While China and India are responsible for the biggest growth in carbon emissions, China is now the largest global investor in renewable energy and India saw the highest growth rate in recent times between 2010 and 2011.

This paper looks at what the primary drivers of investment in wind and solar energy in India and China are. It argues that while the primary driver of all investment is a perceived business opportunity, renewable energy investments differ in important ways. Most pertinently, unlike in many other sectors, business opportunities often arise because government provides financial incentives.

Understanding the drivers of green investments in the two countries is important for four reasons:

how China and India meet their energy needs is crucial for growth and poverty reduction
their decisions will influence those made by other developing countries
what happens in India and China will also affect the options and incentives facing policymakers in developed countries
taken together these direct and indirect effects may be pivotal in determining whether it proves possible to shift the world onto a sustainable development path