Climate change worries coupled with high oil prices and increasing government support are fuelling soaring rates of investment in the renewable energy and energy efficiency industries, a new report by the United Nations Environment Programme (UNEP) said today.
“One of the new and fundamental messages of this report is that renewable energies are no longer subject to the vagaries of rising and falling oil prices – they are becoming generating systems of choice for increasing numbers of power companies, communities and countries irrespective of the costs of fossil fuels,” said UNEP Executive Director Achim Steiner.
Investment capital flowing into renewable energy climbed from $80 billion in 2005 to a record $100 billion in 2006, according to the report. The growth of the renewable energy sector “although still volatile… is showing no sign of abating.”
Renewable energy sectors attracting the highest investment levels are wind, solar and biofuels, “reflecting technology maturity, policy incentives and investor appetite.”
In addition to concerns about climate change, which Secretary-General Ban Ki-moon has called “the defining issue of our era,” increasing energy demand and energy security are spurring the sector’s growth, as is the persistently high price of oil – averaging more than $60 a barrel in 2006.
The report also credited the November 2006 United States mid-term Congressional elections, which it said confirmed renewable energy as “a mainstream issue,” moving it up the political agenda.
“Growing consumer awareness of renewable energy and energy efficiency – and their longer term potential for cheaper energy, and not just greener energy – has become another fundamental driver,” said the report. “Most importantly Governments and politicians are introducing legislation and support mechanisms to enable the sector's development.”
The report added that while investment in sustainable energy is still mostly concentrated in the industrialized members of the Organization for Economic and Cooperative Development (OECD) – with the US and European Union together accounting for more than 70 per cent in 2006 – investment in developing countries is growing quickly.