Target 7.a By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy
efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology
Indicator 7.a.1 International financial flows to developing countries in support of clean energy research and development and renewable energy
production, including in hybrid systems
International public financial flows in support of clean energy in developing countries have a decreasing trend that started before the COVID-19
pandemic and continued through 2021, amounting to USD 10.8 billion
International public financial flows in support of clean energy in developing countries have a decreasing trend that started before the COVID-19 pandemic and continued through
2021. In 2021, they amounted to USD 10.8 billion—an 11% drop from 2020. This was 35% less than the 2010–19 decade-long average, and less than half the 2017 peak of USD
26.4 billion. Looking at a five-year moving average trend, 2021 accounted for USD 15.8 billion, still 2.6 times larger than the 2010 moving average of USD 6.2 billion. The downward
trend in public investments is expected to continue in 2022, with it possibly taking several years to make up for the lower commitments. Financing stays lower than what is needed
to reach SDG 7, in particular for the least-developed countries, landlocked developing countries, and small island developing states.
The distribution of flows by technology in 2021 shifted. Solar energy attracted most flows at 43%, followed by 33% of flows directed to multiple/other renewables and 16% to
hydropower. Wind and geothermal energy received less than 10% of commitments. These decreases reflect the fact that commitments increasingly fall into the “multiple/other
renewables” category populated by energy funds, green bonds, and other government-led programs to support renewables, energy efficiency, and electricity access. This category is
growing in importance as there is increasing interest in funding mechanisms that target multiple energy technologies at once.
Geographically, all regions saw an annual decrease in international public flows in 2020 of 13%, and then again in 2021 of 11%. Yet in 2021, several regions saw increases in
financial flows. Northern America and Europe received 81% more (USD 180 million); Sub-Saharan Africa had a large recovery of 45% from 2020 (USD 1,213 million); Eastern Asia
and South-eastern Asia increased by 23% (USD 251 million); and “unspecified countries” increased slightly by 4% (USD 21 million), respectively.
Commitments are increasingly more widely distributed, with a larger group of countries receiving a larger share of investments. During 2010-19, 36 countries received 80% of all
commitments, but since then, the number has slightly increased to 38, including unspecified countries and sub-regions without allocations. The improved distribution is a result of
several factors. First, more investments are going to unallocated countries or residual countries in specific regions or unspecified countries, which statistically diversifies the
recipients of the investments. Second, expanding the analysis to cover a longer period flattens the variability of flows and results in a more even distribution. Third, although the
number of donors investing in renewables has decreased in 2020-21, the top investors have slightly increased how many recipients they support.
The number of countries that did not receive commitments decreased to 29 in
2021 from 49 in 2010, which is a positive trajectory. Most of these countries
receiving more than USD 5 per capita are island nations in Oceania. Looking at
trends in distribution of flows by population, a continuation of the decreasing
trend in flows in the past two years can be observed with all recipient countries
receiving on average USD 1.67 and USD 1.24 per capita respectively during
2020 and 2021. Unfortunately, those countries most in need (least developed
countries, landlocked developing countries and small island developing states)
had worse distributions of flows in 2021. SIDS were the most affected in terms
of decreases, receiving USD 3.23 per capita in 2021, a 53% drop from USD 4.94
per capita in 2020. Yet, these countries still receive greater flows per capita
than LLDCs at USD 2.39 per capita and LDCs at USD 1.85 per capita in 2021.
The proportion of debt instruments from public financing sources has
consistently declined, standing at two-thirds of flows in 2021 from nearly 90%
in 2018. In turn, the share of grants, equity, and guarantees has increased. The
increase in flows in grants as well as its larger share of the flows is a major
help to recipient countries as they are debt-free. At the same time, the absolute
decline in loan flows, which provide financing for profitable projects, is limiting
the sources of funding for profitable projects that need capital to start and that
would pay back the loans with interest.
Storyline authors(s)/contributor(s): Gerardo Escamilla, IRENA; Arvydas Lebedys, IRENA
Custodian agency(ies): OECD, IRENA
International public financial flows (commitments) to developing countries in support of
clean energy, 2000–21, by technology (at 2020 prices and exchange rates)