By L&W Energy Attorneys
Both China and Germany have now surpassed the United States in attracting clean energy financing and investments, according to a report – Who’s Winning the Clean Energy Race? 2010 Edition – issued on March 29, 2011 by The Pew Charitable Trusts in collaboration with Bloomberg New Energy Finance. In 2010, China’s clean energy sector received a record-setting $54.4 billion, an increase of 39 percent over 2009. Germany, for the first time, attracted greater investments than the United States with $41.2 billion compared to the United States’ $34 billion. The United States held the top spot in clean energy investment until 2009, when China took the lead for the first time. More information on clean energy investment trends and developments in 2010 is detailed in a separate Bloomberg New Energy Finance report prepared in collaboration with the World Economic Forum – Green Energy Investing 2011: Reducing the Cost of Financing – published on March 31, 2011.
The March 29 report found that the clean energy sector grew by 30 percent in 2010 globally to capture $243 billion in financing and investments. While these numbers present global data, the report focuses on the G-20 countries, which received 90 percent of all clean energy investments.
Despite a 51 percent increase in clean energy investments in 2010 (driven in large part by government stimulus programs), the United States continues to lose ground in the clean energy race. Perhaps most telling is the United States’ ninth place finish amongst G-20 countries for clean energy investment as a percentage of GDP. The report cites “a lack of clarity on the direction of energy policy” and “uncertainty surrounding the continuation of key financial incentives (e.g., production and investment tax credits)” among other reasons as reasons for clean energy capital investments going abroad. In contrast, the report presents feed-in tariffs and clean energy targets, two policies that both China and Germany have implemented, as mechanisms that successfully attracted investments in 2010. Germany in particular has utilized feed-in tariffs to spur investments in small-scale rooftop solar projects, which accounted for 83 percent of its total investments. Meanwhile, China’s aggressive clean energy targets and manufacturing dominance helped it maintain its lead.
Other trends noted by the March 29 report include the resurgence of venture capital in the clean energy sector and growth in government stimulus funding. Venture capital increased by 26 percent to reach $8.1 billion, of which the United States attracted a world-leading $6 billion. By the end of 2010, a dozen G-20 members had spent $98.4 billion of the $194 billion in stimulus funding committed to clean energy programs in response to the 2008-2009 financial crisis. The report estimates that governments will spend an additional $69 billion in 2011, with the remainder to be spent in 2012 and 2013.