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China, India lead U.S. in global renewable energy transition

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When political and business leaders meet in Hamburg for the G20 summit in July, climate change is expected to be one of the main topics up for discussion. And renewable energy investments are key to these discussions.

In a deep-dive ahead of the release of the Allianz Climate & Energy Monitor in June, here’s tracking the changes in the three biggest markets for clean energy investments...

Allianz SE
Munich, Apr 20, 2017

By 2020, annual global investments needed to sustain the energy transition consistent with the goal of limiting global warming to 2° Celsius will have risen to $790 billion. Climate-related investments, such as renewable energy, not only help create a sustainable world but also offer sound long-term returns that are generally not linked to the ups and downs of financial markets.

China, India and the United States together account for more than half of the global emissions of greenhouse gases and are the largest markets for renewable energy investments.

So how have the investment conditions changed lately in these markets? State-level action will be key for the United States as the political landscape changes, while China and India are set to lead the renewable energy transition, says the Allianz Climate & Energy Monitor Deep Dive.

Investments in electricity supply in China and the United States have to double - for India, even triple - by 2040


In 2016, total investments in renewables in the three countries was $134 billion, surpassing investments in fossil-fuel based capacity. Nevertheless, the United States and China have to double investments in low-carbon power while India has to almost triple them.

According to the Allianz Climate & Energy Monitor, federal-level policies in China and India are better than those in the United States. The two Asian countries overshoot their annual renewable energy targets regularly and are exiting coal. China, which has ambitious plans to scale up renewables, has topped prior targets, driven by wind and solar deployment and a steady reduction in the use of coal.

By 2020, China aims to raise its renewable power installed capacity by 38 percent from 2015 levels - equaling investments of $361 billion and 680 GW of installed capacity.


For comparison: Germany, which ranked first in the Allianz Climate & Energy Monitor 2016 for its renewable energy policies, currently has roughly 100 GW renewables installed. A new park of 10 wind mills has around 0.04 GW capacity.

India is also developing its renewable energy capacity at a rapid pace. Last year, solar and wind installations exceeded the annual goal by 43 percent and 116 percent, respectively. For 2022, India plans 175 GW of installed capacity.

Both countries are looking to exit coal-based power generation: China is cancelling plans for new fossil-based power plants and swiftly decommissioning existing coal power plants, while India is considering plans to stop building new coal power plants after 2022.


On a macroeconomic level, the United States offers a better investment environment in general than do China and India. Renewable investors also like the mature market and there is staunch support on state-level for renewables.

Last year, more than 16 GW of wind and solar capacity was installed in the United States, accounting for 60 percent of all new capacity. However, in the recent past, the new U.S. administration has taken action to support coal again and cut back on key climate regulation instruments such as the Clean Power Plan. More steps in this direction are expected.

But renewable energy still has good prospects as technology costs keep falling and progressive states such as California and Texas continue their renewable agenda.

The Allianz Climate & Energy Monitor 2017, to be released at the end of June, will assess all G20 countries along with their detailed investment needs.

Stay tuned.

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Thomas Liesch
Allianz Climate Solutions
Phone: +49 89 3800 12889

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