Renewable Energy Funding Exceeds Fossil Fuels
United Nations Reports Trend Toward Alternative Energy Investments
Jun 4, 2009
Even though recession plagued world economies through much of 2008, a United Nations report released on June 3, 2009 indicates growing investment in alternative energy. Global Trends in Sustainable Energy Investment 2009, was produced by the UN in collaboration with the London, England based research firm, New Energy Finance.
The report analyzes worldwide investments in projects including wind, solar, hydro, marine, geothermal and biomass power and fuel projects. A comprehensive estimate is made by including not only large scale production facilities, but also residential wind, residential solar, and small bio-digesters. Efficiency investments are also included.
Gainers and Decliners by Sector and Region
Overall, investment in renewable energy increased by 5 percent in 2008, according to the UN report. While this increase is small when compared to 2002 to 2007 yearly increases of 25–73%, it indicates continued commitment to new energy technology through tough economic times.
Not all alternative energy sectors gained investment dollars in 2008. The largest percentage increase was in geothermal energy. As the recession slowed growth of worldwide electricity consumption, renewable technologies like biomass, small hydro and efficiency saw fewer investment dollars. Gains and declines by energy sector and region are explained in the report:
- Globally, investment in sustainable energy projects peaked at $155 billion in 2008. While this is a 5 percent growth, the previous 5 periods experienced double digit growth.
- Investment growth was down dramatically in the fourth quarter of 2008, and declined to the lowest level in three years during the first quarter of 2009.
- While electricity demand growth fell by half a percent, renewable energy's global market share increased by the same amount.
- In 2008, about 40GW of renewable energy and 25GW of large hydro generation was installed, 41 percent of new capacity.
- Wind energy received $51.8 billion, a 1 percent decrease from 2007, but the largest share of new investment money.
- $33.5 billion was invested in solar, which is a 49 percent increase from the previous year.
- Regional investment varied: $49.7 billion in Europe, up 2 percent; $30.1 billion in North America, down 8 percent; $10.8 billion in South America, up 76 percent; $15.6 billion in China, up 18 percent; $3.7 billion in India, up 12 percent; and $1 billion in Africa, up 10 percent.
Future Trends in Sustainable Energy Investment
The report indicates that the harsh economic environment will likely slow sustainable energy investments in 2009. However, the same issues of climate change, energy security and depletion of fossil fuel reserves continue to drive investments toward green energy.
With over $180 billion committed to renewable energy by leading nation's economic stimulus packages, it is only a matter of time until growth in this sector begins to explode. Right now, banks are stingy as they worry about insolvency. As confidence in the world economy grows, green energy investments show promise with a steady income stream from utility partners.
As oil reserves continue to shrink, renewable energy will take over a greater share of world energy investments. The corresponding increase in understanding and practice with manufacturing this technology will only make it more affordable. Experts agree that sustainable energy production has a secure place in the world energy portfolio.
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