Renewable energy reached a big milestone in 2011, surging to a record $257 billion in global investments, the U.N. Environment Program announced Monday. That marks a 17 percent jump from 2010, and a six-fold increase over the past seven years. It also marks a breakthrough for the solar power industry, which drew nearly twice as much investment as wind energy last year, according to two new reports by UNEP and the Renewable Energy Policy Network for the 21st Century (REN21).
Total solar investments grew 52 percent to $147 billion in 2011, the reports reveal, ranging from an explosion of rooftop panels in Italy and Germany to big endowments for large-scale concentrated solar thermal projects in the U.S. and Spain. And while China has led the world in renewables investments for three years, it increasingly faces competition from all over the globe — especially from the United States.
Chinese renewables investments rose 17 percent to $52 billion in 2011, followed closely by America's 57 percent surge that pushed U.S. investments to $51 billion. The U.K., Spain and Italy also enjoyed investment booms, with respective growth rates of 59, 45 and 43 percent, although their totals remain relatively small. The most extreme change came in India, whose 62 percent rise to $12 billion represents "the fastest investment expansion of any large renewables market in the world," UNEP reports.
This is mostly good news for the renewables industry, particularly solar, but the UNEP and REN21 reports have some dark spots, too. While $257 billion is a new record for global investments in renewables, the 17 percent increase is down substantially from the 37 percent growth recorded in 2010. Some countries also saw their renewables investments decline, including Germany (-12 percent) and much of the Middle East and Africa (-18 percent). "Policy uncertainty created by the Arab Spring delayed some projects," UNEP notes, "but a number of important initiatives did still progress."
There were also economic setbacks, even in countries like the U.S. and U.K. that saw overall growth in their investments. Austerity measures and falling prices led some governments to cut subsidies and tax breaks for renewable energy, helping trigger a series of company failures and factory closures, including five major solar firms in the U.S. and Germany. One of the highest-profile of these collapses was California-based Solyndra, which had received $535 million in federal aid but still succumbed to price reductions courtesy of China's prolific solar-panel production.
But according to Udo Steffens, president of the Frankfurt School of Finance & Management and a collaborator on the two reports, such failures are merely the growing pains of a maturing industry. "Renewables are starting to have a very consequential impact on energy supply, but we're also witnessing many classic symptoms of rapid sectoral growth — big successes, painful bankruptcies, international trade disputes and more," Steffens says in a statement. "This is an important moment for strategic policymaking as winners in the new economy form and solidify."
There is also a precedent for this kind of halting progress, adds Michael Liebreich, CEO of Bloomberg New Energy Finance. "In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut," he says. "[W]riting off the auto industry based on the failures of weaker firms would have been foolish. Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates."
World leaders will be looking for ways to speed up this growth at next week's Rio+20 Earth Summit in Brazil, and UNEP executive director Achim Steiner says they should resist the temptation to curb assistance for the up-and-coming renewables sector too quickly. "It is essential to continue government policies that support and nurture the sector's growth, and to de-escalate damaging trade disputes," he says. "Otherwise, the low-carbon transition could weaken just at the point when exciting cost reductions are starting to transform the economics."
Here are a few more highlights from the UNEP and REN21 reports:
- Renewable sources have grown to supply 16.7 percent of global energy consumption. Of that, the share from traditional biomass has declined slightly while the share from modern renewable technologies has risen.
- Renewable power, excluding large hydroelectric, accounted for 44 percent of all new generating capacity added worldwide in 2011 (up from 34 percent in 2010).
- Gross investment in fossil-fuel capacity in 2011 was $302 billion, compared to $237 billion for that in renewable energy capacity excluding large hydro.
- In the power sector, renewables accounted for almost half of the estimated 208 gigawatts of electric capacity added globally during 2011.
- At least 118 countries, more than half of which are developing countries, had renewable energy targets in place by early 2012, up from 96 one year before.
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