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UXBRIDGE, Canada, Jun 5 2009 (IPS) - The world has turned a green corner toward a more sustainable future, with investments in clean energy outpacing fossil fuel power generation for the first time.
More remarkably, that investment in clean energy topped 2007's record investments by five percent, in large part as a result of investments by China, Brazil and other emerging economies.
Achim Steiner, UNEP's executive director, says that "2008 was the first year where there was more investment in non-carbon energy sources than in high carbon and nuclear energy."
"That's hugely significant," Steiner told IPS in an interview.
UNEP has been calling for a "Global Green New Deal" to jump-start the global economy and use the various economic stimulus packages to make investments in clean technologies and 'natural' infrastructure such as forests and soils. Experts argue that this is the best bet for real growth, combating climate change and sparking an employment boom in the 21st century.
Renewable energy like wind, solar, biomass and geo-thermal can be rapidly scaled up since the technologies are well-developed and costs have dropped dramatically. For example, the Chinese firm Suntech Power has gone from being a startup to the world's largest solar panel manufacturer in just eight years, Steiner said.
In the same period, China has gone from having practically no wind energy to becoming the world's largest generator of wind energy.
"Renewable energy has now reached a tipping point where it is as important – if not more important – in the global energy mix than fossil fuels," he said.
The 2008 investment is more than a four-fold increase since 2004, according to Global Trends in Sustainable Energy Investment 2009, prepared for UNEP's Sustainable Energy Finance Initiative by global information provider New Energy Finance.
Of the 155 billion dollars, 105 billion was spent directly developing 40 giga-watts (GW) of power generating capacity from wind, solar, small-hydro, biomass and geothermal sources. Wind attracted the highest new investment (51.8 billion dollars, one percent growth in 2007), although solar made the largest gains (33.5 billion dollars, 49 percent growth) while biofuels dropped somewhat (16.9 billion dollars, nine percent decrease).
A further 35 billion dollars was spent on developing 25 GW of large hydropower, according to the report.
And 2008 was the first time developing countries' investments surged 27 percent over 2007 to 36.6 billion dollars, accounting for nearly one-third of global investments.
China led new investment with an 18 percent increase over 2007 to 15.6 billion dollars, while Brazil followed with its 10.8-billion-dollar investment in ethanol. Investment in India grew 12 percent to 4.1 billion dollars in 2008 and Africa exceeded the billion-dollar mark for the first time ever.
Meanwhile, rich countries reduced their investments by 1.7 percent compared to 2007. Not surprisingly, given market conditions, private sector investment all but disappeared in 2008, but government investment took up much of the slack and continues to do so in 2009.
However, in the first quarter of this year global investments plunged 53 percent compared to 2008 and are likely to end up 25 to 35 percent lower than 2008 investments despite the trillions of dollars in various national economic stimulus packages, says Michael Liebreich, chairman & CEO of New Energy Finance.
Only about 180 billion dollars has been earmarked for clean, green projects, which Liebreich told IPS was "a modest percentage" and that "it was not clear when the money will actually be spent". More investment is needed and right away, he said.
UNEP estimates that a minimum of 750 billion dollars – or 37 percent of current economic stimulus packages and one percent of global GDP – is needed to finance a sustainable economic recovery by investing in the greening of five key sectors of the global economy: buildings, energy, transport, agriculture and water.
"Much more investment is needed to stabilise carbon emissions," said Steiner.
The latest climate science since the Intergovernmental Panel on Climate Change's Fourth Assessment report concludes that global carbon emissions must peak by around 2015 to avoid the worst consequences of climate change.
"Renewable energy investment has to get up to 70 or 80 percent of all energy investments to make countries' carbon emission targets," said Michael Eckhart, president of the American Council on Renewable Energy.
This year is an anomaly. The skyrocketing growth in the green energy sector will resume in the near future, Eckhart told IPS. "Renewable energy will be the first sector to recover," he predicted.
And the green energy sector could receive a huge boost at the upcoming U.N. climate meeting in Copenhagen this December. Steiner says a new climate agreement could be "the biggest renewables stimulus package of them all" and ratchet investment up from "second gear and into third and fourth gear" where it needs to be.
"Copenhagen is where governments must seal the deal on a new climate agreement – one that can bring certainty to the carbon markets, one that can unleash investments in lean and clean green tech," he said.
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