The global race to net-zero emissions is well underway—but without the full participation of emerging markets, the finish line may remain out of reach.
Emerging economies, particularly those outside of China, are some of the world’s fastest-growing regions. Urban expansion, industrial development, and rising energy demand are driving growth—but also increasing dependence on fossil fuels. As the climate crisis intensifies, the challenge becomes clear: how can these economies transition to clean energy without slowing development?
The answer lies in bold investments, structural reforms, and global collaboration.
The Investment Gap
According to BloombergNEF, emerging markets outside China must more than double their annual energy investment to $2.2 trillion to stay on track for net-zero goals. This level of capital is needed to fund solar farms, wind projects, energy storage systems, grid upgrades, and clean transportation infrastructure.
But financing the green transition is no easy task. Emerging economies face unique hurdles:
- Political Instability: Uncertain governance and shifting political priorities make long-term investment riskier.
- Currency Fluctuations: Weak and volatile currencies increase financing costs for foreign investors.
- Underdeveloped Financial Systems: Many markets lack mature capital markets and green financing mechanisms.
Together, these barriers slow the flow of capital into critical low-carbon infrastructure.
Policy and Regulatory Challenges
Another major obstacle is the absence of strong legal and policy frameworks. While developed countries have introduced tax incentives, feed-in tariffs, and emissions trading systems to spur green energy, many emerging markets still lack the regulatory clarity needed to attract private investors.
Without reforms, clean energy projects face delays, added risk, and inconsistent support—deterring the very capital they need to scale.
The Cost of Inaction
Failing to address these barriers could lock in fossil fuel use for decades. Once built, coal and gas infrastructure tends to remain in operation for 30–40 years. Continuing along this path would:
- Jeopardize global climate goals
- Expose economies to volatile fossil fuel prices
- Amplify vulnerability to environmental disasters and health crises
In short, delaying the transition could prove costlier than the upfront investment needed to make it happen.
Signs of Progress
Despite these challenges, emerging markets are making significant strides:
- India’s NTPC, one of the largest power utilities in Asia, is investing over $23 billion in renewables, signaling a strong commitment to green energy.
- Renewable energy generation in developing countries is growing at 23% annually, outpacing wealthier nations, which are growing at 11%.
- China’s solar and wind investments are reducing global clean energy costs, increasing affordability and accessibility for developing nations.
These examples show that with the right mix of policy support and investment, progress is not only possible—it’s already underway.
The Road Ahead
To accelerate the transition in emerging markets, three key pillars must be prioritized:
1. Scale Up Investment
Significant funding—both domestic and international—is required to build clean energy infrastructure at speed and scale. This includes blended finance models that de-risk private capital through public guarantees or concessional funding.
2. Policy Reform and Market Clarity
Governments must adopt transparent, investor-friendly regulations that provide long-term visibility and reduce project risk. From power purchase agreements to emissions standards, clarity is key.
3. Global Collaboration
Developed nations must step up by offering financial support, transferring clean technologies, and building local capacity. Net-zero is a global goal—and it demands global cooperation.
A Global Imperative
Emerging markets are not just participants in the climate transition—they are central to its success. With the right support, these economies have the potential to leapfrog directly to sustainable energy systems, bypassing the fossil-fuel-heavy pathways that defined past industrial growth.
Achieving net-zero by mid-century depends on aligning climate ambition with development priorities. The future of global decarbonization will be written in the streets of fast-growing cities, the factories of rising industries, and the policy halls of emerging economies.
The race to net-zero is global—and the path runs straight through the Global South.
