Switch to clean energy will cuts costs, create local jobs and save millions of lives

LONDON/NEW YORK, JULY 14 – Fossil fuel electricity generation has peaked worldwide as emerging markets seize the opportunities of low-cost renewables, finds a report published today by India’s Council on Energy, Environment and Water (CEEW) and the financial think tank Carbon Tracker.

Given renewables are already the cheapest source of new electricity in 90% of the world [1], emerging markets (non-OECD countries plus Chile, Colombia, Mexico and Costa Rica) [2] have no need to build up huge electricity infrastructure based on fossil fuels. They are leapfrogging this stage and meeting growth in demand by deploying clean energy systems powered by wind and solar, with huge potential to boost economic development and bring electricity to millions more people.

Kingsmill Bond, Carbon Tracker energy strategist and report co-author, said: “Emerging markets are about to generate all the growth in their electricity supply from renewables. The move will cut the costs of their fossil fuel imports, create jobs in domestic clean power industries, and save millions of lives lost to fossil fuel pollutants.”

Arunabha Ghosh, CEO of CEEW and report co-author said: “Around 770 million people still lack access to electricity. They are a small share of forecast growth in electricity demand but the international community has a moral obligation to support universal electricity access as the basis for achieving many other sustainable development goals.”

Reach for the Sun notes that emerging markets are key to the global energy transition, accounting for 88% of all expected growth in electricity demand from 2019-2040. [3]

In developed markets demand for fossil fuels for electricity generation has fallen by 20% since it peaked in 2007, and every country except two have reached peak fossil fuel demand for electricity.

The transition is different in emerging markets because they have electricity demand growth from a lower base as well as the need to provide access to hundreds of millions of people. Nevertheless, fossil fuel demand for electricity has already peaked or plateaued in 63% of emerging markets ex-China, from Chile to Nicaragua, from Kenya to Thailand.

India, which accounts for 9% of emerging market electricity demand and 20% of expected demand growth, illustrates the speed and scale of change. From less than 20GW of solar in 2010 it has grown to 96GW of solar, wind biomass and small hydro in May 2021. Including large hydropower, renewables now provide 142GW or 37% of the country’s power capacity, and it has a target of 450GW by 2030. Demand for fossil fuel generation reached a plateau in 2018, and fell in 2019 and 2020. While fossil fuel demand might again increase in the near-term to meet latent electricity demand, India has demonstrated how a double leapfrog — connecting nearly all households to electricity and its renewable energy rollout — can be driven with policy priorities and market design.

China, which accounts for nearly half of emerging markets electricity demand and 39% of expected demand growth, is on the cusp of change, with solar and wind capacity growing at over 20% each year. Assuming electricity demand growth of 4-5% and solar and wind supply growth of 20-25%, fossil fuel demand for electricity in China will peak before 2025.

Vested interests are the key impediment to change. The report looked at the drivers of change and the barriers to change in the emerging markets and concluded that in most locations, the barriers to change were soluble. It is vested interests in certain exporters and fragile states that are able to hold back change. But these will simply be the laggards of the energy transition.

Overall, 82% of current emerging market electricity demand and 86% of expected demand growth comes from countries that import coal and gas, and they have powerful incentives to switch to solar and wind. With the right policies in place, technology and cost barriers to change can be crossed.

Continuing to build fossil fuel power risks huge losses. China alone could face more than $16 billion in stranded assets by 2030 if coal plants continue to be built without controls [4]. Europe’s electricity sector wrote down $150 billion of losses after fossil fuel demand peaked in 2007.

Resistance to the energy transition is likely to be more entrenched in coal and gas exporting countries, but they account for just 16% of emerging market electricity demand and 10% of expected demand growth. Some are already changing: demand for fossil fuel generation peaked in South Africa in 2007, and many Gulf nations are showing signs of embracing solar.

It finds that a supportive policy environment is the key to driving growth in renewables. If countries liberalise markets and introduce competitive auctions, they can cut costs and attract international finance as capital markets turn their backs on fossil fuels. Auctions have helped India drive the cost of solar down to one of the world’s lowest levels.

Developed countries can speed up the transition to renewables in emerging markets by providing policy support, technology expertise and by using development finance to reduce the cost of capital. The report says it is in their interests to do so, in order to support global climate targets, and for geopolitical reasons as the US seeks to counter growing Chinese influence.

The report also notes that renewables hold the key to meeting the UN’s goal of giving everyone access to affordable, reliable and sustainable energy by 2030.

Once embargo lifts the report can be downloaded here: https://carbontracker.org/reports/reach-for-the-sun/


To arrange interviews please contact:

Stefano Ambrogi sambrogi@carbontracker.org +44 7557 916940
Joel Benjamin jbenjamin@carbontracker.org +44 7429 637423
David Mason david.mason@greenhousepr.co.uk +44 7799 072320

About Carbon Tracker
The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org

About CEEW
The Council on Energy, Environment and Water (CEEW) is one of Asia’s leading not-for-profit policy research institutions. The Council uses data, integrated analysis, and strategic outreach to explain – and change – the use, reuse, and misuse of resources. It prides itself on the independence of its high-quality research, develops partnerships with public and private institutions, and engages with the wider public. In 2021, CEEW once again featured extensively across ten categories in the 2020 Global Go To Think Tank Index Report. The Council has also been consistently ranked among the world’s top climate change think tanks. CEEW is certified as a Great Place To Work®. Follow us on Twitter @CEEWIndia for the latest updates.


[1] Solar or wind are cheapest source of new electricity in 90% of the world by supply: LCOE of renewables h2 2020, BNEF, 2020

[2] Emerging markets defined as non-OECD countries plus Chile, Columbia, Mexico and Costa Rica, following the IEA approach in Financing clean energy transitions in emerging and developing countries. IEA, 2021

[3] In the IEA STEPs scenario 88% of the growth in demand for electricity from 2019 to 2040 comes from emerging markets and just 12% from the OECD.

[4] Ganesan, Karthik, and Danwant Narayanaswamy. 2021. Coal Power’s Trilemma: Variable Cost, Efficiency and Financial Solvency. New Delhi: Council on Energy, Environment and Water.