With fluctuating fossil fuel prices and extreme weather events, the need for drastic acceleration in sustainable energy and infrastructure investments is emphasised. However, at a time when action to deliver on this transition should be picking up speed, sustainable investment flows into emerging markets and developing economies (EM&DEs) has slowed down. Without sustained investment into energy transition in these markets and economies, the world will fail to keep global warming within 1.5 degrees Celsius of pre-industrial levels to meet the goals of the Paris Agreement.
More progressive action is needed in these geographies and sectors, yet investment activity in EM&DEs is “often constrained by higher prevalence of risks such as currency volatility [and] unstable regulation.” Despite this, an increasing number of EM&DEs rank among the most attractive investment opportunities for energy transition investors.
Fortunately, renewables are the cheapest new build sources of energy in these countries which should incentivise investment into energy transition.
The increasing intensity and frequency of extreme climate events reinforces the need for urgent investment in the resilience and adaption of critical infrastructure across EM&DEs