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Clean energy one of top sectors in withstanding financial crisis

22.06.2009

The United Nations Environment Programme’s (UNEP) has published a new report entitled ‘Global Trends in Sustainable Energy Investment 2009’. The report shows that, although the renewables industry was affected by the financial crisis in 2008, certain types of investment in the sector increased. Overall, the report’s executive summary says, “clean energy resisted the global crisis more successfully than many other sectors for much of the year”, but started feeling the impact right at the end.

New investment in sustainable energy was $155 billion in 2008, which was 5% higher than in 2007 – but the second half-year figure was down 17% on the first half. Moreover, share prices in renewable energy fell 61% last year.

A second paper, the IEA’s background paper for the G8 Energy Ministers’ meeting at the end of May, corroborates these findings, saying that although investment in renewables has shot up by about 85% per year recently, activity slowed at the end of 2008. Preliminary data from the first quarter of 2009 shows that the slump has increased, according to the IEA.

The UNEP document goes on to report that leading governments committed a total of over $180 billion to sustainable energy within their various stimulus packages, yet banks are still too worried about solvency to lend. When lending does start to flow again, renewable energy projects are likely to be among the early beneficiaries, as they produce a reliable stream of revenues from the utilities. The IEA, although it praises the money given to clean energy in stimulus packages as “a positive step in the right direction”, states that the crisis may curb investment in clean energy technologies, thus increasing reliance on fossil fuel technologies and greenhouse gas emissions.

In 2008, according to UNEP, venture capital and private equity funds invested $19.3 billion in renewable energy and energy efficiency firms, an increase of 43% compared with 2007. Financing of sustainable energy assets grew by 12.9% in 2008 to $116.9 billion.

At the same time, investment in clean energy firms via the world’s stock markets tumbled 51% to $11.4 billion last year, says UNEP. The volume of money changing hands in mergers and acquisitions of clean energy companies fell 16.2% to $21.7 billion, due to the lack of available credit.

Despite the turmoil in the world’s financial markets, 2008 was another year of record
growth in the carbon markets. Transaction value in the global carbon market grew 87% during 2008, reaching a total value of $120 billion. The average settlement price of European Union Emissions Allowances (EUAs) closed the year at around $25 per tonne.

Financial investment in developing countries increased to $36.6 billion in 2008, an increase of 27% on 2007, whilst investment in developed countries fell by 1.7% to $82.3 billion. Developing countries’ share of total global financial investment increased to 31% in 2008, up from 26%. The field was led by China, with $15.6 billion of new investment, mostly in new wind projects, and some biomass plants.

For more on UNEP’s report, click here.
For more on the IEA’s report, click here.

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