Renewables beat fossil fuels in investment

Green energy overtook fossil fuels in attracting investment for power generation for the first time last year, figures released on Wednesday by the UN showed. Wind, solar and other clean technologies attracted US$140 billion investment compared with US$110 billion for gas and coal for electrical power generation, with more than a third of the green cash destined for Europe.
The biggest growth for renewable investment came from China, India and other developing countries, which are fast catching up on the West in switching out of fossil fuels to boost energy security and tackle climate change.
“There have been many milestones reached in recent years, but this report suggests renewable energy has now reached a tipping point where it is as important — if not more important — in the global energy mix than fossil fuels,” said Achim Steiner, executive director of the UN’s Environment Program.
It was very encouraging that a variety of new renewable sectors were attracting capital, while different countries such as Kenya and Angola were entering the field, he said.
The UN still believes that US$750 billion needs to be spent worldwide between this year and 2011 and this year has started ominously, with a 53 percent slump in first-quarter renewables investment to US$13.3 billion.
Counting energy efficiency and other measures, more than US$155 billion of new money was invested in clean energy companies and projects, even though capital raised on public stock markets plunged 51 percent to US$11.4 billion and green firms saw share prices slump more than 60 percent over last year, said the report, Global Trends in Sustainable Energy, which was drawn by the New Energy Finance (NEF) consultancy in London.
Wind, where the US is now the global leader, attracted the highest new worldwide investment, US$51.8 billion, followed by solar at US$33.5 billion. Wind represented annual growth of only 1 percent, while the latter was up by nearly 50 percent year-on-year.
Biofuels were the next most popular investment, winning US$16.9 billion, but down 9 percent on 2007, as the sector was hit by overcapacity issues in the US and political opposition, with ethanol being blamed for rising food prices.
Europe is still the main center for investment in green power with US$50 billion being pumped into projects, an increase of 2 percent on last year, while the figure for the US was US$30 billion, down 8 percent.
But while overall spending in the West dipped nearly 2 percent, there was a 27 percent rise to US$36.6 billion in developing countries led by China, which pumped in US$15.6 billion, mostly in wind and biomass plants.
China more than doubled its installed wind turbine capacity to 11GW of capacity, while Indian wind investment was up 17 percent to US$2.6 billion, as its overall clean-tech spending rose to US$4.1 billion last year, 12 percent up on 2007 levels.
Several green new deals — government reflationary packages designed to kickstart economies and boost action to counter climate change — have been laid out by ministers around the world.
The slump in global renewable investment during the first quarter of this year has alarmed the UN and NEF.
NEF chief executive Michael Liebreich said the second quarter had revealed “green shoots” of recovery, which indicated this year could end up with investment at the upper end of a US$95 billion to US$115 billion range, but still a quarter down on last year at the least.
About US$3 billion of new money had been raised via initial public offerings or secondary issues on the stock markets in the second quarter, compared with none in the first three months of this year.
The New Energy Index of clean-tech stocks, which had slumped from a 450 high to 134 by March, had since bounced back to 230, while more project financing had been raised in the last six weeks than in the 13 before that, he said.
But Steiner and Liebreich are still anxious that politicians do more to stimulate growth.
“There is a strong case for further measures, such as requiring state-supported banks to raise lending to the sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for green bonds and so on, all targeted at getting investment flowing,” Liebreich said.
It is important stimulus funds start flowing immediately, not in a year or so, he said.
“Many of the policies to achieve growth over the medium-term are already in place,” he said.



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