The first half of 2024 has underscored the pivotal role of digitization and the energy transition in driving foreign direct investment (FDI), as evidenced by the latest data from fDi Markets.
It's encouraging to see such substantial commitments to greenfield investments, especially in renewable energy sectors, reflecting a global shift towards sustainable growth. However, the tapering off of investments in strategic industries like batteries is a cautionary tale, highlighting the challenges and uncertainties that still lie ahead. As we navigate this transformative period, policymakers and investors must maintain momentum in these critical sectors while addressing the hurdles that could impede progress.
Renewable energy held onto its top spot as the leading recipient sector, recording greenfield FDI pledges worth $138bn. Around half ($65.8bn) of this was pledged to green hydrogen and other emerging clean tech projects, which are still broadly unproven at commercial scale. Solar power projects took the second-largest slice, at $38.7bn, followed by wind ($27.5bn). Other renewable energy projects, such as biomass, took on a much smaller share of renewables FDI.
However, there are early signals that investment in the electronics components industry, which is also critical to the energy transition, has slipped. FDI worth $8.4bn was pledged to the highly coveted battery sub-sector, the lowest level since the first half of 2021 (1H2021), according to the latest fDi Markets data. This reflects uncertainty over making gigafactories a success and concerns about weaker-than-expected demand for the electric vehicles.
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