GREEN ‘GOLD RUSH’

Probably the most telling statistic in a new report on global New Energy investment trends: Despite the impact of the credit crisis on financial markets, overall investment in New Energy during the first half of 2008 has been just ABOVE levels in the first half of 2007 (a boom year).

Achim Steiner, Executive Director, United Nations Environment Programme (UNEP): "Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern-day prospectors in all parts of the globe…What is unfolding is nothing less than a fundamental transformation of the world's energy infrastructure."

Given the imperatives of global climate change, it is more than exciting and something of a relief to see world investment momentum shifting in this direction. All that remains now is for governments that have so far resisted making their fair contributions (NewEnergyNews will point no fingers and name no names) step up.

Steiner: "With world temperatures and fossil fuel prices climbing higher, it is increasingly obvious to the public and investors alike that the transition to a low-carbon society is both a global imperative and an inevitability…This is attracting an enormous inflow of capital, talent and technology. But it is only inevitable if creative market mechanisms and public policy continue to evolve to liberate rather than frustrate this clean energy dawn."

From the report. (click to enlarge)

UN agency hails green energy ‘gold rush’
Bogonko Bosire, July 1, 2008 (AFP via Yahoo News)
and
Clean Energy Investments Charge Forward despite Financial Market Turmoil
Nick Nuttall, July 1, 2008 (UNEP)

WHO
The United Nations Environment Programme (UNEP); New Energy Finance (NEF)

WHAT
Global Trends In Sustainable Investment 2008; Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency sees a “green gold rush” in New Energy investing.

From the report. (click to enlarge)

WHEN
- The report assesses 2007 trends in comparison to 2006 activity.
- 2007: $148.4 billion in new money invested, a 60% increase over 2006
- 2007: $204.9 billion in sustainable energy transactions
- 2007 non-hydro New Energy investment in China: $10.8 billion.
- By 2012: investment expected to be at $450 billion/year.
- By 2020: $600 billion/year.

WHERE
- The report covers global activity. It has specific chapters on investment and trends in China, India, Brazil and Africa.
- There is a trend of New Energy investment leadership away from Europe and toward the U.S. and China.
- Wind was the biggest source of investment in assets.
- Investment in “next-generation” New Energy (ex: cellulosic ethanol, thin film solar development, energy efficiency technologies) increased.

WHY
- Key findings:
(1) New Energy new investment was up to a record $148.4 billion, 60% higher than 2006.
(2) 23% of world new power generation (31 gigawatts) came from New Energy and New Energy is now 5.4% of world power generation.
(3) There was $2 billion in early-stage venture capital investment in emerging technologies, a 112% jump.
(4) Total R&D spending was $16.9 billion (corporate: $9.8 billion; government: $7.8 billion).
(5) World markets doubled investments in New Energy to $27 billion.
(6) New Energy asset financing was up 61% to $108 billion, most for new generation, wind leading with $39 billion for 21 gigawatts of new capacity, solar the fastest growing with an increase of 250% to $17.7 billion.
(7) Corporate Mergers & Acquisitions were up 52% to $25.7 billion, led by wind and biofuels.
(8) New Energy funds reached $30+ billion with $26.4 billion more in environmental funds and $10.9 billion in New Energy power projects. 17 new funds launched in 2007 compared to 5 new funds in 2006.
(9) Most Clean Development Mechanism (CDM) projects: India (32%), China (19%),
Brazil (13%). Most CDM credits: China (53%), India (15%). (The bigger projects were in China.) Source of most CDM projects: New Energy (55%). (Other CDM projects: GhG-capture plant retrofits, tree planting, etc.)
(10) Investment continued shifting from developed (U.S., UK, EU) to developing (China, India, Brazil) countries.
(11) Energy efficiency technology investment was up 78% to $1.8 billion.

From the report. (click to enlarge)

QUOTES
- From the report: “Europe and the Middle East saw the most corporate R&D activity, followed by the Americas and then Asia. Patterns of government R&D are the reverse, with Asian governments (notably Japan, China and India) investing relatively heavily in R&D. The US and UK host the most clean energy incubators, often supported by public funding. Many of the most successful incubators have benefi ted from government support. Solar is the single most incubated technology, with a bias towards service companies, disruptive technologies and large-scale generation such as solar thermal electricity generation (STEG). Collectively, though, energy effi ciency technologies account for the greatest number of incubated companies.”
- From the report: “Wind dominated public market investment ($11.3 billion), although wind companies raised no money in the US in 2007. Solar companies continued to raise signifi cant amounts of capital ($9.4 billion), particularly Chinese manufacturers tapping the US markets.”
- From the report: “Africa continues to lag other regions in terms of sustainable energy investment, however, there is promising large-scale solar development in North Africa and signs of change in South Africa, where targets for renewable energy have been set and the country’s first wind farm commissioned.”
- From the report: “Financing energy efficiency is challenging, because the benefits are asymmetrical and the industry´s diverse and fragmented nature makes it diffi cult for investors to identify large enough opportunities. In many cases some level of public intervention and support is needed to correct market failures, organise the market and catalyse investment.”