London, UK — Investing in renewable energy is ‘becoming increasingly viable as technology advances and costs decrease,’ a United Nations Environment Programme (UNEP) analysis concludes. In its new Green Economy report, UNEP argues that investing 2% of global GDP into 10 key sectors could kick-start a transition towards a low carbon, resource efficient ‘green economy’.
Amounting to around US$1.3 trillion a year, and backed by national and international policy, the sum would enable the global economy to grow at about the same rate if not higher than that forecast under current economic models, states UNEP. Investment would be channelled across sectors including agriculture, buildings, energy supply and industry, including energy efficiency. The report envisages that annual global investment of $134 billion would improve the energy efficiency of buildings, and more than $360 billion would help improve the environmental performance of energy supplies.
Putting that in context, UNEP estimates that new investment in clean energy over 2010 hit a record high of $243 billion, up from $186 billion in 2009. And this growth is increasingly driven by non-OECD countries, particularly Brazil, China and India.
Pavan Sukhdev, on secondment from Deutsche Bank and head of UNEP’s Green Economy Initiative, said: ‘Governments have a central role in changing laws and policies, and in investing public money in public wealth to make the transition possible. By doing so, they can also unleash the trillions of dollars of private capital in favour of a green economy.’
It is true that governments have a major role to play in supporting renewable energy industry, for instance by enacting feed-in tariff policies that encourage renewable energy development. But in today’s austere times such largesse is, if anything, dwindling. In the UK for instance, as our analysis reveals, the country’s successful feed-in tariff scheme is under review less than a year after its introduction. Elsewhere in this edition of Renewable Energy World we consider some of the other issues set to influence investment in renewables.
Policy issues are further explored with a look at the factors influencing the development of a global, liquid and effective carbon market. We also lift the curtain on Russia’s renewable energy development, currently led by hydropower, in our country profile. Taking in technologies, we include a report on developments in the small wind sector, while taking a forward-looking view at the development of the solar thermal sector. We also include a peek at some of those companies working on the development of advanced biofuels with our regular key players feature.
With investment in clean — largely renewable — energy at record levels and showing healthy growth in the midst of a major recession, the UNEP figure of $360 billion appears almost within reach. But the sector would be wise to seek that equity on its own merits. By relying so heavily on government support, which can be withdrawn on a whim or in response to adverse financial conditions, renewables ultimately risk failure while standing on the cusp of success.