The effects of climate change pose some unique challenges for humans of the 21st century. Desertification will slough away arable land, forcing the citizens of many developing countries to retreat to cities across the globe. A similar result will come from the destruction of rising sea levels and extreme weather events.
Mark Twain may have been on to something when he famously said “buy land. They’re not making any more of it”. He probably didn’t account for the fact that some land may simply be destroyed.
If governments are idle while climate change creates another refugee crisis, humankind will face a slew of problems. The World Bank predicts that climate change will displace at least 140 million people by 2050 (World Bank). Social strife, economic costs, and geopolitical conflicts will result from people retreating from Africa, Latin America, and Southeast Asia.
Fortunately, the problems associated with climate change can be curbed by shifting energy investments to the cleantech sectors. Developing countries are already leading the way.
Developing Countries Are Investing More in Cleantech
The chart below demonstrates some fascinating trends about renewable energy investments.
As you can see, renewable energy investments have increased everywhere since 2004. However, investments by developed countries reached a peak in 2011. Between 2004 and 2017, renewable energy investments in developed countries grew from $38 billion to $103 billion. During that same period, renewable energy investments in developing countries grew from $9 billion to $177 billion (Statista).
Most of the renewable investment gains in the developing world can be attributed to state-led energy plans and public-private initiatives in China, India, and Brazil (Statista). While their contributions were minor in comparison to the big three, many countries in Latin America and Africa also ramped up their cleantech investments.
Chinese Investments Account For A Majority of Cleantech Investments
China is the leader of the renewable energy sector among all developed and developing countries. In 2017, China invested $126.6 billion in the renewable energy sector. The primary focus of China’s investment plan is solar energy. Planners hope to produce 100 gigawatts of solar energy by 2020. This is enough energy to provide 30 million households with electricity (Business Insider).
China also aims to boost its alternative energy capacity to 20 percent of the total energy consumption of the country by 2030 (Business Insider). China’s goal is ambitious since economic planners are currently reducing subsidies to combat a deficit in the renewable energy sector.
In 2018, China approved a 85-megawatt solar project worth $300 million. Naturally, China also constructed a solar plant in the shape of the iconic panda (Business Insider).
Causes for China’s Renewable Energy Investments
Climate change is the leading cause of China’s push for cleantech, but there are also other reasons to consider.
Investing in cleantech is a geopolitical strategy that may help Beijing become an influential player in the future. By investing in renewables now, China can appear to be the moral leader of the world later (Council on Foreign Relations). China also aims to achieve energy independence.
Reducing pollution is a top priority of China’s government and business leaders. Most of China continues to be powered by coal plants. The resulting smog gives many people respiratory problems and pollution-related diseases (Business Insider). In 2013, 366,000 Chinese citizens died from the effects of pollution (Business Insider). It is common for Chinese citizens to wear masks to avoid inhaling coal particles in the air.
India’s Investment Growth Set to Explode
India is the second largest investor of renewable energy in the developing world. In 2018, India accounted for 4.43 percent of global renewable energy generation capacity (IBEF).
If India continues to invest in renewable energy at its current rate, the country will be able to produce 4,550 gigawatts from cleantech by 2040. India currently produces 334.15 gigawatts of electricity from hydropower, solar energy, and other alternative energies. In 2017, India added 11,785 megawatts of clean energy capacity. This is an impressive accomplishment, but most of the economic gains are exclusive to northern India (IBEF)
Most of India’s progress in the clean energy sector can be credited to several private-public initiatives. Since 2014, the Indian government and private companies invested $42 billion in the renewable energy projects. In 2018, India launched the world’s largest solar plant in Karnataka. The project will cost $2.55 billion (IBEF).
China continues to be the leader in cleantech investments, but growth is higher in India. India cleantech investments grew by 22 percent in Q1 and Q2 of 2018. Chinese investments in renewables grew by 15 percent. Analysts expect India to surpass China by 2030 (Quartz).
Brazil Is the Largest Producer of Alternative Energy in Latin America
Brazil is the largest producer and consumer of renewable energy in Latin America. Due to its large landmass and diverse geography, the country effectively exploits solar, wind, and hydro power. In 2018, 76 percent of Brazil’s energy consumption came from alternative energy sources (Export).
Hydropower is the largest energy source in the country. This should not be surprising since Brazil has numerous rivers and waterfalls that are suitable for hydropower dams. 93 gigawatts of Brazil’s energy come from large hydropower dams. Other alternative energy sources account for 86 gigawatts of Brazil’s energy production (Export).
Brazil already has a significant alternative energy capacity, but it is attempting to diversify beyond hydropower. WInd power is a major focus of private investment efforts. Wind power is no longer on renewable energy auctions. This is a great indicator that wind power projects can survive on markets without government support. Brazil aims to produce 24 gigawatts of wind by 2024. $24.5 billion of wind power investments are expected in the country by 2020 (Export).
Investments in Africa Are on the Rise
African countries have not made much progress in the cleantech sector, but several initiatives were launched to spur development and promote sustainability. The Emerging Africa Infrastructure Fund was created with a $120 million loan from Allianz. Planners intend for the funds to be used to install cables and the infrastructure necessary for an advanced energy grid (ESI Africa). Countries like Nigeria and Kenya also received funding from Chinese investment groups (Carbon Brief).
In 2016, Africa Trade Insurance and the European Investment Bank approved funding for a solar facility in sub-Saharan Africa. Just 0.8 percent of the total sunlight in this region could power every home in Europe (ESI Africa).
China and India will continue to lead the world in cleantech investments, but countries in Latin America and Africa should not be counted out.