Financial woes grip the world. The American economy continues to sag, Europe teeters on the brink of collapse, and even the Chinese economy is starting to worry.
In many countries, funds are being redirected towards shoring up existing industries and practices, threatening sustainable development in poor and rich countries alike.
Renewable energy investment is bucking the trend, according to global investment analysts Preqin, but funds are continuing to leave North America despite a report at the beginning of the year that the US had overtaken China.
The figures confirm Pew Environment’s Who’s Winning The Clean Energy Race 2011 report, which states:
The United States reclaimed the top spot in the worldwide clean energy race in 2011. Because of policy uncertainty, however, its leadership is likely to be short-lived after a variety of American clean energy programs expired at the end of 2011.
Preqin tracks over 200 North American and European infrastructure funds, of which nearly half are actively seeking renewable energy investment. This year, these funds are targeting over $16 billion at renewable energy investment, nearly 20% of all infrastructure capital they’re looking to raise.
However, these figures hide a drain on renewable energy investment away from North America, with only 29% of the clean energy funds headquartered here and only 19% of the funds invested here.
Conversely, nearly half the funds investing in renewable energy are headquartered in Europe and 50% are seeking opportunities in Asia and the rest of the world. In general, European infrastructure funds are 10% more likely to invest in renewable energy than North American ones.
One of the big winners from this has been the UK, which has seen capital investments there grow from $260 million for the whole of 2011 to $430 million in the first eight months of 2012, poaching investment from the rest of Europe and overtaking Germany as the largest home for infrastructure funds on the continent.
Commenting on the US clean energy investment dropping behind Germany and China in 2010, Phyllis Cuttino from the Pew Clean Energy Program said a major reason was “our clean energy policies are not as clear, consistent, or ambitious as those of other nations.”
This is echoed by Ian McCarlie, energy specialist at lawyers Pinsent Masons, who reacted to the Preqin figures by saying: “Increased regulatory uncertainty and market reform could easily deter investors who will deploy their capital to other markets…. We need to remember that this is a global competition… investors also have the option to look at projects with significant scale in Asia Pacific, Africa and the Middle East.”
Quite how clean energy investment will shake out in the US after the election is almost anyone’s guess. The total amounts invested are rising at a healthy rate worldwide but the more this country appears to rely on fossil fuels, the more severe this drain of finance to more ambitious countries is likely to become.
Image Credit: Chonburi International Art Exhibition – Sal Randolph – Free Money by Marshall Astor – Food Fetishist, tweaked by Chris Milton (some rights reserved).
Chris is a seasoned sustainability journalist focusing on business, finance and clean technology. His writing's been carried by a number of highly respected publishers, including The Guardian, The Washington Post and Scientific American. You can follow him on twitter as @britesprite, where he's one of Mashable's top green tweeters and Fast Company's CSR thought leaders. Alternatively you can follow him to the shops... but that would be boring.