China replaces UK for green investors

By Michael Stothard
Published: August 19 2008 01:01

China has displaced the UK in rankings of the most attractive destinations for renewable energy investment, according to Ernst & Young, the professional services firm.
The UK dropped from fourth to sixth place in E&Y’s index, swapping places with China.

A combination of outstanding growth rates in the Chinese wind power industry and setbacks for the UK’s proposed renewables strategy were behind the switch, E&Y said.
Britain’s energy bill is still bogged down in parliament, adding to uncertainty over the future for renewables. Germany, meanwhile, has forged ahead with implementing attractive tariffs to support its renewable energy industry, making it second in the rankings behind the US.
“A further consultation period over the [energy] bill could lead to up to two years of relative inactivity,” said Jonathan Johns, the head of renewable energy at E&Y, whose annual review of renewable energy investment ranks countries according to the development of markets and infrastructure.
However, Gordon Edge, director of economics and markets at the British Wind Energy Association, said the report was unfair on the UK: “I think this report says more about China than it does about the UK.”
The improvement in China’s score is partly down to the country’s renewable energy policy, which aims to generate 15 per cent of energy from non-carbon sources by 2020. The government’s focus on infrastructure had made China especially attractive for investors, Mr Edge said.
China has galloped ahead of predictions by the International Energy Agency that it would be producing 5GW of wind power by 2010, reaching the target three years earlier. E&Y expects that the country’s target of 30GW by 2020 will also be exceeded.
The US maintained its position as the most attractive destination for renewable energy investment, despite uncertainty over Washington’s extension of tax credits for renewables.
Despite general agreement that they will be renewed, there is concern over a requirement that energy measures as a whole should be budget-neutral. There is also speculation that tax credits for wind will only be renewed for one year.
The E&Y report also highlights the mixed effects of high oil prices.
Rising energy costs are putting pressure on governments to consider renewables. E&Y estimates that a rise in household energy bills by 20 per cent would see Britain meet its target of sourcing 15 per cent of its energy from renewables by 2020.
Copyright The Financial Times Limited 2008