Crunch time for clean energy

The recession has cut low-carbon funding and piled pressure on Copenhagen

Mark Newham

International plans to combat global warming by switching to low-carbon energy technology have been handicapped by the world financial crisis, according to new figures seen by The Sunday Times.
The data will be worrying for world leaders who tomorrow begin nearly two weeks of talks in Copenhagen to hammer out a new global agreement to cut carbon emissions.
According to New Energy Finance (NEF), the research firm, funding for clean energy schemes this year will fall to $125 billion (£75 billion), down nearly a fifth from last year. The drop ends seven years of growth in which global low-carbon funding soared from $22 billion in 2002 to $155 billion last year. The decrease would have been even greater had the world’s governments not stepped in to support the sector with billions in economic stimulus cash.
The fall creates a worrying scenario. In a report to the United Nations, NEF said that $500 billion a year needs to be invested in clean energy schemes by 2020, rising to some $590 billion annually by 2030, if carbon dioxide output is to be capped at 450 parts per million. Scientists say that if atmospheric carbon exceeds this level, there will be catastrophic environmental consequences.
The low-carbon sector was doing well until the credit crunch struck in 2007. Up to that point investment in green companies and projects was growing at an annual average of 60%. The reversal of fortunes underlines the need for political leaders to produce a new global warming treaty to succeed the Kyoto protocol after it expires in 2012.
The two biggest polluters, America and China, did not sign up to the Kyoto protocol. This time they have made a public commitment to set binding pollution reduction targets and claim to support carbon cap and trade schemes.
However, a definitive deal is not expected at Copenhagen and businesses fear that the policy vacuum could weaken the sector. Recent claims that the director of the influential Climatic Research Unit at the University of East Anglia may have manipulated data have further damaged sentiment.
Public money is already playing a significant role in propping up the sector. The International Energy Agency said: “Without the stimulus provided by government fiscal packages, renewable [energy] investment would have fallen [from the 2008 level] by almost 30%.”
In the short term, more government cash will be needed.
A survey by the UK’s Renewable Energy Association found that more than 75% of its members were having difficulty getting loans and new equity, putting projects and green-energy jobs at risk.
Venture capital and private equity firms are sitting on hundreds of billions they raised in the boom years but have been slow to invest it while the overall state of the economy remains shaky. Tom Murley, chairman of the British Venture Capital Association’s energy, environment and technology group, said the group’s 10 member firms had a combined pot of £10 billion to spend.
The lack of money in the rest of the market means they have the pick of the deals. “The world’s governments are beginning to show sincere commitment towards ensuring a low-carbon, energy-secure future,” he said. “We remain bullish.”
On a global scale, however, the industry has taken a step back and is farther from NEF’s goal of $500 billion in annual investment than it was a year ago.
Green Idea: Car skin generates its own electricity
A professor has come up with a way for cars to generate electricity from the wind. Yiannis Andreopoulos at City College of New York has invented a polymer device that he said can be embedded in the body of a car or plane and will generate a current from turbulence in the air. A car could, in theory, be covered in the paper-thin material. The device will have to get better, however. The first one-inch by one-inch model generated a mere 40 volts.