The United Nations Conference on Trade and Development (UNCTAD) said the global transition to renewable energy would require over $1 trillion yearly investment by 2030, warning that developing economies may struggle to achieve climate and energy targets without stronger foreign direct investment (FDI) inflows and broader access to clean technologies.

This was contained in a new UNCTAD report titled ‘Energy Transition Investment and the Transfer of Knowledge and Skills: Implications for Investment Treaty Design’, which examined financing requirements for the global clean energy transition and the growing role of private capital in renewable energy development.

According to the report, the scale of investment required to transform the global energy system remains significant as countries intensify efforts to cut fossil fuel dependence and achieve net-zero emission targets.

UNCTAD noted that renewable energy financing was increasingly being driven by private capital, with developing economies expected to rely heavily on foreign investment to meet transition objectives.

The report stated that more than 80 per cent of investments across the renewable energy value chain come from private sector sources.

“Especially for developing economies, attracting foreign direct investment (FDI) may be a prerequisite for the energy transition as domestic capital and development funds are insufficient to meet projected needs,” UNCTAD stated.

It added that emerging economies are gradually moving up the clean technology value chain and participating more actively in global innovation and manufacturing activities.

It stressed that countries would require not only financing but also access to advanced technologies, technical expertise and skilled labour to effectively deploy and manage clean energy infrastructure.

UNCTAD further warned that developing economies across Africa, Asia and Latin America continue to face major barriers to renewable energy investment despite growing global demand for cleaner energy solutions.

According to the report, high borrowing costs, weak infrastructure, regulatory uncertainty and limited access to long-term financing remain major constraints affecting renewable energy investment flows.

The agency noted that sectors such as solar, wind, battery storage, hydrogen and electric mobility present significant economic opportunities for emerging economies if financing and technology access improve.

It also highlighted the growing importance of industrial policy, innovation and strategic partnerships in building local clean energy manufacturing capacity.

UNCTAD warned that inadequate investment mobilisation could widen global inequalities, slow climate action and expose vulnerable economies to future energy and economic shocks.