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Climate Change : Opportunities in Renewable Energy
The Science
International Policy
Implications for energy
Opportunities in Renewable Energy
Carbon Finance and CDM.
Introduction
Renewable energy (RE) is energy derived from resources that are sustainable as
opposed to traditional energy supplied by fossil fuels. Greenhouse gases (GHGs)
and other pollutants commonly found in fossil fuel combustion are mitigated,
if not eradicated in RE. Conventionally, the RE domain includes the utilization
of wind, water, and solar energy to produce electricity for commercial usage.
Recently, innovative solutions utilizing energy sources such as biomass, biogas,
biofuels, and synthetic fuel are emerging into the market. Pressing issues
such as major threats of climate change, exhaustion of fossil fuels, and sustainability
risks are influencing policy makers to promote mass RE productions through
tax incentives and subsidies. With policies and support mechanisms in place
to promote the sector, we see investment opportunities continuing to trend
upwards.
Opportunities
According to recent statistics (UNEP Finance
Initiative), the global clean energy industry is currently
growing at a CAGR of 25%, with developing countries (i.e. Asian
Nations) experiencing stronger growth than the rest. In 2005, worldwide
investment in clean energy was $48.9 billion per annum, constituting
nearly 10% of international investment in the energy industry.
The total for 2006 expects to be in excess of $70 billion. Going
forward, recent estimates suggest that clean energy investments
will hit $100 billion annually by 2010, which is close to 20% of
total energy investment world-wide.
Renewable energy sources supplied 14% of global energy use in
2001 (World Energy Assessment 2001).
In the latest World Energy assessment report (World
Energy Assessment 2004), the RE proportion increased to
27.5% of energy use. We expect the trend to stay, and see much
investment potential in the future, especially in Asia where heavy
industrialization is a main concern. According to same assessment,
the technical potential of renewable energy sources is more than
18 times current global primary energy use and furthermore several
times higher than projected energy use in 2100. Renewable technologies
such as geothermal and hydropower are often economically competitive
without subsidies. Other technologies such as solar power are substantially
more expensive, although future costs may decline to a fraction
of current levels.
Clean Energy Technologies
Sector Opportunities:
In view of the increasing focus on the RE sector, an increasing capital inflow
trend has been observed lately. New Energy Finance has estimated deal volume
in 2006 to be US$100 billion, with a 40% increase year-on-year for new investments.
Sources of these investments are made up of private equity, public markets,
equity funds under management, carbon funds, and asset-based financing. According
to Green Edge research, biofuels investments are expected to grow from $15.7
billion annually in 2005 to $52.5 billion per annum by 2015. Similarly, expenditures
on wind power will expand from $11.8 billion a year in 2005 to $48.5 billion
in 2015. Solar photovoltaics investment growth is expected to hit $51.1 billion
by 2015 from $11.2 billion in 2005. The fuel cell and distributed hydrogen
market is estimated to increase from $1.2 billion in 2005 to $15.1 billion
by 2015.
Reference
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