NEW YORK, NY — Deutsche Bank's Climate Change Advisors today published new research highlighting which of 270 countries, regions or states pose the riskiest investment environments based on the robustness of their climate policies.
The report, "Global Climate Change Policy Tracker: An Investor's Assessment," uses a model developed by researchers at Columbia University's Climate Center that estimates how policies impact the greenhouse gas emissions in the areas studied, aggregating the impacts at country, regional and global levels.
The chart below shows which countries are determined to be at lower risk, which are at moderate risk, and which is at the highest risk. The regions are then ranked based on their attractiveness to investors.
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Among the findings of the report are that China, Germany, and France -- all in the lower risk category -- have detailed climate change strategies with generous incentives to achieve their targets. As a result, these countries have all received high levels of investments in clean technologies and climate change industries.
Meanwhile, Brazil, with its solid track record of renewables development, has the highest share of investments in clean energy technologies as a percentage of its GDP.
Countries in the moderate risk level, notably the U.S., U.K. and Canada, have all received significant investment levels despite risky climate change policy environments. Even the state of California, which has long been ahead of the curve in the U.S. and ahead of many countries, would be placed in the moderately risky category because of challenges posed by the state's grid and poor budgetary situation.
Similarly, some other countries in the moderate risk level, especially Russia, Mexico, South Africa and Indonesia, have yet to become players in the global climate policy discussions, although most of these countries are moving in that direction.
The only country in the Major Economics Forum that falls into the higher risk category is Italy, in large part because the country's climate change strategy remains highly uncertain despite a significant amount of investment.
Investment in clean technologies is one of the major obstacles to improving countries' climate risks, according to the report. Even if all of the current and proposed climate policies were to make their hoped-for impact, global emissions by 2020 are projected to be higher than the amount needed to keep global temperature increase below 2 degrees Celsius.
The report's authors argue that more investment in these technologies is needed to speed the impact of climate-reduction strategies, and that governments must create policies that encourage such investment. The report lays out five principles that make climate policies successful:
• Be Transparent, Long-term and exhibit Certainty through consistent, secure and predictable, payment mechanisms ("TLC");
• Introduce incentives that decrease over time as technologies move towards market competitiveness;
• Eliminate non-economic barriers (grid access, administrative obstacles, lack of information, social acceptance);
• Provide fair and open access to distribution channels (e.g. transmission grid);
• Be enforceable.
The executive summary of the report is available for download from ClimateBiz.com; the full report from Deutsche Bank's Climate Change Advisors, as well as all the group's research, is available online at DBCCA.com.
Photo montage created using CC-licensed photos from Flickr users Katrina.Tuliao and bogenfreund.
