The reports say that low- and middle-income economies have invested $2.2tn in their energy systems in 2023, marking a 35% rise over 2020 figures. But this growth was largely driven by China, which accounted for $1.1tn last year. In contrast, other emerging markets have lagged on investment in their energy systems as well as in low-carbon solutions.

Achieving the goals of the Paris Agreement will require significantly more spending, especially on energy transition technologies like electric vehicles and renewables. On average, China requires $1.7tn of annual energy-system investment to be on track to net zero – 1.5 times more than the 2020–2023 average. Other emerging markets need $2.6tn/y, or 2.5 times more than the historical trend.  

An average annual required investment is $4.3tn to 2050. However, there is significant disparity across emerging markets when it comes to low-carbon progress. Despite record investment in renewables last year, 84% of newbuild clean energy investment was concentrated among 15 emerging markets.

Those figures are based on the findings of BNEF’s New Energy Outlook – in particular the Net Zero Scenario, which represents a credible pathway to net zero emissions globally by mid-century and limits planetary warming to 1.75°C above pre-industrial levels.

As of mid-2024, 95% of emerging markets had a clean energy target in place, and auctions and tenders are now available in nearly two-thirds of emerging markets. And these policies seem to be working: clean power investment in these markets passed $100bn for the first time in 2023.

BNEF’s annual Climatescope assessment ranks 105 emerging markets in terms of their attractiveness for clean energy investment. Focusing on power, India has come in first for the second year in a row, according to the newest edition of the report.  

At the same time, the year-to-year variability in the Climatescope ranking illustrates the speed with which the energy transition is moving and can gain pace. Kenya’s top-five finish was a result of jumping up 15 places in the ranking, while Nigeria and Namibia moved up 24 and 48 places, respectively, to enter the top 10.

At COP29, multilateral development banks (MDBs) estimate their annual collective climate financing for low- and middle-income countries will reach $120bn, including $42bn for adaptation, and MDBs aim to mobilise $65bn from the private sector. For high-income countries, this annual collective climate financing is projected to reach $50bn, including $7bn for adaptation, and MDBs aim to mobilise $65bn from the private sector.

‘We MDBs are focused on amplifying our catalytic effect by enhancing the results and impact of our financing, deepening engagement with countries through platforms, supporting clients’ climate ambitions, and increasing private sector mobilisation,’ read a collective statement.

As an example of the power of MDBs’ work, the European Bank for Reconstruction and Development, the Asian Development Bank and the Asian Infrastructure Investment Bank have financed two solar power plants in Azerbaijan by providing $160mn each, they announced at COP29 in Baku.

The sponsors for the two projects, Masdar and SOCAR Green, are said to have already broken ground on the 445 MW and 315 MW solar parks in Bilasuvar and Neftchala, and plan to commission them in 2027.

The EBRD also invested in the country’s first utility-scale solar power plant, which was recently commissioned by Masdar.