Investing in Clean Power
In less than a decade, clean energy has grown from a small, niche industry to a significant source of trade, investment, manufacturing and job creation. “The clean energy sector is emerging as one of the most dynamic and competitive in the world, witnessing 630 percent growth in finance and investments since 2004,” said Phyllis Cuttino, director, Pew Clean Energy Program. “In 2010, worldwide finance and investment grew 30 percent to a record $243 billion.”
New research by The Pew Charitable Trusts reveals that China has solidified its position as the world's clean energy powerhouse. China attracted a record $54.4 billion in clean energy investments in 2010–a 39 percent increase over 2009 and equal to total global investment in 2004. Germany saw private investments double to $41.2 billion and was second in the G-20, up from third last year.
The United States, which had maintained the top spot until 2008, fell another rung in 2010 to third with $34 billion in private clean energy investments. The United Kingdom experienced the largest decline falling to 13th from fifth.
What is causing all the jockeying for leadership? The report confirms that national policy matters. Countries like China, Germany, Italy and India were attractive to financers because they have national policies that support renewable energy standards, carbon reduction targets and/or incentives for investment and production and that create long-term certainty for investors. However, there is ambiguity surrounding clean energy policies in the United States and the United Kingdom, which likely has caused investors to look elsewhere for opportunities.
Michael Liebreich, CEO of Bloomberg New Energy Finance, added, “The United States remains the global leader in clean energy innovation, receiving 75 percent of all venture capital investment in the sector, a total of $6 billion in 2010, but the U.S. has not been creating demand for deployment of clean energy. As a result it is losing out on opportunities to attract investment, create manufacturing capabilities and spur job growth. For example, worldwide, China is now the leading manufacturer of wind turbines and solar panels.”
Among the various technologies, the solar sector experienced the strongest growth, led by small-scale residential projects. Feed-in tariffs, wherein utilities guarantee to pay a fixed rate for energy derived from clean sources, and declining prices helped the solar sector see investments grow 53 percent to a record $79 billion, facilitating the installation of more than 17 gigawatts of new generating capacity globally. In fact, Italy is the first country to achieve grid parity, or cost-competitiveness, for solar energy.
Read the report: