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Allianz Climate & Energy Monitor 2018

With the Paris Agreement governments agreed that global greenhouse gas emissions need to be net-zero by 2050 to limit global warming to well below 2°C; but current emission reductions efforts fall short reaching this goal, the world is currently on track to 3°C+. The energy and especially the power sector with its fossil fuels coal, oil and natural gas is the dominant source of emissions.

A rapid decarbonization is required to enable emission reductions in all sectors. Strong policy signals and market certainty conditions will be essential to attracting renewable energy investment.

 In that context, the G20 countries play a key role to trigger the energy transition globally as they consist of the largest global economies and would in general be in a good position to lead.

So how have the investment conditions changed in the G20 countries last year? Most G20 countries, including several of emerging countries, enhanced their conditions for investments in low-carbonrenewable energy in the past year. Nonetheless, conditions can be improved in all countries and much more renewable energy investments have are needed to be undertaken in order to meet the Paris climate targets, says the Allianz Climate & Energy Monitor 2018.

Result highlights

European countries most attractive for investing in renewable energy, with China, India and Brazil in top 10

France climbed two positions to the top, while Germany and the United Kingdom (UK) dropped to second and third place respectively in the 2018 edition of the Allianz Climate and Energy Monitor. The top 3 currently provide the best policy and market environments in the G20, which are pivotal criteria for long-term investments and complex projects such as solar and wind farms.

Top improvements were shown this year by Brazil and Italy, both reaching significantly higher ranks than last year. Over the last year, Brazil has notably increased its solar photovoltaic capacity additions, growing at a rate similar to other emerging economies like India, Turkey and China.

Only UK has a binding, ambitious and concrete long-term strategy of decarbonization

Only a few G20 countries follow a strategy of full decarbonization for the power sector. Almost all G20 countries (except the US) have agreed to limit their CO2-emissions to net-zero by 2050, but only the UK has passed a binding and ambitious long-term plan to decarbonize its power system.  

The Monitor finds that all countries show room for improvement for their policy framework to provide excellent investment conditions for renewables. “The question is not whether countries implement policies but how exactly they implement them”, says co-author Jan Burck from Germanwatch. The main challenges include

•           On-and-off policy support,

•           Sub-optimal enforcement of a support policy and 

•           Regressive policy design.


More investments for renewable energy by G20 is needed to align within the Paris Agreement warming limit.

Overall the global energy system needs to undergo substantial structural transformations to be compatible with the Paris agreement goals – this change requires a wide set of private and public investment. To achieve this, the annual investments required until 2050 in the power sector amount to 886 billion USD in the 19 countries assessed.

Most G20 countries need to investment more into a low-carbon power system compared to a business-as-usual scenario. But this calculation does not account for lower operational expenses afterwards resulting from lower/zero fuel costs.

For China, France, Brazil and Argentina, the annual investment needs is lower if they follow the Paris aligned path (capex only). This relates to the existing capacity, how much capacity is installed, the electrification rate and the amount of energy efficiency


Private investors will need to account for majority of renewable energy finance

Insurance companies like Allianz can play a crucial role in renewable energy projects, possessing the necessary risk management expertise as insurers as well as being well-capitalized investors with a long-term investment perspective.


On the Climate & Energy Monitor‘s methodology

The Monitor assesses the G20 countries’ conditions to attract investments in renewable electricity production, excluding fossil fuels, large hydro and nuclear as well as transportation infrastructure.

The analysis concentrates on two major elements:

1. the attractiveness of renewable energy investments along 5 policy and market factors in three overall categories:

  • Climate and renewable policy: Long-term climate strategy, renewable energy policies as well as power system integration policies for grid, demand-side and storage
  • Market maturity: Renewable energy experience and dynamic in the market
  • Macroeconomic conditions: Inflation, rule of law and similar

2. the investments required in the power sector to achieve a pathway consistent with the Paris Agreement by comparing the required capex with a business as usual scenario. In 2018, the Monitor switched from IEA figures to newer and more detailed IRENA figures

Absolute scores for all indicators under each element are normalized for each indicator to derive ratings between the best (100) and the worst (0) scores in the sample. Therefore, any given country is scored in relation to the performance of its fellow G20 countries. Countries are ranked and their scores rated between very low to very high, the ratings being relative to one another.

The NewClimate Institute is a Germany-based research institute generating ideas on climate change and driving their implementation. They do research, policy design and knowledge sharing on raising ambition for action against climate change and supporting sustainable development. Their core expertise lies in the areas of climate policy analysis, climate action tracking, climate finance, carbon markets, and sustainable energy. 
Germanwatch is an independent development and environmental organization that advocates for global equity and preservation of livelihood. They concentrate on politics and economies of the "global north" and its worldwide impacts. Starting point of the work are disadvantaged people from the "global south" and together with their members, sponsors and other actors from the civil society to lobby for sustainable development. Based on scientific analyses they inform the public sector, make educational as well as lobby work and demonstrate consumers how to act according their goals.
The Allianz Group is one of the world's leading insurers and asset managers with more than 88 million retail and corporate customers. Allianz is one of the world’s largest investors, managing over 660 billion euros on behalf of its insurance customers while our asset managers Allianz Global Investors and PIMCO manage an additional 1.4 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we hold the leading position for insurers in the Dow Jones Sustainability Index.