Stability and security underpin low-carbon investment needs, finds new report

More than 20% of investors and energy developers have targeted Germany as where they expect to launch or expand their low carbon involvement over the next 12 months, marginally ahead of France.

Indonesia – with 15% of those surveyed – the UK, Ireland and Hong Kong SAR made up the top five, with Ireland just outside at 12.6% of respondents expecting to launch or expand their involvement there.

The findings come as part of landmark research into global low carbon energy investment trends carried out by Pinsent Masons and Censuswide, which collated responses from almost 1,000 active VC investors and technology developers around the world.

Stability of regulatory environments and national economies are among the primary drivers for firms looking at investment in low carbon energy solutions, putting the EU countries and the UK in pole position, alongside countries in South East Asia where low carbon regulatory environments are also developing.

Stacey Collins, an energy transition expert with Pinsent Masons, said the findings underlined how much stability was necessary for ensuring investments were made in the right place.

“One consistent theme in the data is the importance of stable, well‑regulated markets,” he explained.

“Investors and developers are demonstrably more willing to deploy capital where governments provide clear incentives, predictable regulation and credible long‑term policy signals.

“In contrast, regulatory volatility and uncertainty continue to be a major constraint on scaling low‑carbon projects, regardless of underlying technology.”

Much of the lure of these countries in attracting investment or expansion over the next 12 months may be found in their local financial incentivisation schemes, with Germany (29%), France (27%) and Hong Kong SAR (21%) having provided incentive regimes those surveyed have made use of.

Backing homegrown projects is also a primary driver for investors, who are looking to build on the familiarity of their own regulatory and development regimes. Among German respondents, for example, over 90% indicated plans to invest in German projects; while a similar percentage of French respondents highlighted plans to invest in French projects. Of respondents from the US, 82% said that they planned to launch or expand domestic low carbon projects in the next 12 months.

However, UK-based investors and developers bucked the general trend as the fewest to highlight plans to invest in UK-based projects, with just 21% of respondents saying they planned to invest in projects there in the next 12 months.

Despite that, just 55% of those taking part in the survey felt the EU offers a supportive regulatory landscape for investing in low-carbon technology – compared to overwhelming support for the regimes in Africa and the Middle East.

Regulatory issues were an overwhelming factor for stopping investment over the last couple of years – with 42% of respondents overall stymied by a lack of government-backed incentives and 39% put off by changing or unstable regulations. The challenge of scaling technologies was also a major factor for investors.

Collins said the survey results confirmed that the need for a holistic structure supporting projects was essential to attract successful investment.

“The overarching message for investors and developers is to focus early on bankability and delivery, not just technical feasibility,” he said.

“Successful projects are those that address regulation, incentives, infrastructure access and carbon‑credit treatment together, rather than sequentially. For policymakers, the lesson is equally clear: ambitious targets only translate into deployment when they are supported by practical, investable frameworks.”