Renewable-Energy Projects in 2007 Experience 60% Growth to Total $148 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--According to a recent report from the United Nations Environmental Programme (UNEP), sustainable-energy transactions worldwide in 2007 amounted to about $204 billion. Investments in projects focused on the generation of renewable energy took $98.2 billion, and wind-energy projects in the U.S., China and Spain accounted for a significant portion of this total. Another $50.1 billion went into technology development and the scale-up of commercial manufacturing. Added to the $148.3 billion of direct investments, about $56.6 billion went into mergers and acquisitions.

Wind energy received the largest share, about $50.2 billion, but solar power showed dramatic growth with an annual average growth rate of 254% since 2004. Power developers installed 31,000 megawatts of sustainable generation capacity during 2007, which represented about 23% of all types of new power generation additions. The total of new sustainable energy added was about 10 times that of nuclear power.

The total investment shows an increase of 60% over 2006, as stated in UNEP's "Global Trends in Sustainable Energy Investment 2008" report, which shows that the sector is increasing its attraction as a strong investment option in parallel with the drive for cleaner environment action.

Europe is the leading destination for clean energy investment. The U.S. ranks second, but the fastest-growing clean-energy markets are China, India and Brazil with a combined figure of $26 billion for 2007, representing 22% of the global total, up from a 12% share in 2004.

UNEP Executive Director Achim Steiner said that with temperatures and fossil-fuel prices climbing higher across the world, it is increasingly obvious to the public and investors that the transition to a low-carbon society is a global imperative. "This is attracting an enormous inflow of capital, talent and technology," Mr. Steiner said. "But it is only inevitable if creative market mechanisms and public policy continue to evolve to liberate rather than frustrate this clean energy dawn. What is unfolding is nothing less than a fundamental transformation of the world's energy structure."

Yvo de Boer, Executive Secretary of the UN Framework Convention on Climate Change, referenced the International Energy Agency, saying that $20 trillion will be needed to meet the world's energy demand by 2030. If these investments are not made in a climate-friendly way, greenhouse-gas emissions could go up 50% through 2050 while scientific opinion maintains they need to be cut by 50% through 2050. "I hear business crying out for clear policy signals to make the right investment decisions today," Mr. de Boer said. "Setting a long-term target for 2050 is useful, but I think it would give investors much more clarity if rich countries would indicate where they want to be in 2020 or 2030."

In 2007, companies invested $9.8 billion and governments invested $7.1 billion in the research of clean energy, as well as the research and development (R&D) of energy efficiency. European and Middle Eastern companies were leaders in R&D spending, followed by the Americas and Asia. In terms of governments, Japan, China and India topped the list.

North America led in investments in energy-efficiency technology with $1.8 billion, up 78% from 2006. This area should continue to grow with the International Energy Agency claiming that for every dollar invested in energy efficiency, an average of $2 is avoided in the creation of new supplies.

Steiner said that the climate convention meeting in Copenhagen in 2009 is crucial for creating a meaningful new agreement as environmental change scenarios are now driving public policy, including the energy mix. Governments and environmental campaigners are seeking a robust replacement to the Kyoto protocol.

In the first quarter of 2008, the global economic slowdown reduced growth in the sector from the booming conditions of 2007. The report states that the U.S. ethanol industry underwent restructuring and that several wind developers sold their portfolios. There was a realization among many companies that they could not self-finance growth in tight credit conditions. But even in these conditions, investments rebounded in the second quarter of 2008, UNEP said.

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