Energy investments surge
Monday, 21 July 2008 12:00pm
Regardless of the finer debating points on what the ideal emission trading system should look like, investors are already flocking to alternative energy.
New investment into the sector jumped US$148 billion in 2007, up 60 per cent over 2006, noted a report by the Sustainable Energy Finance Initiative (SEFI).
Wind energy attracted one-third of the new capital and solar one-fifth. But interest in solar is growing rapidly on the back of major technological advances which saw solar investment increase 254 per cent.
Countries attracting this investment are Europe and the US. But China, India and Brazil are getting more involved as their share of new projects rose from 12 to 22 per cent.
The interest in energy investment is reinforced by sustainable energy companies accounting for one-fifth of IPOs, noted SEFI. The Indian stock market raised US$1.4 billion in 2007.
A below the radar development in the debate about alternative energy is energy efficiency technology. Countries are finding that as important as new alternative energy sources are, they are yet to create enough baseloadable capacity to allow governments to shutdown coal burning power stations, and this is driving interest in how to use less power in addition to how to create more.
According to the International Energy Agency (IEA), each $1 invested in energy efficiency avoids more than $2 being needed to create new supply.
The growth in alternative energy investment saw a record 17 clean energy public equity funds launched in 2007, including those from HSBC, F&C, Schroders, Deutsche Asset Management and Virgin Money.
The IEA predicts US$20 trillion will be invested into alternative energy projects over the next 22 years.
Alex Dunnin
