December 2007
The Price Of Progress: $100bn
A highly encouraging report on the state of world renewable energy investment was released earlier this month as states sat down for United Nations climate talks in Nusa Dua, Indonesia.
The Renewable Energy Policy Network (RENP) noted that "policies to promote renewable energy have mushroomed over the past few years" and signs of continued future growth were very promising. The Network, which seeks to provide a forum for international leadership on renewable energy by bringing together governments, industry and NGOs, reported that for the year 2007, "global annual investment in energy [is set to] exceed $100bn."
This figure is part of an upward trend in renewables investment which saw $39bn in 2005 leap by nearly 50% to $70bn in 2006. Not only do these findings represent a challenge to the traditional orthodoxy that renewable energy would only make its presence felt in the global energy market until the latter half of the 21st century, but it has prompted the UN to suggest that 2030 could see up to one quarter of the world’s electricity generated through green sources.
According to the report, "wind power now receives the largest share of investment annually of any renewable technology, even more than large hydropower." With $70.9bn of investment going into new projects and venture capital and private equity firms becoming heavily involved in the sector, the future seems bright for green energy.
However, critics have sounded alarm bells with regard to the figures questioning whether people are being presented with lies, damn lies or statistics. Media sources claim that at present only 2% of the world’s energy is found from renewable sources, although 18% of new power plants under construction may be classified as "green". And whilst many would like to share in the UN’s 2030 25% vision, the International Atomic Agency poured scorn on the suggestion calling for closer scrutiny, stating that "barely" 9% would be closer to the mark.
Nonetheless, executive director of the UN environment programme Achim Steiner remained positive in the face of critics:
"This is full-scale industrial development, not just a tweaking of the energy system, where growth is underpinned by a widening array of clean energy and climate policies at the federal state and municipal levels… The challenge now for governments, energy planners and policy makers is to build off this positive market development."
Building on the feel-good factor of Australia’s recent ratification of Kyoto, one could be forgiven for getting carried away. Greenpeace though remained sceptical, highlighting that in a global energy investment market worth $1 trillion a year, BP and Shell, two of the world’s leaders in the field, spent less than 5% of their money on renewable schemes. Charlie Kronick, head of Greenpeace’s climate and energy campaign was open in his appraisal of the recent public announcement. "There are lots of encouraging signs here but $100bn a year is still peanuts and while we do believe renewables hold the key to tackling climate change, we are slightly sceptical that we have reached some kind of tipping point."
Moreover, of new investment, 79% is headed towards US and European markets, with the remained being divided amongst the rest of the world. This is particularly concerning, as China and India have been projected to become the world’s pre-eminent consumers of power within the next 50 years, and they will no doubt be looking at cost as well as environmental factors. Indeed, the UN acknowledges the "significant challenges" that remain, admitting that in addition to uneven investment distribution, the vast majority of investment is being driven by tax incentives and similarly financial rewards.
In light of this, it seems to be to a large degree subjective, as to whether the glass is half empty or half full.
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