05 May $6.4 Trillion will be invested in clean technologies in Developing Countries in the next decade
A report published by the World Bank Group has shown that up to $6.4 trillion worth of investments will be made in clean technology in 145 developing countries in the next decade, and approximately one quarter of that amount ($1.6 trillion) will be accessible to Small to Medium Enterprises (SMEs). According to the report, the best opportunity for SMEs is the wastewater sector, followed by small scale hydro, water treatment, onshore wind power, solar PV, geothermal and bioenergy. In particular, minor equipment manufacture, installation, civil works, retailing and operations and maintenance activities represent the best opportunities in the above sectors.
In order to support SMEs, the report outlined five areas that Governments, Development Agencies and other public and private organisations should consider as follows:
- Entrepreneurship and business acceleration
- Innovation finance
- Market development
- Technology development
- Legal and regulatory framework
With respect to entrepreneurship and business acceleration, direct technical assistance can be offered and foreign investors can be linked with the SMEs to facilitate the development of new technologies and/or to increase production capacities. Governments are also expanding business incubation programs. In terms of innovation finance, a range of options are available including soft loans/loan guarantees and stimulating seed and venture capital investment. Consumer credit facilities can also be established for specific technologies. Market development instruments include portfolio standards, renewable energy certificates and feed-in tariffs. Strict sustainable procurement policies, manufacturer standards, product labelling and product testing/certification can also assist markets.
In terms of technology development, Research and Development (R+D) tax credits, research grants, publicly funded competitive research collaborations, demonstration projects and applied research networks are among the available instruments. Lastly, with respect to the legal and regulatory framework, sector-specific tax incentives, emissions trading schemes, emission reduction credits, import tax reductions and incentives to attract skilled labour are policies that can be implemented in order to strengthen the framework for clean technology SMEs.
The report stressed that the scenario that is most successful is likely to vary between countries, and that the design and implementation of the above instruments should be done in parallel as part of a broader national strategy to support clean technology SMEs.