- South Africa, India, Brazil, Indonesia emerge as high-need hotspots for renewable energy investments
- G20 needs to double investment in renewable energy to meet Paris climate goals
- Policies supporting solar and wind investments start to pay off
- Allianz Climate and Energy Monitor 2017 assesses low-carbon investment climate in G20 countries
The Allianz Climate and Energy Monitor 2017 ranked South Africa 10th among G20 countries for renewable energy investment conditions. It scored high for its depth of capital markets, even though a high inflation forecast brought down the overall score. The country has steadily increased its renewables capacity in the last years and has a relatively high presence of leading renewable energy business.
The Allianz Climate and Energy Monitor 2017 examined the needs and investment climate for all G20 countries regarding renewable energy. Germany, UK and France maintain the top three positions in the 2017 edition. They combine a largely supportive policy environment for renewable energy with a mature market and adequate general investment environment.
South Africa has a national strategy to tackle climate change. However, the country needs to increase its ambition level and put together a plan to decarbonize the electricity sector. The current auctioning system available in the country is insufficient to create a level-playing field for renewables compared to the fossil-fuel electricity infrastructure.
Most G20 states improved conditions for investments in low-carbon energy over the past year, with several emerging market countries rapidly catching up to the leaders. The rapid development of the renewable energy sector is a crucial success factor for meeting the Paris climate goals. The G20 countries need to roughly double their annual investments in renewable energy to align their power infrastructure with the 2°C pathway, fixed at the Paris COP 21 in 2015.
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About the Allianz Climate and Energy Monitor
The Allianz Climate and Energy Monitor 2017 ranks for the second time G20 member states according to their attractiveness as potential destinations for investments in low-carbon electricity infrastructure. It further considers their current and future investment needs in line with a trajectory compatible with the 2°C/1.5°C temperature limit of the Paris Agreement.
Whether and where investors provide funds depends on a reliable climate and energy strategy in the country concerned, as well as on specific, transparent support mechanisms, fair competition with fossil energy sources, the influence of contrary lobbies, and market experience with renewable energy. These are in addition to general factors like inflation, openness to foreign investors, and legal certainty.