There is “a real risk of fractures emerging around energy and climate between some advanced and developing economies, which could lead to damaging dividing lines globally”, the IEA’s fbirol writes in a guest essay
of Ukraine has changed energy markets and policies around the world, not just for the time being, but for decades to come. The energy crisis set off by Moscow’s war is giving a short-term lift to fossil fuels in some cases. More coal has been burned in Europe, for example, because natural-gas prices have been extremely high. But I think this lift is likely to be temporary. The crisis is also driving powerful structural changes that are set to accelerate the transition to clean energy.
I am confident that governments will continue to strengthen their clean-energy policies, however, because they are no longer driven primarily by environmental concerns. The economic arguments in favour of affordable clean technologies are increasingly compelling. Solar and wind are the cheapest options for new power facilities in most parts of the world, even without taking into account the exceptionally high prices seen in 2022 for coal and gas.
Take infrastructure. Emerging and developing economies often face much higher financing costs for clean-energy projects than developed economies do. For example, the cost of capital for a solar power plant in 2021 in key emerging economies, such as in Brazil or Indonesia, was between two and three times higher than in advanced economies. And this gap is in danger of increasing as central banks around the world tighten interest rates, increasing the cost of borrowing.
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