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Climate Change : Implications for energyThe Science The demographics and economic growth of a country drives energy demand. The more advanced economies with higher standards of living will have a relatively high level of energy use per capita. China is a good example of a driving force in both conventional energy demand and clean energy solutions. They are currently leading the world energy demand growth as a result of strong economic growth and with it’s immerse renewable energy resources, China’s potential in renewable energy is second to none. China acknowledges its position in this sector and is aiming to change its global image to an environmental leader and leading investor in renewable energy, but not at the cost of economic growth. There are a large number of initiatives to access the impacts of climate change. The Carbon Disclosure Project is a voluntary energy policy watchdog aiming at creating a lasting relationship between shareholders and corporations regarding the implications for shareholder value and commercial operations presented by climate change. It is also the largest registry of corporate greenhouse gas emissions in the world with reliable data so eventually a common emissions measurement methodology can be developed. Other mandatory energy polices such as energy portfolio standards, special tariffs, public benefit programs and tax mechanisms legislated by national governments, aims to increase the uptake of renewable energy technologies and application of energy efficiency measures. These supportive frameworks and legislation have proven to have a substantial impact on uptake of renewable energy. For example, Germany legal framework is one of the most important factors contributing to their success in renewables market. They are number one ranking in photovoltaics, wind energy and biodiesel. (Refer to the table below)
The estimated worldwide renewable power capacity was 182GW, with China and India accounting for 79 GW, EU 63 GW and US 23 GW. Germany and Spain are the largest countries by percentage of installed capacity of 17.8% and 15.8% respectively. With the regions setting targets of 10-20% of installed capacity by 2020, there are many opportunities for investment in renewable energy projects. The strong growth in venture capital investments in energy technologies has tripled from $917 million in 2005 to $2.4 billion in 2006, according to research by Clean Energy Trends (2007). This shows that investors are driven by high oil prices and the growing concern over climate change, leading them pouring over $2.4 billion into energy tech startups in 2006, an increase of 92% on the first half of 2005. This tremendous output was partly from the work of venture capital firms and hedge funds looking to put capital to work in the emerging private-equity sector, finding ways to apply their skill sets and knowledge to energy-tech deals in solar and batteries. The total transactions undertook by the venture capital and private equity industry was $7.2bn in 2005 in the clean energy sector. It is expecting to see a total of $100bn of deals between now and 2012.
2006 was also the year that marked the growth of cleantech due to the rising global awareness with politicians, business leaders and investors (helped greatly by the film Inconvenient Truth and Al Gore), starting to make climate change the main topic to focus on, thus accelerating the growth and potential in the private equity market. Website
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