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.