# **5. Conclusion and Next Steps**

It is clear that investment in RE and EE will continue to expand, driven by government policies, regulations and incentives as well as underlying macro strengths. Policies, Regulations and Incentives will continue to exert influence over investment decisions. As costs of RE and EE technologies decline and renewable power becomes comparable in cost and reliability to power generated from fossil fuels, the need for additional incentives will decline. As this trend progresses, it will be useful to analyze the correlation between policies, regulations and incentives and investment flows into the RE and EE sectors. From a survey of the literature and of regulatory frameworks worldwide, there appears to be a broad set of policies, regulations and incentives that countries usually put in place. For RE, these include preferential tariffs, RE purchase obligations or portfolio standards, income and equipment tax breaks and incentives (for producers and/or consumers), as well as incentives linked to capital and/or generation cost. For EE, the main policies, regulations and incentives include minimum energy performance standards, voluntary and mandatory labeling schemes, and incentives or tax breaks for the sale and purchase of energy-efficient products. Countries may differ in the specific design of these policies, regulations and incentives, choosing those that may be most appropriate to prevailing conditions in the country.

As evident from South Asia, countries may also be at various levels of evolution with regard to the introduction of policies, regulations and incentives. Consultations with the private sector, however, have made it clear that in addition to macroeconomic indicators and the presence of policies, regulations and incentives, it is the attractiveness and effective implementation of these policies, regulations and incentives that do the most to attract private investment. Hence to effectively assess and compare various countries in terms of their investment climates, it becomes important to survey firms about their perceptions of those investment climates.

The next phase of the study, therefore, will go beyond the binary framework attempted here and seek to deepen its work in South Asia by launching formal private sector surveys, and also expand it to other key developing countries in Asia, Africa and Latin America. These formally structured surveys will go beyond broad informal consultations undertaken during the present phase and attempt to gather and objectively score private sector perceptions of attractiveness of the investment climate including those based on actual implementation-related indicators.

The CIRI will seek to be a living and constantly evolving tool. Based on feedback from experts and target audiences, the indices can, over time, ensure that the policy variable elements it measures are the ones that truly matter to clean energy and energy-efficiency investors.

## **Expected Outcomes and Measurement of the Study’s Effectiveness**

The success of every study lies in the outcomes and long-term impact that it has and the real effectiveness and value of the study will lie in the useful information and analysis it can provide for policy makers, private investors and development agencies.

The ―Assessing Investment Climate for Climate Investments‖ study provides a framework that seeks to enable the following outcomes: 24