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Clean energy hit record investment last year: BNEF report

Date
14 January 2016
Clean energy hit record investment last year: BNEF report

LONDON: Global clean investment attracted a record US$329 billion last year – about six times the amount invested in 2004 – a new report released today by Bloomberg New Energy Finance shows.

The news comes just weeks after the historic Paris Agreement at COP21, where the world reached a fundamental deal on long-term climate goals. Investment in clean energy is a crucial way to keep the global warming increase below 1.5 degrees Celsius from pre-industrial era levels and today’s report adds momentum to the optimism this goal can be achieved.

“COP21 was undoubtedly a watershed moment for mankind, which will enable us to unleash the trillions of investment that will spearhead a low carbon economy,” says Mark Kenber, CEO, The Climate Group. “What’s clear today is that the world has changed: the low carbon economy is now inevitable, irresistible and irreversible.”

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Image: New investment in clean energy 2004-2015, in US$ billion. From the “Clean Energy Investment: Q4 2015 Factpack”, courtesy of Bloomberg New Energy Finance

According to BNEF’s latest figures, in 2012 and 2013, global clean investment decreased to US$272 billion after the previous record of US$318 billion in 2011. Investment then surged from US$316 billion in 2014 to US$329 billion last year, demonstrating the potential of this sector in curbing climate change.

The record number is even more important in light of the continuous, further decline of solar photovoltaics costs, which means that more capacity could be installed for the same price. Furthermore, BNEF’s research uses as a benchmark the US dollar, which has gained strength over the last year. Therefore, impact on the research of investments conducted in different currencies was reduced – especially the Euro, which once led the charge in this sector.

The result is also significant owing to plunging fossil fuel prices: Brent crude dropped by 67% over the last 18 months – from US$112.36 to US$37.28 per barrel – with steam coal and natural gas following the same pattern.

China leads, Europe lags

China continues to lead in clean energy investment, having invested more than US$110 billion in last year. The country “is on the right track to achieve a low carbon future,” comments Changhua Wu, Greater China Director, The Climate Group.

“In 2015, the final year of the 12th Five-Year Plan, China has brought forward ambitious energy and carbon intensity targets, an aggressive development of renewable energy and overachieved its goal of increasing forest stock. Moreover, the country’s Intended Nationally Determined Contribution commits to cap China’s emissions no later than 2030.”

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Image: China’s new investment in clean energy 2004-2015, in US$ billion. From the “Clean Energy Investment: Q4 2015 Factpack”, courtesy of Bloomberg New Energy Finance

The US follows China with US$56 billion invested (an 8% increase compared to the previous year), driven by solar and wind investments. However, the once-leading European continent continued its decline with a total of US$58.5 billion – 18% less than 2014 and its weakest figure since 2006. The UK countered this figure, with investment rising 24% to US$23.4 billion, while Germany dropped 42% to US£10.6 billion, following uncertainty of its clean technology policies.

India rose 23% compared to 2014, reaching US$10.9 billion – a significant number, but still far from what is needed in the country to implement Prime Minister Modi’s vision of powering the entire country with clean energy, particularly solar.

Other countries that performed well were Mexico with US$4.2 billion (an increase of 114%) and South Africa with US$4.5 billion (up 329%). Africa and Middle East are the two regions with the biggest potential, analysts say, while Latin America continues to demonstrate its growth by investing a total of US$17.5 billion.

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Image: Europe’s new investment in clean energy 2004-2015, in US$ billion. From the “Clean Energy Investment: Q4 2015 Factpack”, courtesy of Bloomberg New Energy Finance

Appetite for renewables

Investment was largely driven by fast-growing implementation of wind and solar projects around the world, especially rooftop and other small-scale projects; spending in this particular sector grew to US$67.4 in 2015, with Japan by far the biggest market.

This boom made 2015 a record-breaking year for installation of renewable power capacity, with 64 gigawatts (GW) of wind and 57 GW of solar photovoltaic commissioned during the year – an increase of nearly 30% over the previous year.

The data shows the massive commercial appetite for renewables around the world – as The Climate Group’s campaign RE100, a global initiative supporting major companies committing to 100% renewable power, also clearly demonstrates. “Many companies are switching to renewable power at a remarkable rate, and encouraging their suppliers and customers to do the same,” says Emily Farnworth, RE100 campaign director at The Climate Group.

“Our analysis of the private sector’s electricity consumption and carbon emissions indicated that a switch to power from renewable sources could cut global CO2 by nearly 15%. By acting together, the world’s leading companies are creating a thriving renewable energy market that will help keep a global temperature rise below 2 degrees Celsius.”

The Bloomberg report also indicates how there is huge market and investment opportunities in developing countries. The Climate Group’s project Bijli – Clean Energy for All has been pioneering such opportunities in India in particular. Starting in three Indian states more than two years ago, Bijli proved that it is possible and economically profitable, to roll out off-grid clean energy in rural communities.

However, to avoid the worst effects of climate change and unleash the trillions of dollars available in the global low carbon economy, governments must implement what they promised in Paris – and go even further. “The Climate Group will now be working to hold governments to account in implementing that historic deal,” concludes Mark Kenber, “and also working with the non-state actors – businesses and sub-national governments – who will be critical to transforming the global economy on a low carbon path and rapidly bending the emissions curve downwards.”

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