Investment in renewable power and other "clean" energy technologies has fallen for a second successive year as a result of cuts to government subsidies, especially in Europe, writes Ed Crooks in the Financial Times (15 Jan.).
Total investment in clean energy fell 9 per cent in 2013 to $254bn, following a 9 per cent drop in 2012, according to Bloomberg New Energy Finance, a research group. The volume of new renewable power capacity installed was also less than in 2012.
The figures show the huge challenge faced by the UN and others seeking a transformation in the world's fuel supplies to fight the threat of climate change, with the figures falling far short of the level of investment they say is needed.
However, Ethan Zindler of BNEF said there were signs of a revival in investor interest in clean energy, with a global index of 100 renewable power and related companies rising 54 per cent over the past year.
The fall in investment in 2012 was steepest in Europe, where clean energy investment plunged 41 per cent to $57.8bn as a result of subsidy cuts in countries including Germany, Italy and France.
Investment was also lower in the US and in China, which remains the world's largest investor in clean energy, extending its lead over the US last year.
The most notable country bucking the trend was Japan, where investment rose 55 per cent to $35.4bn, as the country tried to develop alternatives to nuclear power after the 2011 Fukushima disaster.
The global decline included sharp falls in venture capital investment for clean energy companies, as well as a drop in asset finance for large utility-scale renewable power projects.
According to the FT report, the decline was accentuated by the continued steep fall in the price of solar panels, which meant that the value of investment in solar power declined even as the volume of new capacity installed rose, but that was offset by a global decline in new wind capacity. The International Energy Agency has estimated that about $1tn per year more needs to be invested in emissions-reducing industries to limit the long term increase in global temperatures to 2 degrees centigrade, the level deemed acceptable by UN member countries.
Ceres, a network of institutional investors that works on environmental and social issues, last week launched an initiative intended to encourage the private sector to reach that $1tn goal. Mindy Lubber, president of Ceres, said: "Investors themselves need to work harder to prioritise clean energy investing across all asset classes, including the largely untapped bond market and direct project investments."
Mark Fulton, a consultant at Energy Transition Advisors, who worked on the issue for Ceres, said that if banks developed attractive vehicles for investment in emissions-reducing industries, private sector investment could grow rapidly. He said about 80 per cent of the money raised was likely to be debt, used for infrastructure such as power generation, and could offer stable long-term returns that would be attractive to many investors. "I would think we could get to $500bn doing these things," he said. "The $1tn, though, is going to be a stretch."
