Increasing energy demand and strong clean and renewable energy policies will drive investment to Asia, led by China and India. However, by adopting such policies, every G-20 member has the opportunity to attract more private investment in clean and renewable power projects and compete more effectively for business in this emerging global industry, Pew says.
The study, Global Clean Power: A $2.3 Trillion Opportunity, examines projected private investment in wind, solar, biomass/energy from waste, small hydro, geothermal and marine energy projects.
The report models three policy scenarios to determine future growth through 2020:
- Business-as-usual: no change from current policies;
- Copenhagen: policies to implement the pledges made at the 2009 international climate negotiations in Copenhagen; and
- Enhanced clean energy: maximized policies designed to stimulate increased investment and capacity additions.
“The message of this report is clear: countries that want to maximise private investments, spur job creation, invigorate manufacturing and seize export opportunities should strengthen their clean energy policies,” says Phyllis Cuttino, Director of the Pew Climate and Energy programme.
The report finds that the clean and renewable energy sector continues to be an immense economic opportunity. G-20 members have the potential to gain an additional US$546 billion in clean and renewable power project investments over the next decade compared to Business-as-usual.
Under the Enhanced clean energy scenario, the projected US$2.3trn investment in clean and renewable power projects would be equivalent to adding the entire GDP of the UK to the global economy. Over that same time span, total renewable energy capacity additions in the G-20 are projected to reach 1180 GW, almost four times the amount of renewable energy capacity that exists today.
In the G-20, total attracted clean power project investment is projected to be:
- Business-as-usual: US$1.7trn by 2020
- Copenhagen: US$1.8trn by 2020
- Enhanced clean energy: US$2.3trn by 2020
Asia top destination
Asia became the top regional destination for clean and renewable power finance this year – with China and India leading the way due to strong clean and renewable energy policies.
By 2020, China, India, Japan and South Korea will account for approximately 40% of global clean and renewable power project investments.
“Strong and consistent policies in Asia have helped double private investment over the past two years. Asia is now the leading region for clean energy investment, and its lead is set to extend in the near future unless Europe and the US make a step change in their support for the sector,” says Michael Liebreich, CEO of Bloomberg New Energy Finance.
Under all three scenarios, China maintains its global leadership position and has the potential to attract cumulative clean and renewable energy asset investments of US$620bn over the next decade.
Due to its clean and renewable energy policies, India rockets up to third place by 2020 under all scenarios after being ranked 10th in 2009. India could realize a 763% increase in investment under the enhanced scenario, the largest of all G-20 members.
Germany and UK lead in Europe
Europe was an early leader in the global clean and renewable energy economy thanks to strong clean energy policies and targets.
The report finds investment in clean and renewable power projects in the European Union could total US$705bn over the next decade under the Enhanced clean energy scenario. The UK and Germany, traditional renewable energy powers in Europe, rank in the top five globally of attracted clean and renewable power project investments under all three scenarios.
US – the most to gain
The report also finds that the United States is among those countries with the most to gain from passing strong clean and renewable energy policies.
For example, the US has the potential to attract US$342bn in clean and renewable power project investments over the next 10 years under the Enhanced clean energy scenario.
That would represent an additional US$97bn compared to attracted investment under Business-as-usual, a 40% increase in investment. Only India and the UK have the potential to increase investments at a higher rate.