Isra-Mart srl : Report: spending must double on renewable energy projects in developing countries

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Investment in renewable energy must double in developing countries over the next decade just to meet their existing climate and energy supply ambitions, new research has found.

Published today, the report by an alliance of think-tanks called the Global Climate Network (GCN) argues that governments of richer countries must do more to persuade their private sectors to inject cash and confidence into poorly understood clean energy markets.

Researchers examined clean energy projects in China, India, Nigeria and South Africa and found that investment in clean energy needs to rise from $34bn (£21.2bn) in 2009 to an average of $63.6bn a year between 2010 and 2020 just to meet the environmental targets governments in those countries have already set.

This would make up a substantial proportion of the $100bn per year developed nations have promised poorer countries to help mitigate the effects of climate change.

Leaked copies of the UN secretary general's advisory group on finance's paper, due later this week, suggest that taxes on foreign exchange transactions, shipping, aviation and carbon allowances are all being considered to raise this sum.

Today, the GCN called for governments to set aside a proportion of the pledged Copenhagen finance to help attract private capital flows, warning that there was little chance of finding the magnitude of investment required outside the private sector.

It proposed five debt and equity finance mechanisms governments could use to help private investors have more confidence in clean energy markets, including providing upfront incentives or agreeing to give sovereign guarantees.

Following these suggestions would not only reduce the cost gap between clean and conventional power sources, but also draw in between $2 and $10 of private investment for every $1 of government money invested, said Kate Gordon, vice president for energy and climate policy at GCN member the Center for American Progress.

"If developed countries hope to fulfil their promises in Copenhagen, they must adopt strategies to use public dollars as a way to leverage private investment into clean energy markets in developing countries," she said. "Not only is this the right thing to do, it will also ensure massive growth in these countries' clean energy use, which will bring down the cost of low-carbon technologies the world over."

Nick Pearce, director of the Institute for Public Policy Research, which co-ordinates the GCN, added that richer countries should recognise that helping the developing world to convert to cleaner energy was in their own interest.

"It may seem difficult to argue for more investment by governments at a time of spending cuts, but it will reduce the amount of government money that is required in future," he said.