Investment in clean energy: emerging economies with the greatest potential
Investment in clean energy in emerging nations has become increasingly significant in the last few years and the specific reasons behind the growing interest in this field include the need to tackle the challenges of climate change, build energy security, promote sustainability and favour economic growth.
According to recent research conducted by BloombergNEF (BNEF) on a sample of 110 relatively young economies, a total of 102 countries have set precise targets for renewable energy. Unfortunately however, 57 of these are not yet half way to integrating these energy sources. So which are the most promising nations for investment?
Emerging economies
The term emerging economies refers to those countries where industrial development is undergoing rapid growth. These nations are therefore experiencing complete socio-economic transformation, which gives them a certain level of influence at global level. Among the features which typically characterise such countries are:
- high GDP growth;
- rapid urbanisation;
- industrialisation;
- improvement in living standards.
In order to simplify classification of the various levels of development achieved, they are divided into three macro categories as follows:
- BRICS (this acronym is formed from the names of the five most important emerging economies, whose growth plans also include investment in clean energy):
- Brazil: has vast reserves of natural resources and a robust agricultural sector;
- Russia: focused mainly on energy and natural resources;
- India: the economy is experiencing rapid growth, with a strong service sector;
- China: has become one of the biggest economies in the world, with rapid industrial and manufacturing growth;
- South Africa: a diversified economy, with an important mining sector at its base.
- MINT (another acronym which refers to a slightly less influential group of countries than BRICS):
- Mexico: an economy focused on exports where the number of middle income families is growing;
- Indonesia: has a vast population and abundant natural resources;
- Nigeria: an economy mainly based on the oil sector;
- Turkey: a nation which acts as a bridge between Europe and the Middle East, with a diversified economy.
- Asian economies: some Asian nations such as Vietnam, Thailand, Malaysia and the Philippines are also considered emerging economies due to their sustained economic growth, industrialisation and rapid urbanisation.
Which countries have the best potential for investment in clean energy?
The above-mentioned BloombergNEF report has identified certain nations which offer the best opportunities for investment in clean energy by foreign economic powers. Its assessment is based on three main criteria:
- fundamentals: includes aspects such as key policies, market structure and any barriers to investment itself;
- opportunities: the market potential through which the investor can increase their own energy supply;
- experience: the experience gained by a specific country in the renewable energy sector and the respective results obtained.
By combining all this data, the researchers showed that among the 110 countries observed, five offered the best earning potential. The country classified at the top of the list was India followed by China, Chile, the Philippines and Brazil.
The Indian subcontinent achieved first place thanks to the ambitious policies it has introduced in this sector in recent years, among which those relating to sustainability and increasing its renewable energy capacity are of particular relevance.
Translated by Joanne Beckwith
