Did the COP28 Summit Give a Boost to Renewable Energy Plans?

The COP28 summit in Dubai, United Arab Emirates, concluded with the first-ever pledge to phase down fossil fuel use, and more than one hundred countries have pledged to triple renewable energy capacity by 2030. How meaningful is this?

The summit concluded with nearly two hundred countries agreeing to begin cutting down fossil fuel consumption to prevent a climate change catastrophe. While the concluding agreement does not explicitly demand the phasing out of coal, oil, and gas, this historic text is the first of its kind after decades of annual negotiations by the United Nations Conference of the Parties (COP). The deal signals that the world is united in moving away from fossil fuels. It is meant to rally incentives for and mobilize resources around expanding renewables and cutting emissions.

The agreement follows a pledge by a number of summit leaders to triple the world’s installed renewable energy generation capacity by 2030. As of December 8, around 130 countries had signed up, according to the International Energy Agency (IEA). This commitment is one of the IEA’s five pillars for limiting global warming to 1.5°C (2.7°F) above preindustrial levels by the end of the century. The signatories collectively account for 40 percent of global carbon dioxide emissions from fossil fuel combustion, 37 percent of total global energy demand, and 56 percent of global gross domestic product (GDP).  

China and India, two of the world’s biggest greenhouse gas emitters, are not among the 130 signatories. But it is important to note that both signed the New Delhi Leaders Declaration announced by the Group of Twenty (G20) in September, which commits them to “pursue and encourage efforts to triple renewable energy capacity globally” by 2030. Additionally, about two weeks before COP28, the Chinese and U.S. governments agreed in the Sunnylands Statement to cooperatively “pursue efforts to triple renewable energy capacity globally by 2030.”

Both China and India have made significant progress in expanding their renewable energy capacity, and they have ambitious plans to further expand renewable use. In 2021, India emerged as the world’s third-largest market for renewable power in terms of annual additions and cumulative capacity, trailing only China and the United States. India’s Fourteenth National Electricity Plan sets the goal of tripling the country’s renewable capacity by 2030. China, on the other hand, has already become the world’s largest [PDF] producer, exporter, and installer of solar panels, wind turbines, batteries, and electric vehicles. In 2022 alone, nearly half of China’s total electricity generation capacity came from non–fossil fuel sources. Looking ahead, the IEA predicted that by 2024, China will deliver almost 70 percent of all new, offshore wind projects globally, over 60 percent of onshore wind, and 50 percent of solar photovoltaic (PV) projects.

Renewable energy deployment, namely for solar and wind power, has increased globally over the past several years. Are current trends likely to continue?

Yes. Growing demand, expanding supply at lower costs, more efficient and affordable battery technologies for energy storage, and favorable policy incentives for renewables are all reasons to be optimistic. Prices for electricity generation from renewables have fallen dramatically over the past decade, making renewable sources cost-competitive relative to fossil fuels for power generation. According to a study led by Berlin-based researchers, the cost of electricity from solar has fallen by 87 percent, and the cost of battery storage by 85 percent.

Additionally, countries worldwide can be expected to continue pursuing renewables to reduce energy security vulnerabilities caused by energy dependence on rival states and geopolitically volatile regions. Since Russia’s February 2022 invasion of Ukraine, Russian President Vladimir Putin has weaponized his country’s energy, driving the European Union as a bloc to accelerate its deployment of renewables.

If the growth of renewables continues at the current rate as the IEA has predicted, countries can meet the target of tripling global renewables by 2030. Government incentives, low interest rates, and cheap manufacturing costs should help the global renewable boom to continue. However, none of these are guaranteed between now and 2030. The cost of constructing renewable power plants and the associated infrastructure, such as distribution grids and storage facilities, varies widely by country, depending on regulations and costs of material inputs, capital, land, and labor.

What roadblocks could complicate efforts to increase renewable energy capacity?

Funding. Developing countries need funding to help meet their increasing demands for the affordable energy needed to power their rapidly growing economies and expanding populations. While this is less of a concern for wealthy countries such as the United Arab Emirates, it is a major concern for the vast majority of developing countries. India, for example, is estimated to need $293 billion in financing (more than Finland’s 2022 GDP) to reach its goal of tripling renewable energy capacity by 2030, and an additional $101 billion to align with the IEA’s proposed scenario to reach net-zero greenhouse gas emissions. Investors may not be drawn into renewable investment in countries where they often encounter payment delays, bureaucratic red tape, protectionist rules and regulations, and uncertainty surrounding domestic policy and politics.

Cost uncertainty. The prices of major inputs for renewables, such as aluminum, copper, steel, and polysilicon, could rise due to supply shortages relative to demand and protectionist policies. Transportation and labor costs could also raise the overall initial prices of installment and construction for renewable projects. If interest rates remain high to fight inflation, fierce competition for capital could divert investment away from renewables.     

Labor shortages. The acceleration of the energy transition has created new job opportunities worldwide, but not all countries have the necessary programs and vocational schools to provide workers with the needed expertise, especially in terms of manufacturing and constructing renewable projects. According to the U.S.-based Boston Consulting Group, by 2030, the renewables sector will face a global shortage of seven million skilled workers needed to serve as solar panel installers, wind farm operators, welding and metal technicians in large-scale solar farms, and engineers for battery technologies. In the United States alone, the Inflation Reduction Act could create the need for more than 1,000,000 additional solar-related jobs and 250,000 more wind-related jobs by 2035, researchers estimated. The findings indicate that total wages earned by solar and wind workers would increase by about $85 billion but also highlight the need to train such a workforce.

Global competition. Geopolitical tensions and trade protectionism will be additional challenges on top of funding and labor shortages. They can directly disrupt the supply chains of renewables, from mineral and material inputs to manufactured parts, which will directly raise construction costs of renewable projects and likely delay the installment of additional renewables capacity.

Will Merrow created the graphic for this article.