Australia is one of the wealthy countries that attracted big money into renewables throughout the pandemic. However, less flowed to developing countries.
Australia is the eleventh biggest market for renewable energy investment according to a new BloombergNEF (BNEF) Climatescope report that also revealed renewables investment in developing countries slowed during the pandemic.
Investors funnelled 10 per cent less into renewables in developing countries in 2020 compared to 2019 and more investment flowed into wealthier countries, contributing to a widening energy transition gap between richer and less developed nations.
In the past, emerging markets have attracted most of the renewables investment. In 2017, 59 per cent went to developing countries. By 2020, the tables had turned and 57 per cent of total global energy transition investment was poured into developing nations.
Aside from pandemic disruptions, other drivers behind the uptick in renewables investment in wealthier countries was the rise in electric vehicle adoption, especially in European nations and the US. Unlike wealthier countries that can offer generous subsidies for these vehicles, EV uptake in developing countries has been slower as these cars are still unaffordable.
Global investment into clean road vehicles and infrastructure rose by 28 per cent ($139 billion) in 2020 from 2019. The majority of this finance went into passenger vehicles (85 per cent of total spending on electric mobility). Investment in electric busses, the second largest electric mobility category, has not grown at the same pace, however.
There’s hope for developing countries yet with wealthier countries at COP26 in Glasgow firming up a former commitment to provide $100 billion in financing to help less developed countries tackle climate change.
Overall renewables investment climbing
Overall investment in renewables was up despite the pandemic with energy transition infrastructure funding (also including electric mobility, electrified heat and other types of projects) hitting an all-time high of $471 billion in 2020, up 11 per cent from 2019.
The Climatescope survey revealed a highly concentrated market for renewables investment, with the top 15 markets attracting 88 per cent of the total investment.
China comfortably tops this list, attracting a third of total investment followed by the US (16 per cent) and Japan (6 per cent).
Solar continues to outstrip other technologies in annual generation growth. Solar generation jumped 15 per cent in 2019-20. Fossil fuel generation is flattening out, with coal generation growing by just 1 per cent between 2015-2020 and natural gas growing by 11 per cent I the same time.
Ten countries now get over a quarter of their power from wind and solar, with Denmark the renewable penetration leader in 2020 with 70 per cent of its power coming from the wind and solar.
In terms of new projects, wind and solar accounted for 69 per cent of the total new build at 218GW, with solar representing 46 per cent of total additions.
Australia came in seventh for wind capacity additions in 2020, making it one of a small number of developed nations doubling down on wind. The top ten countries accounted for 84 per cent of the global capacity additions in wind in the decade.
The survey also revealed that net zero targets with expiry dates some time in the future covered two thirds of global greenhouse-gas emissions and another 27 per cent of countries were working on such a pledge.
Despite these commitments, the survey noted that few of these targets had yet to be backed up with specific policies to meet them.