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Bloomberg predicts renewable energy boom

Mar 19, 2010 - Cath Everett - BusinessGreen - Bloomberg.com

But warns investment levels must rise faster still if we are to avoid the worst effects of climate change

Although annual global expenditure on renewable energy projects is expected to jump from $90bn (£59bn) last year to $150bn by 2020, it will need to increase by up to a third more if the world is to avoid dangerous levels of climate change.

That is the conclusion of new research released this week by Bloomberg New Energy Finance, an analyst firm specialising in renewable energy and carbon markets, which warned yearly investment in renewable power sources must rise to $230bn by the end of the decade if governments are to meet their goal of ensuring global greenhouse gas emissions peak.

Procurement must likewise more than double to $500 billion by 2030 in order to ensure that the average carbon emissions per head is only two tons by 2050. But such figures compare unfavourably with current expenditure projections of $200 billion in 20 years' time based on current policy targets.

The report estimates that based on current trends renewable energy will constitute 22 per cent of the world's installed power generation capacity by 2020, up from 13 per cent today, and will then grow to account for 31 per cent of the energy mix by 2030. But again Bloomberg's New Energy Finance Global Energy and Emissions Model forecasts that renewable energy will need to account for more like 40 per cent of installed capacity by 2030 to keep in line with the scale of emission reductions that climate scientists believe will be required.

Guy Turner, director of carbon market research at the firm, said that despite falling short of the scale of emission cuts that are required, the projections indicate the sector will enjoy rapid growth over the next two decades. "These findings confirm that, in spite of ongoing economic malaise, investment in renewable energy should continue to grow, driven heavily by existing government targets," he said.

He added that the required level of investment could yet be achieved if the cost of carbon around the world is progressively increased to $100 per ton by 2030.

The firm also pointed out that clean tech investment trends had remained relatively unchanged over the past five years, with expenditure growing on average more than three-fold between 2004 and 2007, before peaking in 2008. Last year, however, investment fell modestly as a result of the recession.

Michael Liebreich, Bloomberg New Energy Finance's chief executive, said: " The 6.6 per cent dip in clean energy investment between 2008 and 2009 shows the effect of the credit crunch on the availability of debt for projects and the impact of the stock market downturn on IPOs [initial public offerings]."

The situation would have been more marked but for heavy investment in the sector by China and an increase in project financing in Europe and the Americas during the second half of the year as a result of stimulus funding, he added.