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Brazil, China, India leading in clean energy investment world record

Date
13 July 2011
Brazil, China, India leading in clean energy investment world record

LONDON: A new report commissioned by the UN Environment Programme (UNEP) shows that developing countries such as Brazil, China and India invested more in renewable energy than developed countries like the US and UK last year, helping worldwide investment grow by 32% and reach a record high of US $211 billion.

This new total is up a third from 2009 renewable investment and the report states that clean energy is now responsible for over 5% of the world’s total power production.

The report, Global Trends in Renewable Energy Investment 2011, prepared for UNEP by the London-based Bloomberg New Energy Finance, also says that for the first time, developing economies overtook developed countries in terms of ‘financial new investment’, spending on utility-scale renewable energy projects and provision of equity capital for renewable energy companies.

It is revealed in the report that US $72 billion was invested in developing countries compared to US $70 billion in developed economies, which contrasts with 2004, when financial new investments in developing countries were about one quarter of those in developed countries. 

Noteworthy highs for renewable energy investment in developing countries in the report include the following:

  • China accounted for 70% of the total with US $50 billion put into clean energy projects, primarily in wind power
  • The Middle East and Africa witnessed the largest leap, with their combined investment doubling to US $5 billion
  • Including Brazil, Central and South America rose 39% to US $13.1 billion, with Mexico seeing the biggest jump  to US $2.3 billion
  • India ranked eighth in the world growing by 25% to $3.8 billion, with wind projects as the biggest single item at $2.3 billion, followed by $400 million each for solar, and biomass and waste-to-energy
  • Together, the developing countries account for more than half of global renewable energy power

Udo Steffens, President, Frankfurt School of Management collaborated with UNEP on the report and said that this positive trend was likely to carry on: “The investment activity in the developing world is not only leading to innovations in renewable energy technologies. It will also open up new markets, as first mover investors are facilitating a range of new business models supporting entrepreneurship in the developing world.”

The report notes that the recession in the G-7 countries and the dynamism of China, India, Brazil and other important emerging economies has transformed the balance of power in renewable energy worldwide.

A closer look at the reasons for India’s impressive 25% growth in particular shows that investment was supported by a number of factors, including a race to exploit the accelerated depreciation tax break for wind projects before reforming in 2012; the government’s new Solar Mission to develop 1GW of grid-connected capacity by 2013; and the launch of Renewable Energy Certificate and Renewable Purchase Obligation schemes.

Interestingly the report also highlighted five technologies in India: ‘powering through husks’, ‘institutional cooking with solar’, ‘powering telecom towers’, ‘waste to energy’ and ‘processing foods with solar power’ that have recently attracted investors and are likely to be pushed to the mainstream in the near future.

In what could easily be cited as a healthy trend, Indian companies ranging from small and privately-owned to much larger corporations have already started using these technologies at a respectable scale, although the potential to up-scale continues to be explored.

Aditi Dass, Director of Technology Programs, The Climate Group India, said: “It’s interesting and exciting to see the growing interest in renewable investment. For the changes that are gradually happening, a great deal of credit has to go to national policies focused on renewables that are creating fertile environment for investors. And under the existing circumstances, India is certainly looking forward to scaling up investments further particularly as more and more international players seek opportunities in new markets.

The report also clarified that in an increasing number of cases, renewable energy is not just one of the easiest non-grid-connected options to establish, but also more cost-effective than the fossil fuel alternatives, and that the growing trend of taking up renewable energy options might just result into developing economies 'leapfrogging' developed countries in their use of renewable energy over the coming decade.

Read the UNEP report

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