Generic Hero BannerGeneric Hero Banner
Latest market news

Capital costs slow renewables in developing world

  • : Electricity, Emissions, Hydrogen
  • 24/04/16

Higher cost of capital in emerging economies for clean energy technologies remains the key challenge for attracting investments to meet the goal set last year of tripling global renewable capacity by 2030.

Developing nations, excluding China, need to spend around $2.4 trillion/yr on clean energy and climate resilience by 2030 to help reduce global warming, according to the UN.

But governmental and development spending will fall short, said Avinash Persaud, the special adviser on climate change to the president of the Inter-American Development Bank.

"There are not enough subsidies in the world to blend 2.4 trillion/yr every year to fund the energy transition," Persaud said today at the Columbia Global Energy Summit in New York.

And characteristics of renewable energies make filling the gap with private-sector financing more difficult than for traditional hydrocarbons.

Some clean energy technologies such as solar plants and wind farms have seen their cost of capital decreasing in more developed regions. But this cost, or the minimum expected financial return to justify an investment, for utility-scale solar PV projects in emerging and developing economies was more than twice that in advanced economies last year, energy watchdog the IEA has said.

The biggest risk for developing clean energy projects in emerging economies stands on currency risks, according to Persaud.

"When an investor in the developed world invests in an oil, gas, coal project in a developing country they know they have an asset that is going to earn them a foreign currency revenue if they need it. They can export that," he said, adding that the case for renewables plants is different, raising the financial risk of projects. Investors in a solar farm are paid by local consumers of the utility in local currency, increasing the hedging cost.

The IEA has estimated that narrowing the gap in the cost of capital between emerging and developing economies and advanced economies by 1pc could reduce financing costs for clean energy by $150 bn/yr.


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/01/30

EIB's transition, climate finance hit €50.7bn in 2024

EIB's transition, climate finance hit €50.7bn in 2024

London, 30 January (Argus) — The European Investment Bank (EIB) lifted its finance for the energy transition, climate action and environmental sustainability to a record €50.7bn ($52.8bn) in 2024 — 57pc of the bank's total financing last year. The EIB lifted its "green" financing by 14pc on the year . The bank signed €88.8bn in new financing in 2024, with the majority — €68.2bn — going to EU members. The projects financed in 2024 are expected to result in 21GWh of renewable power generation, as well as 107,370km of installed or upgraded power lines, the EIB said. The bank has an existing target for more than 50pc of its total annual financing to go to climate action and environmental sustainability by 2025. It surpassed this goal in 2021, 2022 and 2023, with 51pc, 58pc and 60pc, respectively, going towards climate action in those years. The EIB also aims to support €1 trillion of climate and sustainability investment by 2030 and remains "well on track" to reach this goal, it said. The EIB is the EU's lending arm, owned by EU member states. It is classed as a multilateral development bank (MDB). Countries often call on MDBs to do more to address climate change, as the institutions have significant leveraging power. The bank expects to lift its signed financing to €95bn this year, with plans to support renewable energy, grids and interconnectors, green hydrogen and storage and reduced emissions in heavy industry. "Far-reaching technological changes, the increasing costs of climate change and demand for more investment in defence, housing and global needs are the expected focus for 2025 to 2027," the EIB said today. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

UK sets out '1.5°C-aligned' climate plan to 2035


25/01/30
25/01/30

UK sets out '1.5°C-aligned' climate plan to 2035

London, 30 January (Argus) — The UK has released its third national climate plan, reiterating its commitment to Paris climate agreement goals, and to its 2035 target of an 81pc cut in greenhouse gas (GHG) emissions, from 1990 levels. UK prime minister Keir Starmer announced the 2035 target at the UN Cop 29 climate summit in November last year. Countries and jurisdictions that are signatories to the Paris climate agreement commit to submitting new national climate plans — known as nationally determined contributions (NDCs) — every five years, to UN climate body the UNFCCC. The agreement includes a ratchet mechanism, whereby climate targets should become more ambitious over time. Today's NDC — the UK's third — covers 2031-35. The document consolidates plans already in place, and flags upcoming strategies. The government plans for "clean sources" of power to make up 95pc of the country's generation by 2030, cutting carbon intensity of electricity generation to "well below" 50g CO2 equivalent (CO2e) per kWh in 2030. Carbon intensity was 171g CO2e/kWh in 2023. And the plan notes that the UK was the first G7 country to shut down all coal-fired power , closing its last plant in September 2024. The government has pledged "an initial" $3.4bn ($4.24bn) towards decarbonising heat and improving household energy efficiency over the next three years, and will introduce the delayed clean heat market mechanism in April. The scheme will require boiler manufacturers to ensure a proportion of their sales are "low carbon options". The plan sets out the government's manifesto pledge to phase out sales of new cars "relying solely on internal combustion engines" by 2030, and notes that it will consult on issuing no new oil and gas licences to explore new fields. The government also promises "an updated cross-economy plan to meet our climate targets in due course", as well as a new industrial decarbonisation strategy by 2026. The NDC is in line with advice from the UK's independent advisory Climate Change Committee , and with the country's legally binding sixth carbon budget. The latter includes international aviation and shipping emissions, although NDCs do not require this. The UK's third NDC is "a credible contribution towards limiting warming to 1.5 °C and it sits within a range of Paris-consistent equity metrics", the government said. The Paris accord seeks to limit the rise in global temperature to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C. The country's Labour government, which took power in July last year, has repeatedly underlined its commitment to the UK's legally binding target of net zero GHG emissions by 2050. The plan took some direction from the outcome of Cop 28 , in December 2023. Countries agreed at Cop 28 to transition away from fossil fuels and to treble renewable energy capacity to 11,000GW by 2030. The NDC also underlined the UK's commitment to spending £11.6bn in international climate finance over April 2021-March 2026, and will outline future climate finance plans in its spring 2026 spending review. UK international climate finance over April 2011-March 2024 reduced or avoided 105mn t of GHG emissions, the government said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

New Zealand sets 51-55pc emission cut by 2035 target


25/01/30
25/01/30

New Zealand sets 51-55pc emission cut by 2035 target

Edinburgh, 30 January (Argus) — New Zealand has submitted its new 2035 target today, aiming for 51-55pc cuts in greenhouse gas emissions (GHG) compared with 2005 gross levels. Countries party to the Paris agreement must submit new climate plans — nationally determined contribution (NDCs) for 2035 — to the UN climate body the UNFCCC by 10 February, as part of the so-called ratchet mechanism which requires them to review and revise plans every five years. The target includes all sectors of New Zealand's economy and all GHGs. The sectors covered comprise energy, industrial processes and product use, agriculture, land use, land-use change and forestry (LULUCF) and waste. The country's second NDC target is expressed as a range "to respond to evolving national circumstances, notably the high proportion of biogenic methane from agriculture in New Zealand's emissions profile," the NDC said. The country's largest source of emissions is the agricultural sector, making up 53pc of total emissions in 2022, according to the environment ministry. With this target, the country's net emissions would reach between 39mn t and 42mn of CO2 equivalent (CO2e) in 2035, according to the environment ministry. The target covers the 2031-2035 time period, but is set as a single-year goal. Single-year goals aim to cut emissions by a single target year, while multi-year goals aim to reduce emissions over a defined period. A multi-year goal is typically more effective when it comes to limiting cumulative emissions, according to the GHG protocol, a GHG cut framework established by the World Resources Institute. New Zealand committed to reduce GHG emissions by 50pc by 2030, from a 2005 baseline. It is also a single year — "point year" — target but is managed using a carbon budget across the NDC period. The country said today the lower range of its 2035 target aligns with its third emissions budget — maximum quantity of emissions allowed in a five-year period — for 2031-35, but the upper end of the range goes beyond "the budget to achieve greater emissions but still remains feasible". New Zealand's emissions budget for 2031-35 is 240mn t of CO2e, according to environment ministry data. New Zealand said the country will publish its third emissions reduction plan for the period 2031–35 in light of the new NDC in 2029, and it will "continue to assess, realign and introduce policies to reduce emissions". This plan would cover the third emission budget period. The country said it aims to achieve its new NDC target through domestic emissions reductions and removals, but may take part in "co-operation under Article 6 during the NDC period". Article 6 of the Paris accord includes two mechanisms aimed at helping countries meet their emissions reduction targets and NDCs through carbon trading . By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: UK’s biomethane RGGO auction to add transparency


25/01/30
25/01/30

Q&A: UK’s biomethane RGGO auction to add transparency

London, 30 January (Argus) — The UK's first independent biomethane renewable gas guarantees of origin (RGGO) auction is due to take place on 5 February. It will be run by UK auction provider E-power, which currently runs auctions for power purchase agreement (PPAs), renewable obligation certificates (ROCs) and renewable energy guarantees of origin (Regos). Argus spoke to E-power managing director Melanie Reay about the new auction. Edited highlights follow: UK biomethane producer Future Biogas is providing the certificates for the auction, how did this partnership come about? Future Biogas contacted us in May following a conference in Glasgow, and was keen to develop a platform to sell its RGGOs. Since then, we have been working on what the platform would look like and testing it so that it will be ready for the first auction next week. What types of buyers are you expecting to participate in the auctions? We have invited buyers from our ROCs and Regos auctions, a lot of which have come on board. And we have also been provided with a list of customers that Future Biogas has dealt with in the past. Anyone who wants can take part in the auction, they just need to sign a registration form, which binds them for any bids they make in the auction. We are expecting a lot more interest over the next few days, especially once we have published the list of what lots are in the auction. We have already got some registration forms from international buyers. A lot of Rego buyers are international so they are used to our auction platform and were keen to sign up to this RGGO auction as well. For those familiar with E-power's Rego, ROC and power auctions, will there be any key differences in how the RGGO auction is run? No, the auction platform has been designed off the back of the Rego auction, so everything that is in the sale will be in specific lots and you will be able to see what technology the RGGOs come from and when they were produced. This is the first auction so I would not expect it to have lots of certificates. The platform is quite adaptable, so if there is some functionality that we have missed we can adapt it for future auctions. How do you see this auction affecting the UK RGGO market? It will make the market a bit more transparent, because if you are logged on you can see what other people are bidding. Future Biogas will set the reserve prices for all the lots, so it will decide where to start the prices in the auction. At the moment, no one is publishing or declaring what they are selling and for what prices. D o you hope the UK will move closer to using the auction model more often? There are definitely a lot a benefits to an auction model, rather than [trading happening] behind the scenes. To be transparent about where the certificates are trading helps sellers know what the certificates are worth. Buyers are not paying a fee [to take part in the auction], whereas with the broker model a fee would be paid by the seller and the buyer. With our auction platform, only the seller has fees. What volumes and types of biomethane will be available in the auction? We do not know at this point in time, but Future Biogas will be providing a mixture from a few different sites. Prior to the auction, all the lots will be held in the E-power RGGO account so buyers will be able to see an extract from that. Will you hold more auctions after the first one on 5 February? Yes. Since we started talking to Future Biogas, we have had enquiries from other sellers, so hopefully we will be able to roll this out to other sellers. We have also had enquiries from trading companies that would like to use the platform to sell as well as buy. By Emma Tribe Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Scottish court rules Rosebank, Jackdaw consent unlawful


25/01/30
25/01/30

Scottish court rules Rosebank, Jackdaw consent unlawful

London, 30 January (Argus) — Scotland's supreme civil court has ruled that approval for the UK's North Sea Rosebank and Jackdaw oil and gas fields was unlawful, and has quashed consent for their development. The consent granted for the fields was unlawful because it did not take into account the scope 3 emissions — those that would be caused by burning the fields' oil and gas — the Scottish Court of Sessions ruled today. It ruled that the UK government can take a new decision on the fields, "this time taking into account downstream emissions." Norwegian state-controlled Equinor has an 80pc stake in Rosebank and London-listed Ithaca holds the remaining 20pc. Shell is developing Jackdaw. The companies would have to submit new environmental impact assessments to the UK government for approval, taking into account scope 3 emissions. Scope 3 emissions typically make up between 85pc and 95pc of an oil and gas company's total emissions. Environmental groups Greenpeace and Uplift first separately applied for a judicial review of the government's decision on Rosebank in December 2023 , although the cases were heard together. Greenpeace in July 2022 separately filed a legal challenge against the permitting of the Jackdaw field. All parties to the case agreed that the approvals had been unlawful, but the court heard differing opinions on how to resolve this. A judicial review in the UK is a challenge to the way a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. The developers may continue with Rosebank and Jackdaw, but cannot extract any oil or gas from the fields, today's ruling stated. Equinor welcomed the ruling, saying it allows it to "continue with progressing the Rosebank project while we await new consents". The company said it would "work closely" with the UK government and submit a "downstream end-user combustion emissions… assessment in full compliance with the government's new environmental guidance" when it is ready. "Today's ruling rightly allows work to progress on this nationally important energy project while new consents are sought," Shell said in reference to Jackdaw. Judge Lord Ericht said today that "the private interest of members of the public in climate change outweigh the private interest of the developers". Environmental campaigners have had success in courts lately, largely underpinned by a landmark judgment made by the UK Supreme Court in June 2024. The court ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The UK's Labour government, which took power just days after that ruling, said the outcome meant "end use emissions from the burning of extracted hydrocarbons need to be assessed". The government said in August that it would not challenge judicial reviews brought against development consent granted to Jackdaw and Rosebank. The hearing took place in mid-November . The UK government is expecting to introduce new environmental guidance for oil and gas firms in the spring. It has halted all assessments of environmental statements related to oil and gas extraction and storage activities until this is in place. The then-Conservative UK government greenlit Rosebank in September 2023 and Jackdaw in June 2022 . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more