Berlin, Germany [RenewableEnergyWorld.com] The solution to the world’s two biggest crisis — the economic and the global warming crisis — is exactly the same: a huge government investment plan in renewable energy will not only help kick start economies, but it will also help fight global warming, according to a report by Deutsche Bank.
Faced with the worst economic crisis since 1931, governments in Germany and the UK as well as the US and China are planning to use deficit spending to avert a dramatic economic slowdown.
The study by Deutsche Asset Management (DeAM), a member of the Deutsche Bank group, argues that directing any stimulus package towards the renewable energy would benefit not just the economy by boosting jobs and growth but also accelerate the creation of a booming new clean tech industry, so helping to slash greenhouse gases.
Massive investment in renewable energy would also have the advantage of establishing energy independence for countries such as US, China, Germany and the UK from oil and gas imports from crisis-hit regions.
“The current crisis is making the necessity of tackling climate change an opportunity to stimulate growth through investment opportunities,” said Mark Fulton, DeAM’s Global Head of Climate Change Investment Research.
Investments in new improved energy efficiency technologies are especially likely to benefit recession-hit economies by reducing the burden of high fuel costs, the study argues.
Additional measures to stimulate investment in “green” infrastructure and industry, such as smart electricity grids, solar thermal and geothermal power plants, could pay dividends by creating jobs in long-term growth industries.
Investment in renewable energy would also help accelerate “grid parity,” the point when electricity generated by solar, wind and other sources becomes cost competitive with power from conventional fossil fuels.
Though wind power in some locations is already cost competitive, government investment in renewable energy as part of a stimulus package would provide much needed funds to bring down the cost of all types of renewable energy.
Also, the Deutsche Bank experts are urging governments to change laws to help steer private investment into the clean energy.
Moreover, a recent report by Greenpeace in Germany and the European Renewable Energy Council (EREC) argues that investment in renewable energy would not represent an additional cost, but would pay for itself out of savings to be made on oil, coal and gas expenditures.
Furthermore, investment in clean energy would reduce the huge bill that the world is likely to have to face from damage caused by global warming in the future, which could be as high as 20 percent of the world’s GDP a year, according to Greenpeace.
Sigmar Gabriel, Germany’s Environment Minister, recently affirmed the government’s commitment to the renewable energy sector, saying that 500,000 new jobs could be generated in the green sector by 2020 in Germany.
In spite of the government’s pledge to support the green energy sector, few additional funds, however, were made available in this month’s stimulus package from Berlin, which amounted to €50 billion [US $63.1 billion].
To succeed in the new energy revolution, analysts say the German government will have to reverse years of low investment in new renewable energy technology and energy efficiency research.
For example, the Technical University of Munich, one of Germany’s leading universities with 22,000 students and 6,500 employees, spends only €10-15 million [US $12.6 to 19 million] out of a total budget of €769 million [US $971 million] on renewable energy research, which is furthermore, splintered over several institutes.
The German government’s role in financing renewable energy projects is set to become all the more critical as banks are less likely to lend funds in the financial crisis.
The economic uncertainty is already clouding a series of renewable energy projects in Germany.
Doubts have grown over the Blackstone-financed project announced in July this year to build an offshore wind park of 80 wind turbines generating 400 megawatts (MW) of electricity off Helgoland by 2012, according to the German newspaper Handelsblatt. RenewableEnergyWorld.com’s Eize de Vries alluded to that project last week in his story, 5-MW BARD Near-shore Wind Turbine Erected in Germany.
Capital from the private sector will be needed if the German government is to meet its ambitious target of building 10,000 MW of offshore wind power by 2020.
Building wind parks 20, 30 or even 40 kilometers off the north German coast and anchoring turbines 20 to 30 meters below the sea surface will require substantially more money than constructing equivalent wind parks on land. Without additional government funding, experts think the country’s wind power plans could now have to be scaled back.
More crucially, Germany could fall behind in the race to create a thriving, strong new clean tech economy and an export world leader by the government’s failure to include green energy funds in its stimulus package to revive the economy this month.
“Major investment in renewable power and energy efficiency could create an industry a 360 billion-dollar industry, provide half of the world’s electricity, and reduce the hefty 18 trillion-dollar bill expected to for future fossil fuel costs, according to Oliver Schäfer from the EREC.
“Currently, the renewable energy market is worth US $70 billion and doubling in size every three years,” he said. “The global market for renewable energy can grow at double digit rates until 2050, and overtake the size of today’s fossil fuel industry.
Governments that include green energy incentives into their stimulus package will not only create jobs, stabilize the economy and protect the environment, but they will also help ensure that their country is well placed to come out of the recession as a world leader in green technology, which is set to dominate the energy market of the future.
With countries such as Germany and the UK so far having failed to seize the opportunities hidden in the current economic crisis, all eyes are on the US to see whether the new Obama administration grasps the chance to invest in green energy to revive the recession-hit economy and catapult America to the front of the world energy leaders.