Bloomberg: clean energy investment decline is ‘worrying’

Global investment in clean energy dropped by 14% in the third quarter of 2013, making it “almost certain” that annual investment in renewable and energy-smart technologies will fall for the second consecutive year. 

International investment in clean energy amounted to $45.9 billion (£29 billion) in Q3, according to figures released by research company Bloomberg New Energy Finance (BNEF). This represents a 14% drop on Q2 and a reduction of 20% when compared to the same period last year.

Michael Liebrich, chief executive of BNEF, described the loss of momentum since 2011 as “worrying”. 

He added, “Governments accept that the world has a major problem with climate change but, for the moment, appear too engrossed in short-term domestic issues to take the decisive action needed.”

The BNEF report found that investment in China, the US and Europe had fallen. The US suffered the largest decline, with spending falling by as much as 41% to $5.5 billion. Investment in China fell to $13 billion from $13.8 billion in the second quarter. 

BNEF also found that investment from venture capital and private equity firms fell more than 44% to $724m in the third quarter from the second. It said that represents the lowest level of venture capital investment in the sector since 2005.

While investment in clean technology in the UK has risen, from £1 billion to £1.6 billion, the sector is under threat as renewable energy subsidies have been blamed for rising energy bills.

However, Liebreich told the Guardian that scrapping the subsidies would not bring down bills.

“Gas prices have risen more than 8% – we know that it is gas prices that are pushing up bills. I don’t follow the logic of how that has to do with green subsidies”, he said.

Renewable energy generation could in fact help to reduce bills, he argued, pointing to some periods in the UK, when thanks to wind power in particular, short-term prices had reduced considerably.

“But that doesn’t get passed through to the consumer, because there is no transparency in the market, and so people don’t know about it. Yet you get this distortion of people saying [bill rises] are from green subsidies.”

MPs and climate change experts have also warned that the UK renewables sector is threatened by government indecision in the debate over the country’s ‘carbon budget.’

In August, Ernst & Young’s Cleantech Industry Performance Report had said that the cleantech sector has gone through a “challenging period” due to fiscal issues and the financial crisis, but was showing signs of recovery thanks to demand in the Asia-Pacific region. 

“Resource scarcity, energy security concerns, population growth and increasing consumption, by expanding middle classes in emerging markets, will continue to drive this cleantech market growth”, said Ernst & Young’s global cleantech leader Gil Forer.

Further reading:

Nine UK firms appear on Global Cleantech 100

Reducing carbon budgets would be ‘incredibly short-sighted’

Don’t delay carbon budget decision, climate watchdog tells Ed Davey

UK told to keep up with fellow competitors in ‘global green race’

Global cleantech industry worth $170bn after growing 18% in 12 months