Sustainability

Emerging markets need more ‘climate-responsive’ projects

November 3, 2023, 1:22 PM

Bottles gathered for recycling in Benin. Climate-responsive projects such as recycling are falling short in developing countries, a new report suggests

‘Alarming shortage’ says Tony Blair Institute
Private projects down 10% a year
Developing economies need mature renewable energy markets

There is an “alarming shortage” of projects working to reduce the negative effects of climate change in emerging markets, a new study by the Tony Blair Institute for Global Change has found.

The report noted that the number of “climate-responsive” projects in emerging markets funded by the private sector has been decreasing by around 10 percent per year since 2015.

The number needs to increase by 30 percent in total by 2030 to help those countries meet national and global climate action goals, the report said.

In contrast, renewable energy investments in Organisation for Economic Development and Cooperation developed countries increased at an annual rate of around 4 percent since 2015, it added.

Fighting the shortfall

The Institute was set up by former British prime minister Tony Blair.

Its study noted that the UAE’s presidency of the United Nations’ Cop28 climate change summit has set “improving climate finance” as one of four focus areas.

But a shortfall of climate-responsive projects – in areas such as real estate, renewable energy, natural resources, utilities or waste management – in emerging markets and developing countries (EMDCs) is holding back global transition.

Annually realised projects in EMDCs need to increase by seven times, according to the report.

The Institute analysed data from the World Bank’s Private Participation in Infrastructure database, and figures from investment data company Prequin.

The primary issue is that the renewables market in emerging economies is “not on a strong footing”. The amount of projects has been contracting over time and are concentrated in Brazil, India and South Africa, the report added. These markets are home to almost half of all privately funded renewable energy projects in EMDCs.

Research published in June by REN21, a group of scientists, governments, non-government organisations and renewable energy experts, found that the Middle East was the worst-performing region for investment in renewable electricity sources in 2022, accounting for just 1.6 percent of global investment that year.

Many Mena markets are ramping up their investments in solar and wind power especially, but there is more to do, experts say.

“While this degree of expansion will be challenging, securing private funding is not without its advantages – it can be more flexible and is available with fewer limitations such as borrowing limits or constraints on funding assignment,” the Tony Blair Institue said.

Funding disagreements

The Cop28 climate conference takes place in the UAE from November 30 to December 12.

Over the next two days, a pre-Cop28 meeting of the UN’s Transitional Committee on the operation of funding arrangements, including a new fund agreed at Cop27 last year to respond to loss and damage resulting from climate change, is taking place in Abu Dhabi.

At Cop27, Saudi Arabia pledged $1.5 billion to help Mena countries. But the UK’s Financial Times reported today that Western countries were clashing with the kingdom over the role it should play in kickstarting the fund, and believe it should contribute more money.