The BRICS bank, which consists of five emerging national economies including Brazil, Russia, India, China and South Africa, recently lent $811 million to four of the five countries renewable sectors. As the developing world leads the race to a renewable future, the BRICS bank is giving the sector an extra leg up.
The new loans will be given out to Brazil, South Africa, China and India in a hope to bolster the renewable energy sectors of the BRICS members. Brazil will receive the largest sum of $300million, followed by India receiving $250 Million, $81 Million to China and $180 Million to South Africa.
The Indian project will go ahead first. The money is being lent to the Indian Canara Bank, to then be invested in renewable sector developments within the country. It is hoped that the Indian projects alone will generate roughly 500MW, and reduce emissions by up to 800,000 tonnes.
The Secretary of Economic Affairs Shaktikanta Das tweeted recently, “New Development Bank sanctioned four loans including a loan of $250 million for a renewable energy scheme in India. Good beginning.”
But, there are many more projects to come, including within Russia. In fact it was interesting to see Russia left out, however it does make sense that if they were to pick one country that was in the least dire situation in regards to energy production it would be Russia. We often forget that Russia, despite its shaky political relationships with some of the surrounding European nations, is the main provider of gas to a large number of both EU and Non EU nations in the surrounding area.
However, a spokesperson from the BRICS New Development Bank, which has sanctioned the lending stated, “There are many more new projects in the pipeline including projects from Russia. They are at various stages of consideration or appraisal.”
From a western perspective, the BRICS nations may seem politically distant from the affairs of the US, Australia and the UK. Yet, their combined population makes up 42% of the global populace. More importantly India and China are piling on investment into the renewable sector. To summarise, the movements of BRICS lending could significantly change the renewable sector on a massive global scale. Especially when you consider that the $811 million lent makes up only a fraction of the lending capacity of the BRICS New Development Bank, which was created for the sole purpose of funding the much needed infrastructure for the developing world.
Given the BRICS Bank only became operational in 2015 we could very well see further increase in renewable sector investment from here on. The bank has an authorised capital of $100 Billion, set to increase significantly over time, so it is feasible that clean energy projects will be ongoing recipients of the funds.
Last year we saw the renewable sector beat the traditional fuel industry by a factor of two in regards to private and public investment globally. Everyday more evidence supports that we are witnessing the tipping point for the global energy industry, especially within developing nations that have the opportunity to build implement clean energy projects from the ground up.
So why is it we are seeing cuts to funding left, right and centre across western developed nations?
This year alone, the UK and the newly ‘elected’ Turnbull government both reduced funding and investment for solar, wind and other renewable energy, measurably damaging market growth as a whole. The UK for example has seen a number of industry leading companies reduce staff by up to 18 - 25% following the market plateau, which was a direct result of public funding cuts. Before hand the industry was booming, and setting new records every couple of months, including beating coal for a full 24 hours.
The Turnbull government was at least smart enough to distract the public by cutting existing funding by up to $1.3Billion, but only after announcing a new $1 billion dollar innovation fund. Unfortunately, the Innovation Fund was created by simply redirecting existing money from other renewable research and development grants.
Hopefully, we will see a turnaround in the western world before the 2020 deadline. If we don’t our BRICS neighbours may become the economic and energy powerhouses of the world. Given that Australia has traditionally been a strong leader in solar R&D it would be a shame, for the sunny country to miss the solar boom and get left behind in the process.