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Speaker 1: This is Dana Perkins and you are listening to Switched

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Speaker 1: on the BNF podcast, and today we're discussing this year's

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Speaker 1: edition of Climate Scope, BNF's annual publicly available resource that

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Speaker 1: compares individual markets around the world and evaluates their readiness

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Speaker 1: to put transition investment to work. We started doing this

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Speaker 1: in twenty twelve, a dozen years ago, and have slowly

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Speaker 1: but surely added more markets every year to bring us

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Speaker 1: to one hundred and forty in total, of which one

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Speaker 1: hundred and ten are emerging markets and developing economies. This

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Speaker 1: year's focus was on the EMDs, in particular, especially the

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Speaker 1: power sector, where we've seen a boom in capacity editions

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Speaker 1: for clean technologies. In order to gather all of the

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Speaker 1: data that we need to bring this research to life,

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Speaker 1: members of the BNF team were sent to many of

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Speaker 1: these markets to speak with local politicians, utility companies, and

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Speaker 1: project developers in person. In this year's Climate Scope, for

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Speaker 1: the first time, we see the one hundred and ten

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Speaker 1: emerging markets break the one hundred billion dollar barrier for

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Speaker 1: clean energy investment. But when you take a closer look,

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Speaker 1: you'll realize that eighty four percent of this is concentrated

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Speaker 1: in just fifteen markets. So today we'll talk about the

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Speaker 1: markets at the top of the list, the ones that

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Speaker 1: rose the most in the rankings, and the policies that

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Speaker 1: could be behind the markets that saw the most significant rises.

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Speaker 1: Available for everyone to read, you can find the full

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Speaker 1: Climate Scope twenty twenty four at Global dash Climatescope dot org.

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Speaker 1: To discuss the findings from this year's Climate Scope in

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Speaker 1: more detail, today, I'm joined by two of its authors,

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Speaker 1: Head of Country Transition Research, Sophia Maya, an analyst Anna

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Speaker 1: Paula Fonseca Tecia. Sophia, thank you very much for joining today.

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Speaker 2: Hi Dana, thanks for having me.

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Speaker 1: Anna, it's great having you here as well.

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Speaker 3: Thank you, thank you for having me as well.

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Speaker 1: So we're here to talk about Climate Scope and are

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Speaker 1: twenty twenty four results that have come in on this

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Speaker 1: with the renewed focus on emerging markets and developing economies,

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Speaker 1: and I want to come to the top of the list,

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Speaker 1: let's focus on the winner. So for the second year

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Speaker 1: in a row, India came in first place. What is

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Speaker 1: happening in India that is making it such a great

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Speaker 1: place for clean energy development?

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Speaker 2: So this is a really good question because actually over

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Speaker 2: the past two three years, we have seen India kind

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Speaker 2: of fighting with Chile to get the first place in

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Speaker 2: the ranking, but this year India got that for the

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Speaker 2: second year in a row.

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Speaker 3: And one of the reasons is.

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Speaker 2: Because India has established really good policies, more specifically focused

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Speaker 2: on the.

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Speaker 3: Renewable energy auctions, and they also.

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Speaker 2: Have a really bold renewable energy target to meet by

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Speaker 2: two thousy thirty. So this target means reaching five hundred

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Speaker 2: gigawats of renewables installed by two thoy thirty and so far,

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Speaker 2: until twenty twenty three, they had already achieved the twenty

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Speaker 2: nine percent of this target. And in addition to that,

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Speaker 2: we had seen that the big power demand and the

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Speaker 2: GDP growth has also contributed to that, because as industries

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Speaker 2: and people demand more electricity, the country is consequently obliged

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Speaker 2: to tackle this issue. Also, another thing is that India

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Speaker 2: is one of the most polluting countries in the world,

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Speaker 2: so when we analyze its energy matrix, we see that

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Speaker 2: there's still a long way to go, so they can

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Speaker 2: switch coal power plants, for example, to more renewable energy.

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Speaker 2: So this is some of the main issues. The main

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Speaker 2: findings that put India in the first place.

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Speaker 1: I'm so glad you brought up policy because while this

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Speaker 1: is a ranking that really looks at the clean energy

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Speaker 1: side of things, we know that policy drives adoption and

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Speaker 1: can really make the difference in where you show up

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Speaker 1: in on this ranking and how much is actually happening

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Speaker 1: in your country. We see this the world over. So

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Speaker 1: in twenty twenty, we actually had a show that focused

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Speaker 1: on Vietnam where we saw changes in feet and terraffs

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Speaker 1: actually led to a boom in solar installations and well

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Speaker 1: not the same thing as the energy industry, but adjacent.

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Speaker 1: You see, electric vehicles in Norway took off after there

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Speaker 1: were tax is levied on internal combustion engines, making electric

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Speaker 1: vehicles more cost competitive. So I want to know what

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Speaker 1: are some of the policies that you are seeing that

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Speaker 1: is really driving countries' positions on this climate scope braking

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Speaker 1: and especially in emerging markets and developing economies. You know

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Speaker 1: why is policy so key?

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Speaker 3: So policies are the first step to towards attractiveness for

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Speaker 3: climate scope, which is why the fundamentals parameter measures higher

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Speaker 3: than anything else in our scarring process. We measure four

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Speaker 3: key policies which are reno w energy targets auctions and tenders,

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Speaker 3: not meturing and feeding tariffs as the main ones observed

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Speaker 3: in emerging markets, but we do track a hole on

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Speaker 3: more renown Winergy targets are by far the most adopted policy,

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Speaker 3: reaching over ninety five percent of emerging markets in twenty

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Speaker 3: twenty four, which is also a significant improvement from seventy

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Speaker 3: four percent in twenty twenty one. This increase is mostly

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Speaker 3: attributed to a lot of African markets raising up their targets.

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Speaker 3: And if we look at the second most popular policy,

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Speaker 3: which are auctions and tenders, this policy is saw the

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Speaker 3: smallest change in the last four years, going up from

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Speaker 3: fifty eight percent to sixty four but has for the

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Speaker 3: first time in twenty twenty four reached over sixty percent.

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Speaker 3: Net metrin, which is the term most popular policy, has

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Speaker 3: been growing consistently over the years, up to sixty percent

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Speaker 3: in twenty twenty three thanks to Minigrates Group, top solar

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Speaker 3: incentives and small scale solar uptake and feeding tarriffs. The

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Speaker 3: least popular policies have reached thirty four percent after seeing

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Speaker 3: a lot of decreases in the last two years. But

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Speaker 3: all these policy adoption rates and this whole growth story

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Speaker 3: is not spread out equally. We see that there are

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Speaker 3: changes depending on the region. If we look at for example,

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Speaker 3: Africa has raised a lot of their renown energy targets

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Speaker 3: and fitting tires are the least popular policy everywhere, but

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Speaker 3: are as equally popular in one region, which is Europe,

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Speaker 3: as auctions and metering is the least popular policy in

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Speaker 3: Africa and more popular in Europe, which also leads us

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Speaker 3: discussion on a lot of untapped resources. And tax incentives

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Speaker 3: are also key in emerging markets with both impart taxes

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Speaker 3: and value added taxes are yet reductions and exemptions being

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Speaker 3: key for lowering costs in emerging markets as most of

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Speaker 3: those markets are not manufacturers of key components for the

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Speaker 3: energy transitions. Forty two percent of markets have both value

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Speaker 3: added taxes and import taxes reduction exemption, but please do

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Speaker 3: note that those are mostly directed to either solar and

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Speaker 3: as we can see in the report, this is not

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Speaker 3: spread out and a lot of markets still have a

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Speaker 3: lot of progress should be made in most of these policies.

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Speaker 1: So, while renewable energy targets are the most popular and

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Speaker 1: that to some respect makes them de facto the most

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Speaker 1: effective because of their prevalence. Let's say we cleared the

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Speaker 1: slate and we started over. Of these different policies, which

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Speaker 1: one would be the most effective if it did take

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Speaker 1: the top spot. And let's remove renewable energy targets from

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Speaker 1: the list.

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Speaker 3: So if we remove renew brantage targets, we do see

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Speaker 3: that auctions drive the biggest increase in deployment and auctions

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Speaker 3: adoption rates are seen in most markets that we see

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Speaker 3: raising in the Climascope ranking. So this is probably the

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Speaker 3: policy that we would with number one, but this cannot

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Speaker 3: be done alone, so other incentives are also key to

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Speaker 3: make sure that auctions are feasible and the n S year.

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Speaker 2: And if IMA jump in So in addition to the auctions,

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Speaker 2: net metering is one of the polls that we have

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Speaker 2: seen like the biggest jump in the past years. And

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Speaker 2: as Anna mentioned before, this is mainly because most markets

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Speaker 2: they are now canceling their fossil fuel subsidies for example

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Speaker 2: for generators, and this would actually help drive the deployment

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Speaker 2: and the investment in of.

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Speaker 3: Greed and midigreeds.

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Speaker 2: So this is basically what we are starting to see

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Speaker 2: in Nigeria. For example, last year, the recently elected president

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Speaker 2: just cut off all fossil fuel subsidies and this is

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Speaker 2: actually driving a boom of PVA capacity in the country.

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Speaker 2: And according to bin a f forecast for solar, we're

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Speaker 2: going to see a higher increase in PREV capacity in

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Speaker 2: the country until twenty thirty.

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Speaker 1: So that really drove photovoltaics in Nigeria. That's a really

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Speaker 1: great example. Well then let's talk. Let's talk. Then we'll

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Speaker 1: put renewable energy targets back on the table. And what

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Speaker 1: I want to better understand is kind of why they

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Speaker 1: are the most popular. What is driving these? Is it

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Speaker 1: a focus on expanding access to electricity or is it

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Speaker 1: just a cost effective way due to the low levelized

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Speaker 1: cost of energy to really get different infrastructure on the grid,

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Speaker 1: or are they aligned with carbon emissions targets? You know,

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Speaker 1: what are the reasons behind this being so popular?

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Speaker 3: So this is not a single factor that I think

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Speaker 3: we can attribute it to. Why renewble energy targets are

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Speaker 3: the most popular, This is of course a combination of

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Speaker 3: political intent economic As we see the levelized costs of

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Speaker 3: renewble energy orl cooees are going down each year, which

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Speaker 3: makes renewables more attractive for everywhere. Our needed everywhere as

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Speaker 3: time progresses and the whole political need of climate change.

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Speaker 3: As the years progress and we are reaching closer and

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Speaker 3: closer to twenty thirty, markets are also raising the question

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Speaker 3: on how they're going to effectively reach a low carbon

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Speaker 3: economy and how they can progress towards it. So setting

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Speaker 3: those targets is the first step towards saying this is

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Speaker 3: how we want to do it, and then the combination

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Speaker 3: of policy support attracting investment that makes this transitional feasible.

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Speaker 1: So when we look at the financing of projects, projects

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Speaker 1: in emerging markets and developing economies can sometimes fall into

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Speaker 1: this category of unbankable and can carry with them higher

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Speaker 1: levels of risk. So what are some of the challenges

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Speaker 1: that are standing in the way of securing financing? Because

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Speaker 1: understanding the challenges the first step and trying to figure

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Speaker 1: out how to fix them and scale clean energy infrastructure.

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Speaker 2: So one of the main barriers that we were able

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Speaker 2: to see this year is related to grid constraint, regulatory hurdles,

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Speaker 2: and financial concerns. In the case of the financial issues,

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Speaker 2: this is mainly due to the currency volativity and politic

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Speaker 2: come stability as such for example corruption. So these key

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Speaker 2: issues they really affect the confidence of investors in putting

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Speaker 2: their money in those emerging markets. In addition to that,

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Speaker 2: like the on the grid constraints issue. So we have

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Speaker 2: seen an uptake of renewables added in most emerging markets

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Speaker 2: in general. However, one thing that hasn't keep up with

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Speaker 2: these capacity added for renewables is their investment in greeds

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Speaker 2: in the green infrastructure. So without this investment, the counter

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Speaker 2: would be facing other challenges as well because it would

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Speaker 2: be able to generate clean electricity, but this would cause

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Speaker 2: other problems due to the grid constraints and curtailment and

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Speaker 2: these kind of things which we are already seeing in

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Speaker 2: some emerging markets like Chile Uru Guy because they have

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Speaker 2: already added they had their bone on renewable energy installed capacity,

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Speaker 2: but now the greed is not being able to keep

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Speaker 2: up with these folocks of our for example in the grid.

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Speaker 1: So overall our investments in emerging markets and developing economies,

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Speaker 1: are they going up or are they going down? If

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Speaker 1: we look at twenty twenty four versus say twenty twenty

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Speaker 1: three or twenty twenty.

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Speaker 3: Two, investment in emerging markets is definitely growing, and in

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Speaker 3: twenty twenty three we actually saw a very interesting number

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Speaker 3: because emerging markets reached over one hundred billion of investment

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Speaker 3: for new built renew blinerge investment, which includes both us

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Speaker 3: AT finance and small scale solar investment, and so twenty

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Speaker 3: twenty three marked one hundred and sixty billion USC four

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Speaker 3: emerging markets, which represented seventeen point five percent of the

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Speaker 3: global renau burinergy investment figure in twenty twenty three, and

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Speaker 3: this is up from thirteen percent in twenty fourteen, so

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Speaker 3: we see a significant growth from a thirteen percent share

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Speaker 3: to seventeen point five percent. Most of this investment goes

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Speaker 3: to either solar and wind, with solar taking sixty eight

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Speaker 3: percent of emerging markets investment in twenty twenty three, and

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Speaker 3: a small scale solar actually took the biggest share in

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Speaker 3: solar investment for the first time in twenty twenty three

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Speaker 3: as well. Win still has a long way to go

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Speaker 3: in emerging markets. A toy is raising as well because

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Speaker 3: it's deeply concentrated in a small number of markets and

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Speaker 3: with fifteen markets concentrating eighty four percent of new builderyno

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Speaker 3: banerge investment in twenty twenty three, and if we look

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Speaker 3: historically in the last ten years, the figure goes to

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Speaker 3: seventy eight percent of total investment in emerging market going

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Speaker 3: to only fifteen markets. India and Brazil take the biggest shares,

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Speaker 3: and Brazil has actually seen a record high last year

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Speaker 3: at twenty seven billion, with most of these investments also

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Speaker 3: concentrated in solar.

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Speaker 1: So solar is the most popular technology, but this is

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Speaker 1: with a few economies that are really adopting at much

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Speaker 1: wider scale. So when we look at the other markets

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Speaker 1: on this list of one hundred and ten, how would

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Speaker 1: you like to see this information being used? And essentially,

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Speaker 1: you know, what are the actions that you hope that

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Speaker 1: this will end up driving or at least informing people

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Speaker 1: who are looking at it, either from a policy standpoint

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Speaker 1: or from the companies actively involved in the energy industry.

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Speaker 2: I think that the main thing here is once you

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Speaker 2: have this awareness on the policy side, like that we

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Speaker 2: have seen more emerging markets adding more clin energy policies.

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Speaker 2: This helps creating a un enable environment that will be

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Speaker 2: able to put some countries in this spotlight. And with

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Speaker 2: that in mind, when you have the necessary framework and

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Speaker 2: you have the necessary policies in force, this will consequently

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Speaker 2: be able to attract investors and investments, especially from abroad.

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Speaker 2: So in my opinion, the point we want to make

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Speaker 2: with this is that even though emerging markets are reaching

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Speaker 2: like new records and investing more and adding more renewable

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Speaker 2: energy capacity, they are still very concentrated. As an I mentioned,

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Speaker 2: and for the other markets, we have seen that they

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Speaker 2: are slowly progressing. So there we have seen some progress

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Speaker 2: in basically all the emerging markets that we cover. However,

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Speaker 2: these progresses still very far from what it should be

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Speaker 2: by now. So the main idea what Climate Scope really

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Speaker 2: wants to spread is that there are plenty of opportunities

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Speaker 2: to invest in emerging markets. So we often talk too

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Speaker 2: much about Brazil, Chile, China, India, so the major economies,

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Speaker 2: but sometimes we forget about the other emerging markets that

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Speaker 2: they are actually seeing huge progress. But this actually doesn't

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Speaker 2: compare to the other one because it's just unfair when

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Speaker 2: you look to Brazil and the high volumes of investment

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Speaker 2: that it has attracted compared to Mauritania, for example. So

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Speaker 2: what do we want to spread with that is that

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Speaker 2: there are opportunities. Of course there are barrias as well,

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Speaker 2: but there are opportunities and the countries are moving forward

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Speaker 2: to make this process much more smooth to be able

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Speaker 2: to attract investment, and they are becoming more prepared for that.

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Speaker 1: So let's talk about some of those markets then and

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Speaker 1: the ones that jumped that aren't part of that kind

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Speaker 1: of you know, big critical mass at the top. There

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Speaker 1: were several countries in Africa that actually broke into this

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Speaker 1: top list this year. What were some of those that

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Speaker 1: you know, climbed in the rankings and are actually making

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Speaker 1: really discernible progress.

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Speaker 3: So we have three markets to highlight, Kenya and Namibia

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Speaker 3: and Nigeria, which were the first African markets in three

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Speaker 3: years to join the Climate Scope Top ten. Those three

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Speaker 3: markets exemplify how an increased enabling environment and fundamentals reflect

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Speaker 3: the progress on their scars in Climate Scope. Talking about

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Speaker 3: Namibia specifically, we see that great small scale solar growth

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Speaker 3: has led the market to increase its experience care and

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Speaker 3: reach the top of the Climate'scope ranking. Nigeria, for instance,

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Speaker 3: has seen the end of the phossil fuels so anxiety

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Speaker 3: in twenty twenty three, which also led a PV boom,

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Speaker 3: and Kenya has also seen a similar path. So all

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Speaker 3: these markets have seen increased in adoption rates for policies

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Speaker 3: which led to deployment growth and reflected in investments as well.

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Speaker 1: So maybe they're on this list or maybe they're not.

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Speaker 1: But what was the one country for each of you

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Speaker 1: that surprised you the most this year and when you

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Speaker 1: looked at the data set, you kind of went, Okay,

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Speaker 1: I want to actually know a bit more about what

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Speaker 1: the story is in that market.

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Speaker 2: I think the one that surprised me the most was Gatemala.

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Speaker 2: So Gatemala has among Latin American countries, it has doing

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Speaker 2: really well over the past years, but reaching the top

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Speaker 2: ten was quite a surprise for me. One of the

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Speaker 2: reasons why they deserved being on the top ten is

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Speaker 2: because despite this is a small country, they and really

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Speaker 2: reliable and they have like plenty of hydroelectric power plants

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Speaker 2: in there. One thing that we have seen actually in general,

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Speaker 2: not only Guatemala, that is now making these countries does

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Speaker 2: emerging market switch a little bit their focus to other

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Speaker 2: renewable energy instead of hydro is because due to natural

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Speaker 2: phenomenons like El Nino, these markets that relies a lot

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Speaker 2: on hydro power, they have seen their hydrogeneration decreased a lot.

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Speaker 2: So this is a way for them to switch from

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Speaker 2: this reliance on hydro and then consequently start implementing policies

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Speaker 2: that gives incentive to solar and wind for example. So

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Speaker 2: right now, what is happening to Gatemala. One of the

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Speaker 2: main drivers for them to be in this top ten

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Speaker 2: is exactly because they have switched a little bit from

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Speaker 2: this hydro reliance and is now investing in solar.

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Speaker 3: For me, I guess I'll move back to one of

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Speaker 3: the countries I just listed, which is Namibia. The countries

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Speaker 3: saw some of the biggest changes in the rankings out

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Speaker 3: of all of the top ten markets, and those changes

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Speaker 3: were mostly attributed to you. As I said, the adoption

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Speaker 3: of solar. Namibia was facing a lot of issues due

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Speaker 3: to unreliable hydropower supply and also unreliable cope plants, which

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Speaker 3: led consumers to adopt a lot of small scale or

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Speaker 3: rooftop solar in their own homes to be able to

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Speaker 3: provide for electricity throughout the year. So that was the

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Speaker 3: biggest change I think a country climate Scope this year

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Speaker 3: saw and I think that was very impressive.

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Speaker 1: Sophia, Anna, thank you very much for joining today.

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Speaker 2: Thank you, Diana, it was my pleasure to be here.

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Speaker 1: Today's episode of Switched On was produced by Cam Gray

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