Global Investment in Clean Technologies Falls for Second Year

Analysts at Bloomberg New Energy Finance (BNEF) have calculated that global investment in clean energy technologies has fallen 14 percent during the third quarter of the year compared to Q2. The $45.9 billion spent over the last three months is a sharp decrease from the $53.1 billion spent the months before, and 20 percent lower than for the same period last year. BNEF has stated that a big reason for this lack of momentum is due to unstable political commitment to decarbonisation and clean technologies in the future.

Investment in technologies such as; the smart grid, efficiency increase, energy storage, electric vehicles, and renewable energy generation, will be less this year than the $281 billion spent in 2012, which itself was 11 percent lower than in 2011.

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No one country is responsible for fall in investment, rather there has been a drop recorded across the board, in the US, China, and Europe. The US invested just $5.5 billion in Q3, down from $9.4 billion in Q2; and China’s clean tech investment fell from $13.8 billion to $13 billion. The UK was the only country to actually show any considerable increase in investment, with growth from $1.6 billion to $2.6 billion, although Ernst & Young claims that the current high levels of investment in the UK will not be sustainable without more policy security.

BNEF did explain that part of the decrease in investment can be attributed to the fall in cost of renewable energy technologies; such as solar energy, which has fallen by over a quarter in the last year. A record amount of solar capacity has been installed in 2013, but the lower cost means that it has cost less.

The wind energy industry has also taken a hit this year as an important tax credit ran out at the end of 2012, reducing the investment in that market, and China’s wind market has been cooling down. Overall, BusinessGreen expects the volume of wind capacity installed this year to fall by 40%.

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The boom in the shale industry has also robbed the clean tech industry of investors. Shale oil and gas has revolutionised the energy market in the US, and Europe is keen to develop its own shale industry, reducing its focus on renewable energy.

Michael Liebreich, the chief executive at BNEF, said that “after the slightly more promising second quarter, we now have a very disappointing third quarter figure for investment. $45.9bn is still a substantial amount of money, greater than that invested in the whole of 2004, but the loss of momentum since 2011 is worrying. The latest setback reflects policy uncertainty in Europe, the lure of cheap gas in the US, a levelling-off in wind and solar investment in China, and a general weakening of political will in major economies.

Governments accept that the world has a major problem with climate change but, for the moment, appear too engrossed in short-term domestic issues to take the decisive action needed.”

By. James Burgess of Oilprice.com