After less than a year and a half in which so much energy news seemed troubling — nuclear meltdowns, oil spills, rising gas prices — it might be startling to find out that worldwide installed capacity of renewable energy has now surpassed that of nuclear power. In fact, global investment in clean energy, driven by enlightened, forward-looking national policies, grew to a record US$243 billion last year, up 30 percent from the previous year.
Indeed, in less than a decade, clean energy has grown from a niche industry to a significant source of trade, investment, manufacturing and job creation. Since 2004, annual investment in the sector has increased by an impressive 630 percent. We need to ensure that this encouraging trend continues.
The emergence of the clean-energy sector reflects rational policies — from research to financing to tariff incentives — in the world’s largest economies. These measures, which still pale in comparison to what is granted to conventional fossil fuels, will be reduced over time as economies of scale are realized and costs fall. We are not far from the day when clean energy can compete head to head with coal, oil and gas.
In many places, wind energy is already competitively priced, and it has attracted almost half (48 percent) of all G20 clean-energy investments in recent years, fueling the addition of some 40 gigawatts of generating capacity — enough to power 30 million homes.
However, the solar sector is the fastest-growing clean-energy industry, in large part because prices of solar panels have declined by more than 60 percent in the last 30 months. By the end of this year, solar modules are expected to cost half as much as they did four years ago. The 17 gigawatts of solar-generation capacity that was added last year from investments totaling US$79 billion could power more than 12.5 million homes. Geographically, recent research by The Pew Charitable Trusts and -Bloomberg New Energy Finance reveals that Europe continues to lead the world in such investment, attracting US$94.4 billion last year, a 25 percent gain over 2009. Investment in Germany more than doubled to US$41.2 billion, surpassing the US to take second place globally. Italy was in fourth place — up from eighth in 2009 — attracting almost US$14 billion in investment. France entered the world’s top 10, after annual investment grew 25 percent to US$4 billion. Investment in Spain, meanwhile, was down by more than half, but remains in the top 10 worldwide at US$4.8 billion.
The research also demonstrates that Europe’s consistent policies leave it well positioned to compete in the clean-energy sector. Investors want to be sure that there will be ongoing demand for renewable energy. The EU is providing that certainty through its clean-energy targets, carbon markets and feed-in tariffs — under which utilities guarantee to pay a fixed rate for clean energy.
For example, European policies are driving an explosion in small-scale, distributed solar-power generation. Investment in these projects doubled last year to US$59.6 billion globally, with most poured into the EU and more than half into Germany alone.
Germany also is demonstrating that sound clean-energy policies can drive not only domestic investment and installations, but also manufacturing and export opportunities. Last fall, Germany’s environment ministry reported that renewable-energy jobs had doubled since 2004 to 340,000 thanks to the country’s investments in education, training, research and innovation.