Speaker 1: This is Dana Perkins and you are listening to Switched
Speaker 1: on the BNF podcast, and today we're discussing this year's
Speaker 1: edition of Climate Scope, BNF's annual publicly available resource that
Speaker 1: compares individual markets around the world and evaluates their readiness
Speaker 1: to put transition investment to work. We started doing this
Speaker 1: in twenty twelve, a dozen years ago, and have slowly
Speaker 1: but surely added more markets every year to bring us
Speaker 1: to one hundred and forty in total, of which one
Speaker 1: hundred and ten are emerging markets and developing economies. This
Speaker 1: year's focus was on the EMDs, in particular, especially the
Speaker 1: power sector, where we've seen a boom in capacity editions
Speaker 1: for clean technologies. In order to gather all of the
Speaker 1: data that we need to bring this research to life,
Speaker 1: members of the BNF team were sent to many of
Speaker 1: these markets to speak with local politicians, utility companies, and
Speaker 1: project developers in person. In this year's Climate Scope, for
Speaker 1: the first time, we see the one hundred and ten
Speaker 1: emerging markets break the one hundred billion dollar barrier for
Speaker 1: clean energy investment. But when you take a closer look,
Speaker 1: you'll realize that eighty four percent of this is concentrated
Speaker 1: in just fifteen markets. So today we'll talk about the
Speaker 1: markets at the top of the list, the ones that
Speaker 1: rose the most in the rankings, and the policies that
Speaker 1: could be behind the markets that saw the most significant rises.
Speaker 1: Available for everyone to read, you can find the full
Speaker 1: Climate Scope twenty twenty four at Global dash Climatescope dot org.
Speaker 1: To discuss the findings from this year's Climate Scope in
Speaker 1: more detail, today, I'm joined by two of its authors,
Speaker 1: Head of Country Transition Research, Sophia Maya, an analyst Anna
Speaker 1: Paula Fonseca Tecia. Sophia, thank you very much for joining today.
Speaker 2: Hi Dana, thanks for having me.
Speaker 1: Anna, it's great having you here as well.
Speaker 3: Thank you, thank you for having me as well.
Speaker 1: So we're here to talk about Climate Scope and are
Speaker 1: twenty twenty four results that have come in on this
Speaker 1: with the renewed focus on emerging markets and developing economies,
Speaker 1: and I want to come to the top of the list,
Speaker 1: let's focus on the winner. So for the second year
Speaker 1: in a row, India came in first place. What is
Speaker 1: happening in India that is making it such a great
Speaker 1: place for clean energy development?
Speaker 2: So this is a really good question because actually over
Speaker 2: the past two three years, we have seen India kind
Speaker 2: of fighting with Chile to get the first place in
Speaker 2: the ranking, but this year India got that for the
Speaker 2: second year in a row.
Speaker 3: And one of the reasons is.
Speaker 2: Because India has established really good policies, more specifically focused
Speaker 2: on the.
Speaker 3: Renewable energy auctions, and they also.
Speaker 2: Have a really bold renewable energy target to meet by
Speaker 2: two thousy thirty. So this target means reaching five hundred
Speaker 2: gigawats of renewables installed by two thoy thirty and so far,
Speaker 2: until twenty twenty three, they had already achieved the twenty
Speaker 2: nine percent of this target. And in addition to that,
Speaker 2: we had seen that the big power demand and the
Speaker 2: GDP growth has also contributed to that, because as industries
Speaker 2: and people demand more electricity, the country is consequently obliged
Speaker 2: to tackle this issue. Also, another thing is that India
Speaker 2: is one of the most polluting countries in the world,
Speaker 2: so when we analyze its energy matrix, we see that
Speaker 2: there's still a long way to go, so they can
Speaker 2: switch coal power plants, for example, to more renewable energy.
Speaker 2: So this is some of the main issues. The main
Speaker 2: findings that put India in the first place.
Speaker 1: I'm so glad you brought up policy because while this
Speaker 1: is a ranking that really looks at the clean energy
Speaker 1: side of things, we know that policy drives adoption and
Speaker 1: can really make the difference in where you show up
Speaker 1: in on this ranking and how much is actually happening
Speaker 1: in your country. We see this the world over. So
Speaker 1: in twenty twenty, we actually had a show that focused
Speaker 1: on Vietnam where we saw changes in feet and terraffs
Speaker 1: actually led to a boom in solar installations and well
Speaker 1: not the same thing as the energy industry, but adjacent.
Speaker 1: You see, electric vehicles in Norway took off after there
Speaker 1: were tax is levied on internal combustion engines, making electric
Speaker 1: vehicles more cost competitive. So I want to know what
Speaker 1: are some of the policies that you are seeing that
Speaker 1: is really driving countries' positions on this climate scope braking
Speaker 1: and especially in emerging markets and developing economies. You know
Speaker 1: why is policy so key?
Speaker 3: So policies are the first step to towards attractiveness for
Speaker 3: climate scope, which is why the fundamentals parameter measures higher
Speaker 3: than anything else in our scarring process. We measure four
Speaker 3: key policies which are reno w energy targets auctions and tenders,
Speaker 3: not meturing and feeding tariffs as the main ones observed
Speaker 3: in emerging markets, but we do track a hole on
Speaker 3: more renown Winergy targets are by far the most adopted policy,
Speaker 3: reaching over ninety five percent of emerging markets in twenty
Speaker 3: twenty four, which is also a significant improvement from seventy
Speaker 3: four percent in twenty twenty one. This increase is mostly
Speaker 3: attributed to a lot of African markets raising up their targets.
Speaker 3: And if we look at the second most popular policy,
Speaker 3: which are auctions and tenders, this policy is saw the
Speaker 3: smallest change in the last four years, going up from
Speaker 3: fifty eight percent to sixty four but has for the
Speaker 3: first time in twenty twenty four reached over sixty percent.
Speaker 3: Net metrin, which is the term most popular policy, has
Speaker 3: been growing consistently over the years, up to sixty percent
Speaker 3: in twenty twenty three thanks to Minigrates Group, top solar
Speaker 3: incentives and small scale solar uptake and feeding tarriffs. The
Speaker 3: least popular policies have reached thirty four percent after seeing
Speaker 3: a lot of decreases in the last two years. But
Speaker 3: all these policy adoption rates and this whole growth story
Speaker 3: is not spread out equally. We see that there are
Speaker 3: changes depending on the region. If we look at for example,
Speaker 3: Africa has raised a lot of their renown energy targets
Speaker 3: and fitting tires are the least popular policy everywhere, but
Speaker 3: are as equally popular in one region, which is Europe,
Speaker 3: as auctions and metering is the least popular policy in
Speaker 3: Africa and more popular in Europe, which also leads us
Speaker 3: discussion on a lot of untapped resources. And tax incentives
Speaker 3: are also key in emerging markets with both impart taxes
Speaker 3: and value added taxes are yet reductions and exemptions being
Speaker 3: key for lowering costs in emerging markets as most of
Speaker 3: those markets are not manufacturers of key components for the
Speaker 3: energy transitions. Forty two percent of markets have both value
Speaker 3: added taxes and import taxes reduction exemption, but please do
Speaker 3: note that those are mostly directed to either solar and
Speaker 3: as we can see in the report, this is not
Speaker 3: spread out and a lot of markets still have a
Speaker 3: lot of progress should be made in most of these policies.
Speaker 1: So, while renewable energy targets are the most popular and
Speaker 1: that to some respect makes them de facto the most
Speaker 1: effective because of their prevalence. Let's say we cleared the
Speaker 1: slate and we started over. Of these different policies, which
Speaker 1: one would be the most effective if it did take
Speaker 1: the top spot. And let's remove renewable energy targets from
Speaker 1: the list.
Speaker 3: So if we remove renew brantage targets, we do see
Speaker 3: that auctions drive the biggest increase in deployment and auctions
Speaker 3: adoption rates are seen in most markets that we see
Speaker 3: raising in the Climascope ranking. So this is probably the
Speaker 3: policy that we would with number one, but this cannot
Speaker 3: be done alone, so other incentives are also key to
Speaker 3: make sure that auctions are feasible and the n S year.
Speaker 2: And if IMA jump in So in addition to the auctions,
Speaker 2: net metering is one of the polls that we have
Speaker 2: seen like the biggest jump in the past years. And
Speaker 2: as Anna mentioned before, this is mainly because most markets
Speaker 2: they are now canceling their fossil fuel subsidies for example
Speaker 2: for generators, and this would actually help drive the deployment
Speaker 2: and the investment in of.
Speaker 3: Greed and midigreeds.
Speaker 2: So this is basically what we are starting to see
Speaker 2: in Nigeria. For example, last year, the recently elected president
Speaker 2: just cut off all fossil fuel subsidies and this is
Speaker 2: actually driving a boom of PVA capacity in the country.
Speaker 2: And according to bin a f forecast for solar, we're
Speaker 2: going to see a higher increase in PREV capacity in
Speaker 2: the country until twenty thirty.
Speaker 1: So that really drove photovoltaics in Nigeria. That's a really
Speaker 1: great example. Well then let's talk. Let's talk. Then we'll
Speaker 1: put renewable energy targets back on the table. And what
Speaker 1: I want to better understand is kind of why they
Speaker 1: are the most popular. What is driving these? Is it
Speaker 1: a focus on expanding access to electricity or is it
Speaker 1: just a cost effective way due to the low levelized
Speaker 1: cost of energy to really get different infrastructure on the grid,
Speaker 1: or are they aligned with carbon emissions targets? You know,
Speaker 1: what are the reasons behind this being so popular?
Speaker 3: So this is not a single factor that I think
Speaker 3: we can attribute it to. Why renewble energy targets are
Speaker 3: the most popular, This is of course a combination of
Speaker 3: political intent economic As we see the levelized costs of
Speaker 3: renewble energy orl cooees are going down each year, which
Speaker 3: makes renewables more attractive for everywhere. Our needed everywhere as
Speaker 3: time progresses and the whole political need of climate change.
Speaker 3: As the years progress and we are reaching closer and
Speaker 3: closer to twenty thirty, markets are also raising the question
Speaker 3: on how they're going to effectively reach a low carbon
Speaker 3: economy and how they can progress towards it. So setting
Speaker 3: those targets is the first step towards saying this is
Speaker 3: how we want to do it, and then the combination
Speaker 3: of policy support attracting investment that makes this transitional feasible.
Speaker 1: So when we look at the financing of projects, projects
Speaker 1: in emerging markets and developing economies can sometimes fall into
Speaker 1: this category of unbankable and can carry with them higher
Speaker 1: levels of risk. So what are some of the challenges
Speaker 1: that are standing in the way of securing financing? Because
Speaker 1: understanding the challenges the first step and trying to figure
Speaker 1: out how to fix them and scale clean energy infrastructure.
Speaker 2: So one of the main barriers that we were able
Speaker 2: to see this year is related to grid constraint, regulatory hurdles,
Speaker 2: and financial concerns. In the case of the financial issues,
Speaker 2: this is mainly due to the currency volativity and politic
Speaker 2: come stability as such for example corruption. So these key
Speaker 2: issues they really affect the confidence of investors in putting
Speaker 2: their money in those emerging markets. In addition to that,
Speaker 2: like the on the grid constraints issue. So we have
Speaker 2: seen an uptake of renewables added in most emerging markets
Speaker 2: in general. However, one thing that hasn't keep up with
Speaker 2: these capacity added for renewables is their investment in greeds
Speaker 2: in the green infrastructure. So without this investment, the counter
Speaker 2: would be facing other challenges as well because it would
Speaker 2: be able to generate clean electricity, but this would cause
Speaker 2: other problems due to the grid constraints and curtailment and
Speaker 2: these kind of things which we are already seeing in
Speaker 2: some emerging markets like Chile Uru Guy because they have
Speaker 2: already added they had their bone on renewable energy installed capacity,
Speaker 2: but now the greed is not being able to keep
Speaker 2: up with these folocks of our for example in the grid.
Speaker 1: So overall our investments in emerging markets and developing economies,
Speaker 1: are they going up or are they going down? If
Speaker 1: we look at twenty twenty four versus say twenty twenty
Speaker 1: three or twenty twenty.
Speaker 3: Two, investment in emerging markets is definitely growing, and in
Speaker 3: twenty twenty three we actually saw a very interesting number
Speaker 3: because emerging markets reached over one hundred billion of investment
Speaker 3: for new built renew blinerge investment, which includes both us
Speaker 3: AT finance and small scale solar investment, and so twenty
Speaker 3: twenty three marked one hundred and sixty billion USC four
Speaker 3: emerging markets, which represented seventeen point five percent of the
Speaker 3: global renau burinergy investment figure in twenty twenty three, and
Speaker 3: this is up from thirteen percent in twenty fourteen, so
Speaker 3: we see a significant growth from a thirteen percent share
Speaker 3: to seventeen point five percent. Most of this investment goes
Speaker 3: to either solar and wind, with solar taking sixty eight
Speaker 3: percent of emerging markets investment in twenty twenty three, and
Speaker 3: a small scale solar actually took the biggest share in
Speaker 3: solar investment for the first time in twenty twenty three
Speaker 3: as well. Win still has a long way to go
Speaker 3: in emerging markets. A toy is raising as well because
Speaker 3: it's deeply concentrated in a small number of markets and
Speaker 3: with fifteen markets concentrating eighty four percent of new builderyno
Speaker 3: banerge investment in twenty twenty three, and if we look
Speaker 3: historically in the last ten years, the figure goes to
Speaker 3: seventy eight percent of total investment in emerging market going
Speaker 3: to only fifteen markets. India and Brazil take the biggest shares,
Speaker 3: and Brazil has actually seen a record high last year
Speaker 3: at twenty seven billion, with most of these investments also
Speaker 3: concentrated in solar.
Speaker 1: So solar is the most popular technology, but this is
Speaker 1: with a few economies that are really adopting at much
Speaker 1: wider scale. So when we look at the other markets
Speaker 1: on this list of one hundred and ten, how would
Speaker 1: you like to see this information being used? And essentially,
Speaker 1: you know, what are the actions that you hope that
Speaker 1: this will end up driving or at least informing people
Speaker 1: who are looking at it, either from a policy standpoint
Speaker 1: or from the companies actively involved in the energy industry.
Speaker 2: I think that the main thing here is once you
Speaker 2: have this awareness on the policy side, like that we
Speaker 2: have seen more emerging markets adding more clin energy policies.
Speaker 2: This helps creating a un enable environment that will be
Speaker 2: able to put some countries in this spotlight. And with
Speaker 2: that in mind, when you have the necessary framework and
Speaker 2: you have the necessary policies in force, this will consequently
Speaker 2: be able to attract investors and investments, especially from abroad.
Speaker 2: So in my opinion, the point we want to make
Speaker 2: with this is that even though emerging markets are reaching
Speaker 2: like new records and investing more and adding more renewable
Speaker 2: energy capacity, they are still very concentrated. As an I mentioned,
Speaker 2: and for the other markets, we have seen that they
Speaker 2: are slowly progressing. So there we have seen some progress
Speaker 2: in basically all the emerging markets that we cover. However,
Speaker 2: these progresses still very far from what it should be
Speaker 2: by now. So the main idea what Climate Scope really
Speaker 2: wants to spread is that there are plenty of opportunities
Speaker 2: to invest in emerging markets. So we often talk too
Speaker 2: much about Brazil, Chile, China, India, so the major economies,
Speaker 2: but sometimes we forget about the other emerging markets that
Speaker 2: they are actually seeing huge progress. But this actually doesn't
Speaker 2: compare to the other one because it's just unfair when
Speaker 2: you look to Brazil and the high volumes of investment
Speaker 2: that it has attracted compared to Mauritania, for example. So
Speaker 2: what do we want to spread with that is that
Speaker 2: there are opportunities. Of course there are barrias as well,
Speaker 2: but there are opportunities and the countries are moving forward
Speaker 2: to make this process much more smooth to be able
Speaker 2: to attract investment, and they are becoming more prepared for that.
Speaker 1: So let's talk about some of those markets then and
Speaker 1: the ones that jumped that aren't part of that kind
Speaker 1: of you know, big critical mass at the top. There
Speaker 1: were several countries in Africa that actually broke into this
Speaker 1: top list this year. What were some of those that
Speaker 1: you know, climbed in the rankings and are actually making
Speaker 1: really discernible progress.
Speaker 3: So we have three markets to highlight, Kenya and Namibia
Speaker 3: and Nigeria, which were the first African markets in three
Speaker 3: years to join the Climate Scope Top ten. Those three
Speaker 3: markets exemplify how an increased enabling environment and fundamentals reflect
Speaker 3: the progress on their scars in Climate Scope. Talking about
Speaker 3: Namibia specifically, we see that great small scale solar growth
Speaker 3: has led the market to increase its experience care and
Speaker 3: reach the top of the Climate'scope ranking. Nigeria, for instance,
Speaker 3: has seen the end of the phossil fuels so anxiety
Speaker 3: in twenty twenty three, which also led a PV boom,
Speaker 3: and Kenya has also seen a similar path. So all
Speaker 3: these markets have seen increased in adoption rates for policies
Speaker 3: which led to deployment growth and reflected in investments as well.
Speaker 1: So maybe they're on this list or maybe they're not.
Speaker 1: But what was the one country for each of you
Speaker 1: that surprised you the most this year and when you
Speaker 1: looked at the data set, you kind of went, Okay,
Speaker 1: I want to actually know a bit more about what
Speaker 1: the story is in that market.
Speaker 2: I think the one that surprised me the most was Gatemala.
Speaker 2: So Gatemala has among Latin American countries, it has doing
Speaker 2: really well over the past years, but reaching the top
Speaker 2: ten was quite a surprise for me. One of the
Speaker 2: reasons why they deserved being on the top ten is
Speaker 2: because despite this is a small country, they and really
Speaker 2: reliable and they have like plenty of hydroelectric power plants
Speaker 2: in there. One thing that we have seen actually in general,
Speaker 2: not only Guatemala, that is now making these countries does
Speaker 2: emerging market switch a little bit their focus to other
Speaker 2: renewable energy instead of hydro is because due to natural
Speaker 2: phenomenons like El Nino, these markets that relies a lot
Speaker 2: on hydro power, they have seen their hydrogeneration decreased a lot.
Speaker 2: So this is a way for them to switch from
Speaker 2: this reliance on hydro and then consequently start implementing policies
Speaker 2: that gives incentive to solar and wind for example. So
Speaker 2: right now, what is happening to Gatemala. One of the
Speaker 2: main drivers for them to be in this top ten
Speaker 2: is exactly because they have switched a little bit from
Speaker 2: this hydro reliance and is now investing in solar.
Speaker 3: For me, I guess I'll move back to one of
Speaker 3: the countries I just listed, which is Namibia. The countries
Speaker 3: saw some of the biggest changes in the rankings out
Speaker 3: of all of the top ten markets, and those changes
Speaker 3: were mostly attributed to you. As I said, the adoption
Speaker 3: of solar. Namibia was facing a lot of issues due
Speaker 3: to unreliable hydropower supply and also unreliable cope plants, which
Speaker 3: led consumers to adopt a lot of small scale or
Speaker 3: rooftop solar in their own homes to be able to
Speaker 3: provide for electricity throughout the year. So that was the
Speaker 3: biggest change I think a country climate Scope this year
Speaker 3: saw and I think that was very impressive.
Speaker 1: Sophia, Anna, thank you very much for joining today.
Speaker 2: Thank you, Diana, it was my pleasure to be here.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a
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