy generation, energy efficiency, and energy infrastructure. That is why this article aims to analyze and summarize the key investment trends supporting the renewable energy transition in the global economy. Methods. To provide due and relevant research the scientific generalizations, analogies, abstraction, analysis, and synthesis were used in the generalization of theoretical foundations of RE transition; the scientific analysis and generalization were implied while studying related publications and providing the conclusions; the method of logical analysis, structural, statistical and system methods were used for the analysis of the statistical and analytical data. Results. In 2022, the total new investment in renewable energy reached approximately $495 billion globally, marking a 17 % increase from the previous year. The funding for clean energy worldwide has been steadily increasing over the last two decades. In 2022, global investments in transition technologies reached $1.3 trillion. But, as this research shows, investment in renewable energy will need to triple by the end of this decade. Most of the investments were made in developed countries widening the annual investment deficit that developing countries face in achieving the SDGs by 2030: the gap is now about $4 trillion per year up from $2.5 trillion in 2015 when the SDGs were adopted. Conclusions. The energy transition requires investment not only in renewable energy generation and electrification but also in sustainable infrastructure, energy-efficient buildings, and decarbonization of industry. To meet climate goals, the energy transition requires a faster pace of renewable energy generation and end-use, in electrification of end-use sectors and improved energy efficiency. Businesses also have a key role to play in financing investments in the RE transition – they are the key enablers.