As the Global South confronts its mounting energy needs, the region is betting heavily on cleantech to fuel its development, sidestepping the fossil-fuel path once trodden by the Global North. With a collective population spanning Africa, Latin America, South Asia, and Southeast Asia, this shift towards renewables could redefine the global energy landscape.
Limited Reserves, High Demand
The Global South’s energy consumption stands at an average of 32 gigajoules (GJ) per capita—about a fifth of the Global North’s. Despite holding 60% of the world’s population, these nations account for only 20% of global fossil fuel reserves. A prime example is India, where fossil fuel imports cost roughly $150 billion each year, making up 5% of its GDP.
Amid these constraints, however, the Global South has substantial renewable energy potential. The region is home to 70% of the world’s solar and wind resources, as well as 50% of the minerals required for cleantech solutions like electric vehicle batteries. This unique mix makes the Global South an emerging player in the global cleantech arena, despite the significant gap in fossil fuel resources.
The Push Toward Cleantech
The transition to renewables is well underway. This year, 87% of energy capital expenditure across the Global South is expected to go towards clean energy projects. The focus is particularly strong in Latin America, which has allocated 93% of its energy investments to cleantech, followed closely by Asia and Africa at 84% and 86%, respectively. Renewable energy sources like solar and wind have been expanding rapidly, with these renewables now powering 9% of the region’s electricity—up from almost zero five years ago.
The shift is supported by favorable conditions. Around 73% of the Global South is well-suited to embrace renewables, due to a combination of middle-income status, relatively low per capita energy demand, dependency on fossil fuel imports, and abundant renewable resources. With costs for solar and battery technologies halving in recent years, the barriers to cleantech adoption have significantly diminished.
Economic Calculations
Solar and battery storage costs have dropped sharply, reaching cost parity with fossil fuels. By 2023, solar energy prices had become comparable to fossil fuel costs, with electric vehicles closing in on gasoline vehicles in terms of affordability. The International Energy Agency (IEA) projects a fourfold increase in solar and wind generation capacity in the region by 2030, pushing the total to over 2,000 terawatt-hours (TWh) per year
China is accelerating this growth. Since 2023, the country has invested over $100 billion in cleantech initiatives, meeting much of the Global South’s demand for renewable energy technology. Chinese manufacturing of solar modules, for example, has helped bring down prices and make renewables accessible to more low-income countries within the Global South.
Health and Environmental Considerations
Cleantech has the potential to address severe air pollution issues across the Global South, where fossil fuel emissions contribute to more than 5 million deaths each year. Renewables present a path to cleaner air and improved public health. Additionally, cleantech investments are expected to drive job creation, with opportunities emerging in manufacturing, installation, and maintenance of new infrastructure.
Electrification rates in the Global South are also rising. Although the region trails the Global North in electricity consumption, 21% of its population now experiences higher electrification levels than parts of the Global North. This trend is anticipated to accelerate as electric vehicles become more common and grid infrastructure expands.
Overcoming Hurdles
While the cleantech shift is gaining momentum, fossil fuel-exporting and low-income countries—representing 21% and 6% of the region’s energy demand—are lagging. To bridge this gap, international financial aid and domestic policy reforms are critical. Experts suggest that reforming multilateral development banks, providing concessional finance, and promoting technology transfer can aid these countries in embracing cleantech.
Good governance and strategic policy frameworks are also essential to attract private investment. India, South Africa, and Brazil have demonstrated how effective policies can mobilize capital, fostering cleantech growth and deployment.
A Global Perspective on Fossil Fuels
The cleantech transformation in the Global South is likely to influence global fossil fuel markets. With renewable energy expanding rapidly, the region’s demand for fossil fuels is projected to peak by 2030. This will likely exacerbate the challenges facing fossil fuel industries as they contend with falling demand in the Global North and China.
The Global South could emerge as a major player in the global energy market. By 2030, the region’s renewable capacity additions may rival those of the Global North, underscoring its potential to become a cleantech powerhouse.
The Path Forward
The shift to cleantech in the Global South is not just a regional development but a global game-changer. With abundant renewable resources, falling cleantech costs, and growing policy support, the Global South is poised to leapfrog traditional energy models and build a resilient, cleaner energy infrastructure
As the cleantech revolution continues, the region’s role in the global energy landscape is set to expand, challenging the traditional dominance of fossil fuels and setting a new course for sustainable development.
