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June 02, 2010
Clean Energy Investment in Emerging Markets Is Growing
    by Robert Kropp

A study by the Carbon Disclosure Project (CDP) finds that clean energy investment in Brazil, China, India, and South Africa is large, and is expected to grow as regulation evolves.

In his foreword to a recently published report from the Carbon Disclosure Project (CDP), James Cameron, the Executive Director of Climate Change Capital (CCC), wrote, “The increasingly absurd distinction between developed and developing countries has to some extent fallen away. All of the countries featured in this report have made pledges and they are not conditional on specific donations from the traditional donor nations.”

The four countries studied by the CDP in its report—Brazil, China, India, and South Africa—form what is known as the BASIC bloc of nations, which reached an accord with the US at the
United Nations Climate Change Conference (COP15) to provide transparency in greenhouse gas (GHG) emissions reductions and climate change mitigation targets. After the accord was reached, President Obama referred to it as a “meaningful and unprecedented breakthrough.”

The report, which was commissioned by the
Renewable Energy & Energy Efficiency Partnership (REEEP), a global partnership focusing on the deployment of renewable energy and energy efficiency technologies in emerging markets and developing countries, found that “the scale of corporate investments in the four countries studied, particularly in China which is the world’s largest investor in this area, is very large.”

Clean energy investment in China, for instance, which reached $35 billion in 2009, is higher than in any other country in the world, according to the report. Brazil spent $7.4 billion on clean energy investment in 2009, while India spent $2.3 billion and South Africa spent $125 million.

To put the magnitude of such investments in perspective, investment in clean energy in the US in 2009 was $18.6 billion, according to a 2010
study by the Pew Environment Group. Relative to the size of its economy, China invested three times more than the US in clean energy in 2009, and now equals the US in installed renewable energy capacity.

According to the CDP report, government policy and regulation are important motivators for investment in clean energy in the BASIC nations. “All four of the countries studied have framework legislation which sets out principles and aspirations for greater energy efficiency and use of renewable energy,” the report found, which both influence investment and create expectations by societies at large. Regulatory requirements are especially strong in Brazil and India.

Expectations of stronger regulation in China, whose Eleventh Five Year Renewable Energy Development Plan sets ambitious goals for renewable energy development by 2020, is likely to lead to even greater investment there.

In his foreword, Cameron of CCC noted the role of the
Clean Development Mechanism (CDM) in creating “a flow of capital into clean energy investments, particularly but not exclusively in China.” The CDM assists developed countries in the practice of offsetting GHG emissions by investment in projects in developing countries.

The report, Cameron continued, “Will assist policymakers, investors, and entrepreneurs alike to understand the scale of the market opportunity that presents itself in the face of the paramount necessity to reduce greenhouse gas emissions as we develop the global economy.”


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