Declines in Clean Energy Investment

Brian Hicks

Written By Brian Hicks

Posted October 15, 2013

Global clean energy investments have dropped 14 percent in the third quarter of this year, prompting near certainty that annual investments in renewables and energy-smart technologies will fall for a second consecutive year.

Investment in the sector was $281 billion last year – 11 percent below record levels of investment in 2011.

solar installThese woes come on the heels of the financial crisis and recession, which touched the economies of the U.S., China, and most of Europe. Europe as a whole has been cutting back on government subsidies, while in the U.S., cheap shale gas has pushed natural gas investments to the forefront. And China is surprising us all as it cuts back on spending.

The $45.9 billion spent in the third quarter is 20 percent less than the same period last year, as Bloomberg reports.

The U.S., which surged in clean energy in the second quarter, dropped off significantly, falling from $9.4 billion to $5.5 billion, according to the Guardian. China fell slightly from $13.8 billion to $13 billion for the same period. India and Japan also saw declines.

While these numbers are worrisome, especially as the world is supposedly shifting toward green technologies and clean energy, the $45.9 billion is still much greater than investments in, say, 2004.

The loss of momentum that we’ve been experiencing globally is still a concern. This matter will be broached next month in Warsaw, Poland, as more than 190 nations are set to meet, aiming to reduce greenhouse gas emissions worldwide.

Renewable Investments

In Europe, clean energy has been thriving due to subsidies from nations across the board. Record growth was being pushed higher and higher, but now these same countries have been cutting back on subsidies, citing high energy bills.

Only $7.1 billion was invested in European renewable projects in the third quarter, according to South China Moring Post, as subsidy cuts were made in Germany, Spain, Italy, Romania, Poland, and the Czech Republic.

In the U.S., it’s the shale boom that has nearly chopped clean energy spending in half for the third quarter. And over in China, utilities seem to be steering away from wind power – the renewable source that was supposed to take them into the future.

The only nations that saw an increase in the third quarter were Brazil, which went from $950 million to $1.1 billion, and the U.K., which increased investments from $1.6 billion to $2.6 billion.

The U.K., for one, seems unwavering, as it is likely to set a record in 2013 for solar power installations. It also helps that solar component prices have been falling, making it easier to invest.

But at the end of the day, Brazil and the U.K. aren’t enough to be clean energy’s saving grace. The global outlook is still poor. Rising energy bills are said to be the reason so many subsidies have been cut in Europe, but renewables may not be the problem. One look at gas prices (which have risen more than 8 percent) tells you that it is gas that is pushing energy bills higher.


Clean Energy Grows

Europe may have been making heavy cuts to subsidies, but all is not lost this year in clean energy. Like I said, solar will remain strong with help from the U.K., and as costs continue to go down, investments will keep going up.

The global outlook for solar should reach roughly 36.7 gigawatts sometime this year, according to Bloomberg.

SolarCity Corp (NASDAQ: SCTY) expects installed capacity to jump nearly 90 percent next year, and others, like Sunrun Inc. and Sungevity Inc., will install rooftop projects at next to no upfront costs.

Perhaps the clearest indicator that hope is not lost is in the patents. Innovations in solar, wind, and other renewables are booming across the globe, especially in China, where they are overtaking fossil fuels. The U.S. and Japan are also filing thousands of new patents each year.

In contrast, patents for coal, oil, and gas are rising much more slowly.

The big takeaway: we seem to have lost sight of what we were after in the first place – clean and renewable energy – but things will improve eventually. It just may take a year or two.


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