Despite the soaring solar markets of China and India, and the emergent growth of Brazil and South Africas solar industries, the BRICS countries (the aforementioned nations, plus Russia) are still falling way short of the required investment to meet climate-change mitigation policies.
That is the conclusion of a recent study by the Institute for Energy Economics and Financial Analysis (IEEFA), which puts forward a blended finance as the most likely way for these nations to plug the whole in the BRICS wall.
In 2015, the IEEFA finds, a total of $130 billion was invested by BRICS countries in renewable energy development, and despite announced policies among the five nations for this year amounting to the equivalent of $177 billion investment, that is still some way short of the level of funding required to enable these countries to tackle their climate change obligations.
The IEEFA data shows that Chinas 2015 investment of $102.9 billion in clean energy was far and away the largest spend, but is still below the average $124.4 billion required if it is to abide by the targets set at the recent Paris Agreement.
India, which like China has recently ratified the agreement, spent $10.2 billion on clean energy investment last year. However, that figure needs to reach $26.3 billion annually if climate change pledges are to be realized.
It is the same story for Brazil, where the $7.1 billion spent in 2015 needs to grow to $12.1 billion, while Russia is some way off the pace, spending just $1 billion on clean energy development in 2015 when it should actually be aiming for investments of $11 billion a year.
Of the five countries, South Africa is the only one to exceed its necessary expenditure requirements, plowing $4.5 billion into clean energy in 2015: the nation only needs to average a $3 billion annual spend to meet its climate change promises.
Combined, the BRICS countries have pledged development amounting to 500 GW of renewable capacity by 2030. At current investment rates, the nations are likely to fall short of that target, but the IEEFA does suggest following the "blended finance" model whereby public expenditure in the first instance should trigger additional private financing in order to plug the gap.
Under such a model, "public capital can catalyze much larger private investment in renewables", said the IEEFA. "By our calculations, every $1 set up through such models to fund infrastructure projects in developing countries and promote sustainable development will draw in $4 in private investment."
India's government is reported to be preparing a $3 billion investment in its solar PV manufacturing sector – a publicly backed boost to the industry that could well trigger such blended finance models to follow suit.
The reports author, Jai Sharda, adds that the BRICS nations are beginning to take positive and collective steps towards blended finance, chiefly via the creation of the New Development Bank (NDB), which is jointly owned and operated by the BRICS and has this year signed off on its first loans amounting to $911 million.
The NDB plans to increase its loan book to around $1.2 billion annually, which is only 11.7% of the annual public investment required to plug the shortfall, but is nevertheless a start.
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