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Tracking decarbonization of multilateral development banks' electricity generation investments
Florian Egli1,2, Clemens-Maria Lehofer1, Nadine Palmowski3,4
1School of Social Sciences and Technology, Technical University of Munich, Munich, Germany.
Multilateral development banks show a continued decline in fossil fuel investments post-Paris Agreement, but renewable energy funding hasn't kept pace. This results in lower overall electricity generation investments, widening the energy gap in developing nations.
Area of Science:
- Development Economics
- Energy Policy
- Climate Finance
Background:
- Multilateral development banks (MDBs) committed to the Paris Agreement (PA) to foster sustainable energy in the Global South.
- A comprehensive analysis of MDB electricity portfolios and policies post-PA was lacking.
Purpose of the Study:
- To analyze MDB electricity generation investments and decarbonization policies from 2006-2020.
- To assess the impact of the PA on MDBs' energy finance strategies.
Main Methods:
- Creation of two novel datasets: 1,230 electricity generation investments and 215 decarbonization policies.
- Analysis of MDB financial commitments and policy frameworks between 2006 and 2020.
Main Results:
- Fossil fuel investment has declined since the PA, but the pace has not accelerated.
- Renewable energy investment has not sufficiently offset fossil fuel phase-out, leading to a decrease in total MDB electricity generation investment.
- While the number of funded renewable projects has increased, the overall investment volume shows a downward trend.
Conclusions:
- MDBs face challenges in scaling up clean electricity investments to meet climate goals.
- The current investment trends raise concerns about MDBs' effectiveness in closing the energy investment gap, especially in low-income countries.
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