Roadside Reflections on the Clean Energy Transition in Emerging Markets

It had only been six months since my previous trip to China, but I was struck how the policy experts and many of the companies that I met with are now so focused on China's leadership role advancing the energy transition. The country has been laying the groundwork for years, making investments to develop the ecosystem, but it became clear through my meetings that maintaining a leading position in the clean energy economy is a top priority for the government driven by both geopolitical ambitions and domestic growth objectives.”

- John Mariano

China's commitment to clean energy is evident through its massive investment in R&D, which is 2.5 times¹ the global average. This investment has fuelled innovation and supported the development of technologies that can be exported worldwide. China's clean energy sector has become a critical component of its economy, contributing 10% to its GDP in 2024², showcasing the sector's substantial economic influence.

Furthermore, China's emphasis on STEM education is laying the foundation for continued advancements in clean technology. In 2020, 41% of graduates in China were in STEM fields³, far surpassing countries like the US and Japan. This focus supports a talent pipeline of skilled professionals ready to contribute to and drive forward the clean energy sector. The combination of substantial R&D investment and a robust educational system positions China as a formidable force in the global clean energy landscape.

China’s continued investment in new coal-fired power generation remains a critical point, though it was not a focus of discussions during our recent meetings. Despite a significant push to grow clean energy technology manufacturing, achieve high rates of EV adoption, and expand renewable capacity, the country continues to invest heavily in coal. China is currently responsible for 80% of the coal-fired power generation being built globally, with over 300 new units planned, representing a capacity of up to 204 GW.⁶ Like renewable power, growth in coal, which is cheap and abundant in China, provides the country with energy independence, but also 24/7 reliability. The coal industry also supports meaningful levels of employment in certain regions. Despite this reliance on coal, China continues to grow its renewable capacity meaningfully and remains a dominant force in the clean energy value chain, highlighting the complexities in investing in the energy transition. As both a major energy consumer and a leading producer of clean energy technology and equipment, China is uniquely poised to play a crucial role in achieving global climate goals—even as it balances growth in both renewable and fossil fuel power generation.

During my recent trip to Morocco, I was struck by the country's clear commitment to clean energy—which seems to fly under the radar for many investors. Morocco isn’t just adopting renewables—it’s executing one of the most ambitious renewable energy buildouts in the world.

A prime example is the Noor Ouarzazate Solar Complex, one of the world's largest concentrated solar farms. This project demonstrates how Morocco’s dedication to turning its energy deficit —as it lacks oil and gas reserves—into an opportunity to lead in renewables. The country aims to achieve 52% of its installed electrical capacity from renewables by 2030, up from approximately 38% at the end of 2022.⁷

I regard Morocco's renewables and green energy transition strategy as a multi-faceted opportunity. The country’s green energy strategy not only opens new sectors for investment—such as utility renewables and green hydrogen—but also strengthens the competitiveness of existing industries through cleaner and more affordable power. Additionally, it contributes to workforce development and upskilling, enhances energy security, and positively impacts the country's balance sheet. With one of Africa's highest credit ratings at Ba1/BB+, Morocco could be well-positioned to advance toward investment-grade status.

Reflecting on my journey, it's clear that Morocco's proactive stance on clean energy, coupled with its strategic location, offers a unique investment opportunity for investors with deep industry expertise and regional insight.

During my meetings with local companies, it became clear that Morocco's renewable energy landscape is attracting global interest from private and public investors. Partners from the UAE, Saudi Arabia, China, and Europe are not just investing but actively participating in Morocco's clean energy narrative.

The Noor Ouarzazate Solar Complex—which harnesses the Saharan sun to generate power—and wind farms such as Tarfaya and Tangier—which exploit Morocco’s coastal wind corridors—have received financing from companies including ACWA Power, Siemens Gamesa, and local banks. TAQA Morocco, the largest independent power producer in the country (and 48% owned by Abu Dhabi’s TAQA with the remaining shares publicly traded), historically ran coal plants but is now investing more heavily in wind farms. 

Morocco's clean energy transition reduces dependence on volatile fossil fuel imports, enhancing energy security and providing a stable electricity supply to boost industrial competitiveness in sectors including automotives, aerospace, cement manufacturing, and mining. As the EU implements a Carbon Border Tax, Morocco's greener grid becomes a comparative advantage for exports, potentially lowering carbon tariffs on Moroccan goods.

Morocco aspires to produce green hydrogen affordably, with pilot projects already in progress. A German-backed project in southern Morocco aims to produce green ammonia using solar power.  Moroccan state-owned company OCP—the world's largest fertiliser manufacturer—intends to use green ammonia for phosphate fertiliser production. As part of the company’s green investment strategy, they expect to produce 1 million tons of green ammonia in 2027, which will increase to 3 million tons in 2023.⁸ With OCP's significant fertiliser output, the country could become a leading user and exporter of green hydrogen derivatives, aiding in decarbonising difficult-to-electrify industries.

During my recent visit to India, I had the opportunity to analyse the country's advancements in renewable energy first-hand. India has achieved its Paris Agreement target of 50% non-fossil fuel power capacity five years ahead of schedule, a milestone that showcases the Modi government's commitment to clean energy solutions as part of the country’s broader goals to achieve energy independence, enable a smooth energy transition, and drive sustainable economic growth.

The country aims to achieve energy independence by 2047 against the backdrop of steeply rising energy consumption to support economic development. Total energy demand in the country is expected to increase by 35% over the next decade.⁹ To achieve energy security, the government recognises the need for substantial upfront investment in renewable energy and has introduced subsidies and tax incentives to accelerate the deployment of solar and wind power installations, resulting in the rapid growth in renewable projects.

Despite India’s significant progress in scaling up renewable energy projects, with 50% of installed power capacity now coming from renewable sources, only around 12% of the actual electricity produced is generated from these renewables.¹⁰ This underscores challenges in integrating renewable energy into the grid but also presents compelling investment opportunities in infrastructure and grid solutions to support the country’s growing energy demand and achieve its ambitions for energy independence.

In particular, we think manufacturers and suppliers of copper cables, grid equipment, energy storage solutions, grid-edge solutions, and transmission and distribution infrastructure could be well-positioned to benefit from these opportunities.

While the government’s “Made in India” initiative and Production Linked Incentives have been a boon to certain industries, we believe it is crucial to look beyond these programmes. To build a longer-term perspective, it is essential to identify companies’ unique competitive advantages to determine which will remain well-positioned as government incentives are gradually phased out.

During my trip, I visited companies and operational sites and engaged with management teams to identify businesses that are not only poised to benefit from these trends but also possess durable competitive advantages. These strengths, we believe, will drive sustained financial productivity over the long term.