The US has emerged as the top market for renewable investment as President Joe Biden’s government enacts wide-ranging reforms to develop the clean energy sector.
The world’s top hydrocarbon producer was placed first on the Global Renewables Markets Attractiveness Rankings commissioned by IHS Markit.
The index, which rates countries based on their desirability to investors interested in non-hydroelectric renewables such as wind and solar, praised the US for its sound market fundamentals.
Germany, which leads clean power initiatives in the EU, was in second position. China, the world’s top oil importer, was ranked third. The world’s second-largest economy accounted for over half of all non-hydroelectric renewable capacity additions last year.
“Onshore wind, offshore wind and solar photovoltaic [cells] are set to account for more than 80 per cent of all new power generation capacity additions globally by 2030,” said Eduard de Vedruna, executive director of global clean energy technology and renewables at IHS Markit.
“While the lion’s share of 2020 capacity additions came from just two markets – China and the US – close to 50 markets recorded double-digit growth in the past year.”
Oil companies in the US face increasing scrutiny as Mr Biden’s administration continues to push for a transition to cleaner sources of energy to lower emissions.
The US has frozen new exploration activities on federal lands and has brought the US back to the Paris Agreement, which seeks to limit emissions to below 2°C above pre-industrial levels. It also plans to halve emissions from 2005 levels by 2030.
France and Spain were ranked fourth and fifth, respectively, by IHS, which cited their strong market fundamentals, stable procurement mechanisms and long-term clean energy targets. India was sixth while Australia was seventh.
However, both countries are “beginning to encounter infrastructure constraints on their continued path towards decarbonisation”, said IHS.
Onshore wind in India has suffered from a lack of grid and land access while uncertainty over federal and state ambitions in Australia has increased investor angst.
“While strong ambitions are perceived positively by investors and testify to a market’s commitment towards renewables, this needs to be backed by a well-conceived implementation framework, adequate infrastructure and durable policies,” said Indra Mukherjee, IHS Markit’s senior analyst for global clean energy technology and renewables.
Japan, which pledged to become carbon neutral by 2050 last year, is ranked eighth. The Netherlands is ranked ninth, while Brazil rounds off the top 10.
