For the first time ever, green energy surpassed fossil fuels in attracting investment for power generation, according to figures released today by the United Nations.

Clean technologies such as wind, solar attracted more than $140 billion compared with $110 billion for gas and coal for electrical power generation. More than a third of the investment was for Britain and the rest of Europe.

Perhaps the biggest surprise is that the biggest renewable investment came from China, India and other developing countries. These countries are catching up quickly to the West in switching out of fossil fuels to improve energy security and tackle climate change.

“There have been many milestones reached in recent years, but this report suggests renewable energy has now reached a tipping point where it is as important - if not more important - in the global energy mix than fossil fuels,” said Achim Steiner, executive director of the UN’s Environment Programm.

It was very encouraging that a variety of new renewable sectors were attracting capital, while different geographical areas such as Kenya and Angola were entering the field, he added.

The UN still believes $750 billion is needed to be spent globally in the next two years (2009-2011) but the global economic crisis has caused a dip of over 45% of the expected renewables investment in 2009.

Counting energy efficiency and other measures, more than $155 billion of new money was invested in clean energy companies and projects in 2008 despite the lack of capital raised in public offering and a more than 50% drop in green energy companies stock prices, according to the Global Trends in Sustainable Energy report, drawn up for the UN by the New Energy Finance (NEF) consultancy in London.

Wind energy attracted the most investment with %51.8 billion representing annual growth of 1%. Solar enegy investment followed at $33.5 billion with an annual growth of almost %50%.

Biofuels were the next most popular investment, with $16.9 billion, but down 9% on 2007 as the sector was hit by overcapacity issues in the US and political opposition, with ethanol being blamed for rising food prices.

Europe is still the main recipient for investment in green power with $50 billion, while the figure for America was $30 billion, down 8%.

While green investment spending has dipped nearly 2% in the West, there was as a 27% rise to $36.6 billion in developing countries led by China, mostly in wind and biomass plants.

The global economic recession is seen as the culprit for a slump in global renewable investment during the first quarter of 2009. This has alarmed the UN and the New Energy Finance consultancy.

There are signs that green investment has improved recently in 2009. More than $3 billion has been raised via initial public offerings or secondary issues on the stock markets in the second quarter, compared with none in the first three months of this year.

Many believe that politicians need to do more to stimulate growth.

“There is a strong case for further measures, such as requiring state-supported banks to raise lending to the ­sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for Green Bonds and so on, all targeted at getting investment flowing,” said Michael Liebreich, chief executive of NEF.

It is important stimulus funds start flowing immediately, not in a year or so, he added: “Many of the policies to achieve growth over the medium-term are already in place, including feed-in tariff regimes, mandatory renewable energy targets and tax incentives. There is too much emphasis amongst some policy-makers on support mechanisms, and not enough on the urgent needs of investors right now.”

Based on the U.N. report it appears that Barack Obama and the U.S. are trailing Europe, China and India in receiving green energy investment.

source: guardian.co.uk

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