Global investments in renewable energy plant saw a record-breaking year in the final tally on 2020, reaching over $450bn, but spending in emerging markets, including China and India, slipped, with $67bn “retreating” to wealthier countries as the Covid-19 pandemic spread worldwide, according to latest BloombergNEF figures.

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Energy transition spending in less developed markets dropped 10% between 2019-2020, as finance shifted to “traditionally lower-risk” Organisation for Economic Co-operation & Development countries, BNEF found, “mark[ing] a major shift from previous years when these rapidly growing economies attracted the majority of new funds deployed”.

“The data suggests that investors retreated hastily from less developed markets to refocus on wealthier countries as the Covid-19 pandemic spread,” said the authors of the research group’s 2021 Climatescope report, published yearly as an assessment of energy transition market attractiveness.

In 2020, developed nations accounted for $262bn, or 57%, of total global energy transition investment, including support for renewable power assets, electric vehicles, and electrified heating, BNEF calculated, while developing economies saw $195bn, or 43%.

This contrasts with 2019, where emerging markets enjoyed a “slight majority” of funds received and 2017, where some 59% of this spend went to developing economies.

“Based on total funds deployed in 2020, enthusiasm for clean energy technologies appears to be at an all-time high,” said Luiza Demôro, head of energy transitions research at BNEF and lead author of Climatescope.

“But investors’ willingness to invest in poorer parts of the world really seemed to stall in 2020 as the pandemic took hold.

“The trend away from emerging markets and back to countries regarded as less risky was clearly evident in renewable power asset finance flows alone. Investment in renewables fell 9% from 2019-2020 in emerging markets but spiked 24% year-on-year in developed countries,” he said.

BNEF spotlighted the role EV adoption in Europe and the US had had in the “surge” in investment in Western nations, but that, in counterpoint, emerging e-mobility markets other than mainland China, have remained sluggish due to the fact “such vehicles typically sell for a premium over conventional internal combustion engine vehicles”.

Among other findings of this year’s Climatescope survey was that markets responsible for nearly two-thirds of global greenhouse-gas emissions have ‘net-zero’ targets in force, which BNEF defines by “having a plan to achieve zero CO2 emissions by some future date”, while policymakers in countries representing a further 27% are “actively considering codifying such a pledge”.

'Far fewer nations have followed through'

But the report also highlights that “far fewer nations have followed through with specific policies to achieve their long-term targets, however”, pointing to the share of developing nations using reverse auction schemes for clean power delivery deals or with feed-in tariffs in force having stayed “flat” compared to 2019, as an example.

“Over the past three years, less than half the emerging markets surveyed had auctions in force, while around one-quarter had feed-in tariff mechanisms in place,” noted the authors.

Mainland China headed the list of emerging markets with a Climatescope composite score – calculated based on ‘market fundamentals’, ‘opportunities’ and ‘experience’ – of 2.4/5 as a country “maintaining the world’s largest fleet of coal-fired power plants, [but] also the largest supply and demand market for wind and solar”.

India ranked second with a score of 2.35, now the world’s largest renewables auctions market being buoyed by “substantial” clean energy investment, and Croatia, which is targeting having renewables account for 63.8% of its electricity consumption by 2030, third with 2.15.