UNEP publishes Global Trends in Sustainable Energy Investment 2009

UNEP Executive Director Achim Steiner presents via media teleconference Global Trends in Sustainable Energy Investment 2009 prepared for the UN Environment Programme’s Sustainable Energy Finance Initiative by global information provider New Energy Finance.

The UNEP report published yesterday shows that during 2008, the economic crisis hit EU and US clean energy the hardest, while renewables investments in emerging economies rose by 27% to $36 billion. Renewables attracted more investment than fossil-fuelled energy technologies during 2008, with geothermal experiencing the fastest growth (149% rise with 1.3 GW of new capacity installed), wind power the most investment ($51.8 billion, 1% growth on 2007), and solar energy the largest gains ($33.5 billion, 49% growth).


New Energy Finance calculates that $155 billion was invested in 2008 in clean energy companies and projects worldwide—not including large hydro. Of this, $13.5 billion of new private investment went into companies developing and scaling up new technologies, alongside $117 billion of investment in renewable energy projects from geothermal and wind to solar and biofuels.


Although extremely difficult financial market conditions during 2008 have constrained investments in clean energy development, the amount invested in 2008 is more than a four-fold increase since 2004. Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: “Without doubt the economic crisis has taken its toll on investments in clean energy when set against the record-breaking growth of recent years. Investment in the United States fell by 2% and in Europe growth was very much muted. However, there were also some bright points in 2008 especially in developing economies—China became the world’s second largest wind market in terms of new capacity and the world’s biggest photovoltaic manufacturer and a rise in geothermal energy may be getting underway in countries from Australia to Japan and Kenya”.


“Meanwhile other developing economies such as Brazil, Chile, Peru and the Philippines have brought in, or are poised to introduce policies and laws fostering clean energy as part of a Green Economy. Mexico for example, the Global host of World Environment Day on 5 June, is expected to double its target for energy from renewables to 16% as part of a new national energy policy,” he added.


Of the $155 billion total worldwide investment, $105 billion was spent directly developing 40 GW of power generating capacity from wind, solar, small-hydro, biomass and geothermal sources, while a further $35 billion was spent on developing 25 GW of large hydropower. This $140 billion investment in 65 GW of low carbon electricity generation compares with the estimated $250 billion spent globally in 2008 constructing 157 GW of new power generating capacity from all sources. Consequently, renewables currently account for the majority of investment and over 40% of actual power generation capacity additions last year.


Solar PV prices set to plummet


The investment surge of recent years and softened commodity markets have started to ease supply chain bottlenecks, especially in the wind and solar sectors, which will cause prices to fall towards marginal costs and several players to consolidate. The price of solar PV modules, for example, is predicted to fall by over 43% in 2009.


Carbon markets buoyant


Despite the turmoil in the world’s financial markets, transaction value in the global carbon market grew 87% during 2008, reaching a total of $120 billion. Following the lead of the EU and Kyoto compliance markets, several countries are now putting in place a system of interlinked carbon markets and working towards a global scheme under the UN Framework Convention on Climate Change (UNFCCC).


Growth shifts to the developing world


With developed country market growth stalled (down 1.7%), developing countries surged forward, accounting for nearly one third of global investments in clean energy technologies. China led new investment in Asia, with an 18% increase over 2007 to $15.6 billion, mostly in new wind projects, and some biomass plants.


Investment in India grew 12% to $4.1 billion in 2008, while Brazil accounted for almost all renewable energy investment in Latin America in 2008, with ethanol receiving $10.8 billion, up 76% from 2007. Africa achieved a modest increase by comparison, with investments up 10% to approximately $1.1 billion.


Europe retains its leadership position


Europe continues to dominate sustainable energy new investment with $49.7 billion in 2008, an increase of 2% on 2007 (37% CAGR from 2006-2008).This investment is underpinned by government policies supporting new sustainable energy projects, particularly in countries such as Spain, which saw $17.4 billion of asset finance investment in 2008.


China - Asia's green energy giant


By 2008, China was the world’s second largest wind market by newly installed capacity and the fourth largest by overall installed capacity. Between 5GW and 6.5GW of new capacity was installed and commissioned in 2008, bringing total capacity to 11GW to 12.5GW. China also became the world’s largest PV manufacturer in 2008, with 95% of its production for the export market.


Brazil - World's largest renewable energy market


About 46% of Brazil's energy comes from renewable sources, and 85% of its power generation capacity thanks to its enormous hydropower resources and long-established bioethanol industry. Some 90% of Brazil’s new cars run on both ethanol and petrol (all of which is blended with around 25% ethanol). By the end of 2008, ethanol accounted for more than 52% of fuel consumption by light vehicles. Brazil is now moving into wind. The government has announced a wind-specific auction to take place in mid-2009, for the sale of approximately 1GW of wind energy per year. Brazil also has a global leader in renewable energy financing. In 2008 the Brazilian Development Bank (BNDES) was the largest provider globally of project finance to renewable energy projects.


Commenting on the release of a similar report (REN21 Renewables Global Status Report) last month, REN21’s chairman, Mohamed El-Ashry, said: “This fourth edition of REN21’s renewable energy report comes in the midst of an historic and global economic crisis. Although the future is unclear, there is much in the report for optimism.” The same could be said of the findings presented above.


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