Latin America and the Caribbean boast extraordinary renewable energy resources and much of the region has seen strong economic growth in recent years. Still, the local clean energy sector is just beginning to gain traction, last year attracting less than five per cent of an estimated US$280 billion invested worldwide. For clean energy entrepreneurs, developers, and manufacturers, massive opportunities appear to lie ahead—if they can identify them. Similarly, government leaders could trigger a flood of new clean energy investment—if they can craft appropriate policy frameworks.
To bridge these gaps, the Multilateral Investment Fund, member of the Inter-American Development Bank Group, in partnership with Bloomberg New Energy Finance, has created the Climatescope, the first annual report, index, and interactive web tool focused on the clean energy market in Latin America and the Caribbean. Climatescope was released June 19 during the Rio+20 United Nations Conference on Sustainable Development. The release of the report is supported by the launch of a web tool which lets users see the underlying data and change weightings to produce their own versions of the index. The web tool will be available at http://climatescope.fomin.org from June 19.
Brazil tops index
The Climatescope uses 30 indicators to measure the ability of each country to attract capital to build a greener economy, aggregated into scores from zero to five, with five representing the best investing environment. The highest ranked country was Brazil, but it only scored 2.6, indicating ample opportunity for improving conditions to attract more capital for low-carbon and renewable energy capacity. Brazil was closely followed by Nicaragua, Panama, Peru and Chile. “Climatescope is much more than a report,” said Nancy Lee, MIF’s general manager. “It is an interactive and dynamic tool with rich data and in-depth country profiles that allows users to change the weights of each parameter to suit their needs. We hope that the Climatescope’s unique combination of information on finance, policy, and market opportunities will have real benefits for facilitating green investment in Latin America and the Caribbean.”
Michael Liebreich, chief executive of Bloomberg New Energy Finance, said that over the past three years equipment prices have dropped to the point where unsubsidised clean energy is on the verge of being competitive with fossil fuels. “For the moment, however, the sector still needs intelligent support mechanisms, and it certainly needs a raft of unhelpful barriers to be swept away,” Liebreich said. “What Climatescope does is measure progress on these fronts on a very granular level, measure by measure, country by country. It is the first time anyone has attempted to do this, and we think it will prove of enormous value as Latin American and Caribbean countries strive to attract funds to accelerate their green growth trajectories. We commend MIF and the IDB for backing this initiative.”
Criteria for judging
Countries were ranked based on four parameters: enabling framework; clean energy investments and low-carbon financing; low-carbon business and clean energy value chains; and greenhouse gas management activities. The report documented US$90 billion of cumulative clean energy investment in Latin America and the Caribbean between 2006 and 2011, with Brazil attracting close to 80 per cent of the total funds committed. Other key findings include:
Renewable energy capacity can be installed in some parts of the region without the need for subsidies due to a combination of falling clean energy technology prices, high electricity prices and rising electricity demand.
At least 80 clean energy policies are in place or in the late planning stage in the region, mostly relating to energy market regulations and tax-based incentives.
Microfinance has emerged as a significant lever to expand access to clean energy for the poor. Currently, 71 of 448 microfinance institutions operating in the region offer some sort of green financial product.
Climatescope was prepared by Bloomberg New Energy Finance and was commissioned by the Multilateral Investment Fund, member of the Inter-American Development Bank Group.
Final, composite scores are shown: