Leadership in renewable investments: a deep dive on China, India and the US by the Allianz Climate & Energy Monitor

The Paris Agreement sets an ambitious goal of limiting global average temperature increase to well below 2°C and pursues efforts to limit it to 1.5°C. In order to do that, huge efforts are needed. Both, a complete phase-out of coal-based power and a massive scale-up of renewables by 2050 are required.

In that context, China, India and the US play a key role to trigger the energy transition globally. These three countries 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.

Key messages:

  • Investments in energy supply in China and the US need to roughly double, in India even triple over the next decades to have a fair chance to remain within the warming boundary set in the Paris Agreement.
  • Adequacy and reliability of renewable energy policies are key for investors to realize the needed scale of investments. China and India outcompete the US in providing a strong, nation-wide green policy environment as per Allianz Climate and Energy Monitor’s 2016 findings. This trend is expected to remain unchanged in 2017.
  • Additions to renewable power capacity are going up in all three countries and have in total overtaken investments in fossil-fuel based capacity.
  • China is swiftly decommissioning coal power plants to combat carbon emissions and environmental pollution, whereas India may not put a hold on building new capacities before 2022.
  • Strong policies helped to set China and India on track for achieving its Paris climate targets, whereas the US might miss its targets if the new administration swiftly implements its recent announcements.
  • A mature market, attractive state-level policies, and a very good general investment climate still attract high amounts of renewable energy investments in the US in progressive states.
  • Without attractive and reliable nation-wide policies in the US, renewable energies face headwinds and will rely on their imminent cost competitiveness and state action.

Renewable investments will need to speed up in the coming two decades in order to be in line with the Paris Agreement goals. China and the US will need to double renewable investments while India has to almost triple them.

To attract these investments, adequate investment conditions need to be provided by regulation. And to bring emissions down, exiting coal-based power generation is equally important.

China and India are on track to achieve their climate targets set. China aims to increase its renewable energy capacity by 38% in 2020 compared to 2015 levels, equaling 680 Gigawatt (GW) of installed capacities and investments of USD 361 billion in renewable energies. While India exceeded the annual goal for solar and wind installations by 43% and 116% respectively in 2016. For 2022, India plans 175 GW of installed renewables.

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 of capacity.

Exiting coal is also essential for both countries. 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 than China and India do. Renewable investors also like the mature market and there is staunch support on state-level for renewables.

In the US, renewables are booming with more than 16 GW of wind and solar capacities installed in 2016, accounting for 60% of all new capacity (27 GW). This has been driven by ambitious Renewable Portfolio Standards in various US states and tax credit schemes on federal level as well as the decline in costs for renewables.

While the outlook for federal ambition to combat climate change is worsening, which may constrain investment climate, renewables still have good prospects to continue their boom anyways, especially when progressive states like California and Texas continue their renewable agenda.

About the contributors

NewClimate Institute

The NewClimate Institute for Climate Policy and Global Sustainability 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. They work together with 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.

Allianz Climate Solutions

Allianz Climate Solutions is the Competence Center of Allianz Group for Climate Risks and Renewable Energy. We offer insurance and advisory services on financing issues for renewable energy projects to both external clients and Allianz entities. Furthermore, we work with both private and public sector partners towards improving social resilience to climate change through dedicated insurance approaches.