This report presents the financial perspective on the current state of play in the development of sustainable energy. The analysis consists of actual data on the different types of capital flows and their movement over time, combined with analysis of regional and sectoral trends. The information is intended to serve as a strategic tool to be used by decision makers in the policy and finance communities globally as they weigh-up commitments to the sustainable energy sector. The report was commissioned by UNEP’s Division of Technology, Industry and Economic (DTIE) under its Sustainable Energy Finance Initiative and was produced in collaboration with New Energy Finance.
Last year was another milestone for investment in sustainable energy, especially given the overall investment climate. Last year a total of $155 billion was invested in companies and projects globally, a modest increase of 5% over 2007. Following several years of over 50% growth, this marks a dramatic slowdown as a result of the global economic downturn. Some improvement has been seen during the second quarter of 2009, but the sector has a long way to go this year to reach previous levels of investment.
The drivers that have propelled investment in the sustainable energy sector for the past five years, however, are still at work – climate change, energy insecurity, fossil fuel depletion and new technologies. As well, political support remains strong, with an estimated $180 billion of fiscal stimulus committed to sustainable energy. While the $155 billion of investment in 2008 and $180 billion of government support in 2009 are impressive, investment needs to reach half a trillion dollars per annum by 2020 to help ensure a peak in greenhouse gas emissions.
Investment in new energy generation projects (wind, solar, biofuels etc.) grew by 13% during 2008, to $117 billion, and new private investment in companies developing and scaling-up new technologies, including energy efficiency, increased by 37% from 2007 to $13.5 billion. Capital raised via the public stock markets for equipment manufacturing and project pipelines fell 51% to $11.4 billion, as clean energy share prices lost 61% of their value during 2008. Total transaction value in the sustainable energy sector during 2008 – including corporate acquisitions, asset re-financings and private equity buy-outs – was $223 billion, an increase of 7% over 2007.
The full report and accompanying resources, including a data set for the report’s graphs and a PowerPoint presentation, can be downloaded from the UNEP SEFI website (pre-registration required)
Photo from Darren Hester (Creative Commons: Flickr)