TODAY’S STUDY: DANCING AROUND THE EARTH - WORLD NEW ENERGYING RISING, U.S. NEW ENERGY FALLING BEHIND

New Energy asked lots of nations to dance. Early in the evening, the U.S. seemed to love dancing with New Energy. There was a budding romance.

As the evening went on, the chitchat got flirtatious and a little awkward so they decided they were being rather premature and perhaps a little conspicuous and decided to try other partners. Budding romance turned out to be precarious.

As the report below highlights, the U.S. found the wealth and power of Big Coal, Big Oil and Nuclear Energy too heady to turn away from and New Energy was charmed by the enormous, unwavering commitment to it by China and Germany.

What could have been a simple, beautiful love story between the U.S. and New Energy in which they settled into clean, prospering generation is turning into a sad Soap Opera for the U.S. and a tale of lonely wandering for New Energy.

Where did they go wrong? They weren’t really wrong to think they should try other partners. That’s what makes dances fun. And romance takes a little time.

It’s easy to understand how the Old Energies seduced the U.S., though not wrong to be impatient with it for falling for their cheap if high-powered tawdriness. It’s clear that New Energy was perfectly right to respond to the passionate attentions of China and Germany, though it might have tried harder to see that in their passion they might be spending too much too fast.

There is still a chance for a happy ending. Clearly, New Energy misses and longs for the U.S. and the U.S., in its heart of hearts, needs and wants New Energy.

It all comes down to this: As long as the U.S. is unwilling to make a sincere and total commitment to New Energy, New Energy has no other choice but to go on dancing with other nations. At the same time, it must not be discouraged.

Clearly, there is something in the U.S. heart calling out for New Energy. Already, the U.S. has begun to realize its flirtations with the Old Energies have the depth of oil floating on Gulf of Mexico waters and the toxicity of Fukushima nuclear plant water ebbing into the Pacific Ocean.

Sooner or later, the U.S. will return to New Energy. The only question is whether it will by then be too late for that clean, prospering generation.

Who’s Winning the Clean Energy Race? 2010 Edition: G-20 Investment Powering Forward
March 2011 (The Pew Chartible Trusts)

Executive Summary

This report examines key financial, investment and technological trends related to clean energy in the world’s leading economies, also known as the Group of Twenty (G-20). Our primary focus is on investment, which is the fuel that propels the innovation, commercialization, manufacturing and installation of clean energy technologies. The data have been compiled and reviewed by Pew’s research partner, Bloomberg New Energy Finance, a market research firm focused on renewable energy.

Our research shows that the clean energy sector around the world has roared back from flat recessionary levels, increasing 30 percent from 2009 to achieve a record $243 billion2 worth of finance and investment in 2010. More than 90 percent of all clean energy investments were directed to companies and projects in the G-20. Excluding research and development funding, clean energy finance and investment in the G-20 countries totaled $198 billion, 33 percent more than was invested in 2009.

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Collectively, the European region was the leading recipient of clean energy finance, attracting a total of $94.4 billion. Europe’s leadership position was solidified by more than 100 percent growth in investment in small-scale solar installations in Germany and Italy. Rising among the ranks of top-10 countries for private clean energy investment, Germany and Italy attracted $41.2 billion and $13.9 billion, respectively.

Although small-scale solar energy investments helped Europe maintain its position as the leading region for clean energy finance in 2010, the Asian region is closing the gap rapidly and is expected in the coming months and years to become the center of gravity for clean energy investment. Overall clean energy investment in the Asian region increased 33 percent to $82.8 billion in 2010.

Asia/Oceania’s emergence is fueled in large part by the rapid rise of China as the world’s clean energy superpower. Private investment in China’s clean energy sector increased by 39 percent in 2010 to a world record $54.4 billion. China also is the world’s leading producer of wind turbines and solar modules. In 2009, it surpassed the United States as the country with the most installed clean energy capacity.

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The Americas region is a distant third in the race for clean energy investment, attracting $65.8 billion overall in 2010. Investments in the United States rebounded 51 percent over 2009 levels to reach $34 billion, but the United States continued to slide down the top 10 list, falling from second to third. Given uncertainties surrounding key policies and incentives, the United States’ competitive position in the clean energy sector is at risk. Growth is sharper in Latin America, where private clean energy investment in Argentina increased by 568 percent and in Mexico by 273 percent, the highest growth rates among G-20 members.

Technologically, 2010 investments notably increased for solar energy, particularly for small scale and residential projects. In the G-20, a record $79 billion was invested by the private sector in solar technologies, facilitating the installation of more than 17 gigawatts (GW) of new generating capacity. Compared with 2009, solar energy investments in 2010 increased by 53 percent, while investments in the wind sector increased by a more modest 34 percent. Still, wind energy remains the favored technology for private investment in the G-20 countries, accounting for 48 percent of total investments, or $95 billion.

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Clean energy funding allocated by governments to help stimulate growth in response to the global economic recession rose sharply in 2010 to $75 billion, from $20 billion the prior year. Corporate and government research and development funding increased globally by 24 percent to $35 billion. Venture capital/private equity funding in the G-20 also rebounded strongly in 2010, up 26 percent over the previous year to $8.1 billion. Investment in G-20 small-scale distributed capacity rose 100 percent in 2010 to $56.4 billion.

Installation of 40 GW of wind and 17 GW of solar helped drive worldwide clean power generating capacity to 388 GW in 2010.

This report documents the continued growth and dynamism of clean energy investment in the world’s leading economies. It follows recent Pew research showing that policy priority for clean energy is well-placed: Investment in clean power assets alone could reach $2.3 trillion over the 2010-20 period.4 Countries that succeed in attracting investment can realize the economic, security and environmental benefits of the global race to harness clean, renewable energy sources.

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Key Findings

Global Investment Grows to Record $243 Billion

Worldwide, the clean energy sector roared back from flat recessionary levels, increasing 30 percent above 2009 levels to achieve a record $243 billion worth of finance and investment in 2010.

Worldwide investments, excluding research and development in clean energy are 630 percent greater than they were seven years ago, and there have been notable shifts in global competition as investment moves from established markets in the developed countries to dynamic, emerging markets in the developing world.

With more than 90 percent of worldwide investment, the G-20 members continue to dominate the clean energy landscape. Excluding basic research and development, $198 billion was invested last year in the G-20’s clean energy sector. Taken together, G-20 clean energy investments in 2010 increased 33 percent over 2009 levels.

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Asia Rising

Clean energy investment in the Asia/Oceania region continued its sharp rise, increasing 33 percent in 2010 to $82.8 billion. In 2009, this region surpassed the Americas for the first time; in 2010, investment in Asia/Oceania grew faster than in the European Region, narrowing the gap between the two regions and edging Asia closer to becoming the world’s top destination for clean energy finance and investment. Still, a surge in financing for small-scale solar energy projects enabled Europe to hold the lead for investment in 2010, attracting $94.4 billion. Although a distant third, clean energy investment in the Americas grew 35 percent to $65.8 billion.

Big Numbers for Small Projects

Small distributed capacity is associated with residential scale solar projects of less than 1
megawatt (MW). Purchases of small-scale, distributed, clean energy technologies were a new and important force driving clean energy investment to record levels in 2010. Investment in small-scale projects among G-20 members grew by 100 percent, doubling annual investment to $56.4 billion. A massive surge in rooftop solar energy projects in Germany accounted for more than half of all small scale investments. Significant investment in small-scale and residential projects also occurred in Japan, the European Union (especially France and Italy) and the United States.

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G-20 Solar Investments Surge, Wind Remains Industry Leader

Among the various clean energy technologies, the solar sector grew the fastest, with investments increasing 53 percent over 2009 levels. Total 2010 investment in solar energy reached $79 billion, and a record 17 GW of solar generating capacity was installed last year, increasing global installed capacity by 70 percent over 2009 levels. The solar sector accounted for 40 percent of total clean energy investments in 2010, further indicating that rapidly declining prices and generous feed-in tariffs for solar are making these technologies an attractive investment option.

Wind investment levels increased by 34 percent in 2010, and wind energy remains the leading recipient of clean energy investments. In 2010, $95 billion was invested by G-20 members in the wind sector, with one-third of that total arriving in the fourth quarter. Low prices for natural gas, especially in the United States, undercut wind energy’s competitive pricing with other fossil fuels. Still, investments in wind helped drive the addition of 40 GW of generating capacity and accounted for 48 percent of the annual clean energy investments in 2010. China installed record 17 GW of wind energy in 2010. Installations in the United States decreased 50 percent from 2009 to 5 GW. Offshore wind investments continue to grow, with important projects undertaken off the coast of Massachusetts in the United States and in the territorial waters of Belgium and Germany.

Among the other clean energy subsectors, biofuels was notable for its ongoing slump. The 2010 investment of $4.7 billion was the lowest since 2005, reflecting the fact that first-generation biofuels production capabilities exceed demand in a number of key markets, and second generation biofuels are not sufficiently advanced for large-scale commercial deployment.

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Venture Capital/Private Capital Equity Investments Rebound

After a dismal 2009, G-20 venture capital/private equity investments in the clean energy sector increased 27 percent to $8.1 billion in 2010. Leading venture capital investments included stakes of $400 million in the Pattern Energy Group (wind); $350 million in Better Place (electric vehicle charging infrastructure); and $150 million in Bright Source Energy (solar). The scale of the leading clean energy venture capital offerings compare favorably with highly publicized offerings in other sectors, such as the $200 million offering in late 2010 for the online social networking and microblogging site Twitter.

Asset financing still accounts for 60 percent of all clean energy investments, or about $118 billion in 2010, up 15 percent over 2009 levels. Public market financing recorded 27 percent growth in 2010, to $15.9 billion, as companies launched public stock offerings to raise capital for expansion.

Installed Clean Energy Capacity Approaches 400 GW

The leading clean energy technologies reached record capacity additions in 2010, with annual wind capacity increasing by nearly 40 GW, and solar capacity more than doubling over record 2009 installations to 17 GW. Total worldwide clean energy generating capacity has almost doubled in the past three years in response to strong policies and incentives, as well as declining cost structures.

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Stimulus Funding Grows in 2010

A dozen governments around the world have prioritized clean energy investments as part of economic recovery and stimulus initiatives undertaken in response to the global economic crisis of 2008-09. Governments allocated more than $194 billion for clean energy efforts in stimulus plans, but only 10 percent of that amount reached the sector in 2009. In 2010, stimulus funding for clean energy efforts more than tripled to $74.5 billion, led by sharply increased funding for projects in five G-20 countries: the United States, China, Germany, Japan and South Korea. Thirty-seven percent of stimulus funding spent to date has been directed to energy efficiency programs, 21 percent to renewable energy and 17 percent to smart grid. Another 19 percent of stimulus funding has been allocated by governments for research and development efforts. Although 2010 was the peak year for clean energy stimulus funding, more than one-third ($69 billion) of the $194 billion pledged to date is expected to be spent in 2011.