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Volume 3(12)

Renewable Energy Transition: A gigantic hurdle for Global South

The global renewable energy transition represents one of the most profound transformations of our time. Between 2015 and 2024, worldwide renewable capacity more than doubled from 1.85 million MW to 4.44 million MW, an increase of 140% in less than a decade. This exponential growth, driven by falling hardware costs, binding international climate commitments, and heightened energy security concerns, suggests a technological revolution that could democratize energy access and reduce global inequalities. Yet, beneath this optimistic narrative lies a stark reality: the renewable transition is reproducing and even deepening the structural dependencies that have long constrained the Global South, which puts a huge-burden already affected by global power structures of inequalities based on unfair trade policies and austerities of International organisations like IMF. The persistent challenge is highlighted by the substantial funding gaps that remain, calculated to be over USD 1.7 trillion annually through 2030 , which impede the ability of lower-income nations to participate fully and equitably in the clean energy economy.

High-income and upper-middle-income countries account for over 88% of global renewable energy production, while lower-middle-income countries contribute less than 10% and low-income nations face absolute zero growth, with their collective share stagnating at less than 1%.

It is crucial to examine how the renewable energy transition, far from being a pathway to global equity, creates a vicious cycle of technological subordination, financial extraction, and policy incapacitation for the world’s poorest nations. Empirical Trends and Power Shifts should be analyzed from the perspective of the geographical inequality and marginalization of global south, where further emphasis should be laid upon low income countries’ extreme precarities, pushing their economic and political stability to further vulnerability.

Political Economy of renewable energy production reveals a dramatic reconfiguration of global power dynamics. Asia has emerged as the undisputed leader, with capacity expanding by 228% compared to Europe’s 83% and North America’s 86% growth rates. China alone commands 31.84% of global renewable production, generating 2,842,826 GWh in 2023, while India ranks fifth with 369,970 GWh and Brazil contributes 629,064 GWh, representing 7.05% of global output. These countries alone have contributed to more than 90% of Asia’s RE production. China’s dominance in the solar supply chain, where it produces over 80% of global photovoltaic modules , grants it considerable economic and geopolitical leverage over the pace and cost of the worldwide energy shift. Which exemplifies the pronounciation of emerging hierarchies in global manufacturing sector fueling strategic vulnerability for technology importing nation. The distribution of both capital and technology capacity risks exacerbating existing global economic disparities if left unaddressed.

Quantitatively, high-income economies, despite their maturing growth rates, still account for nearly 45% of total renewable output. This figure illustrated above stands in sharp contrast to the contribution of lower middle-income countries, which collectively contribute less than 10% of global renewable output. This disparity exists even though these developing economies possess vast, largely untapped solar and wind potential The primary barrier is not resource availability but systemic constraint mechanisms: limited access to finance, advanced technology, and domestic manufacturing capacity. Global capital flows, typically risk-averse, gravitate overwhelmingly toward established projects in stable, high-income markets with strong sovereign guarantees, frequently excluding crucial development markets where renewable energy access is most transformative. Multilateral and bilateral initiatives designed to address this finance gap, such as the Green Climate Fund and the Just Energy Transition Partnerships (JETPs), have provided crucial support but remain functionally insufficient to match the scale of the crisis. The core financial requirement to bridge these disparities remains staggering: the aggregate funding gaps are calculated to be over USD 1.7 trillion annually through 2030 according to the report by IMF, 2023 . This substantial figure underscores the critical structural inadequacy of current global climate finance mechanisms, which are often fragmented, complex, or offered at non-concessional rates that overburden developing nations. If developing economies achieve expanded generation (decentralization of production) but remain reliant on high-income countries and multinational corporations for the requisite technology, finance, and intellectual property (concentration of control) , the transition risks becoming an extractive process. This financial and technological asymmetry can inhibit local industrialization and ensure that the majority of economic value and profits generated by the renewable revolution flow predominantly back to the Global North. This outcome undermines the core principle of "development justice". Consequently, a just transition requires robust redistributive mechanisms including enforced technology sharing, concessional finance, and local industrialization strategies, to align global climate imperatives directly with national economic development goals.

The success of the global transition hinges on policy frameworks that effectively reconcile the three interdependent goals of decarbonization, universal energy access, and economic equity. These goals are often in tension, requiring sophisticated and coherent government intervention. Nationally Determined Contributions (NDCs), formalized under the Paris Agreement, have been instrumental in signaling political intent and accelerating initial renewable investment. However, the successful execution of these commitments depends critically on their translation into coherent, supportive industrial and trade policies. The rapid success achieved by major emerging markets is rooted in assertive industrial strategy. Countries like India and Brazil have strategically deployed local manufacturing policies, often including domestic content requirements, to ensure that they build durable, self-sufficient domestic capacity. This approach ensures that the economic benefits associated with renewable investments including job creation, technological learning, and value retention, remaining within the national economy, reinforcing the societal mandate for the transition.

Most critically, the structural gap where lower-middle-income countries produce less than 10% of global renewable output underscores a persistent failure in current global finance architectures to meet the demands of development justice. This is quantified by the pervasive and critical $1.7 trillion annual funding gap through 2030. The central challenge for the coming decade lies not solely in accelerating the already impressive rates of deployment but, more fundamentally, in ensuring that the renewable revolution actively contributes to equitable, sustainable development across all economies. The long-term success of the global climate agenda is thus inextricably linked to the resolution of the persistent financial and technological asymmetries identified in this political economy analysis.

Zainul Abid

M.A in Development Studies

School of Development Studies

Tata Institute of Social Sciences Mumbai