Policy and regulatory barriers are blocking the rollout of renewable electricity capacity in some of the world’s biggest economies despite the need to triple renewable facilities by 2030, according to new research.

Sustainable investment surpassed $35tn in 2020, while the renewable energy market is expected to reach $2.15tn by 2025, claims the report, Financing the Energy Transition: How Governments Can Maximise Corporate Investment, by international non-profit Climate Group.

But restrictive rules around the locations of solar facilities near residential areas, for example, are hampering investment in renewables and holding back investment by governments and corporates.

In South Korea for example, 129 of the country’s 226 local governments (57%) have rules requiring solar facilities to be located at a minimum distance of anywhere between 100-1,000m from residential areas and roads, making vast areas of the country off-limits to solar development, claims the report.

Another example includes Mexico’s ability to attract $5bn in foreign direct investment in its energy sector in 2018, but by 2021 this was just $600m, a fall attributed to investors being deterred by pro fossil-fuel rhetoric.

Last year, G20 nations committed to triple renewable energy capacity globally by 2030 through existing targets and policies. To do this, however, governments must remove the most common policy barriers that are slowing the global transition to net zero, according to the report.

Such restrictive regulations and market barriers, the report claims, are holding back eight G20 economies and corporates from investing in renewable electricity in many markets. The report, which was launched at COP28 and focuses on Argentina, China, Japan, Indonesia, India, Mexico, South Korea and South Africa, illustrates how these countries are failing to “seize the economic opportunities of the energy transition and speed up the race to net zero”.

“Renewables are the gold rush of the 21st century, but many businesses, states, regions, and countries are still missing out,” says Sam Kimmins, Director of Energy at Climate Group. “The age of cheap fossil fuels is over and it’s time for governments to take simple steps to open their markets to billions of dollars in corporate investment in cheap, clean renewable electricity.

“It’s great that countries are actively discussing tripling their renewable electricity capacity, but they’re going to have to break down barriers in their own countries to actually deliver on that promise.”

Infrastructure investment is also critical. The report highlights South Africa’s Renewable Independent Power Producer Programme (REIPPP) stimulating more investment in renewables development, with R256bn (USD$17.32bn) but inability of the country’s grid to incorporate it.

The report makes several policy recommendations, including establishing an enabling regulatory framework for corporate sourcing and accessibility of renewables, creating a level playing field on which renewable electricity competes fairly with fossil fuel, as well as removing fossil fuel subsidies to stop unfair competition with renewables and reduce the subsidy burden on taxpayers.