Bloomberg NEF: Pandemic’s effect on renewable energy investment has hit developing nations hardest
Covid-19 has slowed renewable energy investment globally in 2020 - but developed nations are likely to see similar levels of investment to 2019, which was a record year, while developing nations will take a bigger hit.
That is according to Bloomberg NEF (BNEF), which has this week published its annual ClimateScope analysis. ClimateScope is designed to track clean energy investment made by international players and places emphasis on emerging renewable energy markets, which are typically in less developed nations.
Last year, BNEF recorded a record $32bn of foreign direct investment in solar, wind, tidal and marine energy in developing nations. Across all kinds of investment, emerging-market economies accounted for more than half (58%) of asset finance in 2019.
BNEF’s latest analysis tracks finance into more than 100 nations during the first three quarters of 2020. While investment was down in all markets by some degree, the fall was most stark in developing nations.
Between January and September, developed nations obtained 76% of the total clean energy financing they saw in 2019. This means they are on track to match last year’s total.
But, during the same period, emerging markets only obtained 58% of last year’s total. Financing provided in the last quarter is unlikely to accelerate rapidly enough to make up for the shortfall. BNEF is predicting the steepest year-on-year investment drop on its records for this cohort of nations.
Countries assessed in this cohort include Pakistan, Haiti, Argentina and Liberia.
BNEF is particularly concerned that many of these nations may experience a slower recovery from Covid-19 – both economically and in terms of stopping the spread of the virus.
“A multi-year pandemic could bring an even more dramatic decline in investment and has the potential to disrupt the energy transition in many developing economies,” ClimateScope’s lead author Luiza Demoro said.
“This underscores the need for a sustainable recovery by making the best possible use of already strained public finances to attract private investment from both national and international investors.”
Earlier this week, the UN Environment Programme (UNEP) published its Emissions Gap report for 2020, assessing the actions needed to align the world with the Paris Agreement.
The headline conclusion was that we are on track for 3.2C of warming from pre-industrial times by 2100 – but that we could cap warming to 2C with a global green recovery effort that slashes annual emissions by 25% by 2030.
But the analysis also outlined the stark difference between the contribution of developing nations and the richest nations to global warming – and between which geographies are feeling the worst impacts.
The report concluded that the richest 1% of the global population accounts for more than twice the combined annual emissions of the poorest 50%. This ultra-wealthy class will need to reduce the emissions footprint of their lifestyles by a factor of 30.
At the same time, this class was found to be unlikely to face the worst physical effects of climate change in the short term. Of the 1.3 billion people trapped on degrading agricultural land globally, the majority are in developing nations and are not financially able to leave. These regions are more vulnerable to slow-onset disasters like desertification and drought.
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