Do developing countries deserve a negative reputation regarding climate change?
In my work, I frequently encounter articles where developing countries are portrayed negatively for the role they play in the current environmental challenges and their perceived lack of commitment to targets, such as achieving Net Zero emissions by 2050. I'd like to provide counterarguments and data to show significant progress in some of these nations.
This summer, I had the pleasure of exploring Costa Rica, a breathtaking country in Central America.
In addition to being one of the safest places to visit in the region, its biodiversity primarily draws tourists from all over the world. This is thanks to a concerted effort by the country to reverse historical environmental damage. Between 1950-1990, Costa Rica experienced rapid deforestation, losing more than half of its rainforests. Only 21% of the country remained forested. This led to drastic climate changes, increased fires, loss of wildlife, and land erosion. In response, the government aimed not just to halt but to reverse this trend. Today, over 75% of the country boasts lush rainforests. This transformation shows the profound impact of well-implemented policies and investments.
Costa Rica transitioned from an economy largely reliant on agricultural exports to a leading destination for ecotourism, raising its standard of living and life expectancy. Concurrently, they became a model for sustainable energy, with 95- 98% of their electricity sourced from water, sun, geothermal, and wind.
South America’s largest country and economic powerhouse Brazil is also progressing, with nearly 84% of its power derived from clean energy sources in the first half of 2023. The country's Energy Agency (ANEEL) set a goal to install 10.3 GW of power generation capacity in 2023. With 5.1 GW installed in the first six months, this goal seems attainable. Wind and solar constitute a significant portion of the new installations, while hydropower continues to dominate the energy mix. Brazil is the worlds second largest hydroelectricity producer, only behind China.
While Brazil experienced years of rising deforestation in the Amazon under the leadership of former President Bolsonaro, satellite data released this summer showed a 34% decrease in deforestation during the first six months of new President Luiz Inácio Lula Da Silva’s leadership. With continued domestic efforts to prioritize environmental law enforcement, along with international support, Brazil should be able to continue to reduce deforestation dramatically.
From the Central and South American regions, Chile stands out, ranking first on Climatescope (Bloomberg’s tool for assessing countries' energy transitions). This ranking isn't due to its current renewable energy mix but more for its readiness for clean energy investments and government commitment to targets. Chile achieved its 2025 goal of 20% clean energy generation five years early, attributed to well-organized energy auctions and incentives attracting developers and investors. If this momentum persists, Chile is well positioned to achieve its 2030 target of 40% clean energy.
Moving from South America to Asia, we see that China and India are notably at the forefront in deploying renewable energy. The pace and scale of their developments are remarkable. Non-fossil fuel sources now account for over 50% of China's total electricity generation capacity, with substantial ongoing investments in this sector.
The examples provided in this note are just a selection of the many stories of environmental progress I see being made in emerging markets around the world. To say that developing countries have no interest in transitioning to clean energy is clearly inaccurate. In fact, increased deployment of renewable energy and other clean technologies are likely to result in economic, environmental, and social benefits for these countries. At the same time, overlooking issues such as coal-dependency, loss of biodiversity, and deforestation would be naïve, and these are topics that both governments and investors must continue to address. There's hope that technological innovation and economic incentives will continue to drive the transition, especially as renewable energy sources like wind and solar become increasingly cost-effective. If governments in the developing world set appropriate policies and offer the right incentives for private market participation and investments, they may very well lead the way in energy transition.
Note:
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