The Green Keeps Flowing to Green
Rombel, Adam, Global Finance
Financial turmoil and an economy on the brink of recession are testing US companies' determination to reduce their environmental impact.
Growing fears about a global economic slowdown and the credit crunch wreaked havoc on global financial markets in the first quarter of 2008. Some believe it may also put the brakes on the growth of the emerging green-business field, including alternative energy, technologies to combat pollution and global warming, and green-building techniques to promote energy efficiency.
However, many researchers, advisers and investors say the green-business movement will have staying power. They point to skyrocketing oil prices fueling interest and investment in renewable energy and energy efficiency, government policymakers' urge to combat global warming, and the desire of traditional, non-green businesses to embrace the "green" trend because it makes business sense.
"High energy prices, climate change and energy security are converging as the new engine driving the development of clean energy," Daniel Yergin, chairman of Cambridge Energy Research Associates (CERA) and executive vice president of research group IHS, said in a speech addressing the 2008 National Governors Association (NGA) winter meeting in Washington, DC. CERA, based in Cambridge, Massachusetts, advises energy companies, financial institutions, technology providers and governments on energy markets, geopolitics, industry trends and strategy.
"There is a major shift in public opinion toward clean energy, which is being bolstered by the growing conviction that new carbon policies will reshape the competitive landscape of the global energy business," Yergin said. Others agree that the public sector s backing of green energy is playing a big role and will help overcome the effects of a softer economy. Frank Morris, founder of Ecologic Advisors, a New York-based investment advisory firm specializing in environmental investing, says: "Political pressure to engage global climate change is the main driver of growth in renewable energy. We see these trends continuing, even in a generally weakening economy."
Governments are aggressively subsidizing the development of renewable energy to make it more price-competitive with conventional fossil fuels. And venture capitalists, private equity firms and big non-green companies such as Citi, Dow Chemical and a number of auto manufacturers have followed by pouring big money into green technology and initiatives.
Global investment in clean-energy technologies jumped 60% in 2007 to $148.4 billion, according to a recent report by London-based energy research firm New Energy Finance. This number was revised upward from the provisional estimate New Energy Finance made in December, forecasting a 41% rise in clean-energy technology investment.
The report found growth across all the primary categories of investment. Venture capital and private equity investment in clean-energy companies jumped 34% in 2007 to $9.8 billion. Equity finance provided by public market investors more than doubled to $23.4 billion, boosted in part by the smash-hit IPO of Spain's Iberdrola Renovables. The financing of assets like wind farms and biofuel plants climbed 68% to $84.5 billion, according to New Energy Finance. Government policies around the world to promote renewable power and cleaner fuels, as well as the impact of soaring oil prices and rising corporate and investor awareness of clean-energy opportunities, fueled the investment growth, the report said.
While North America and Western Europe continued to see strong growth, investment momentum spread to include other regions, such as Eastern Europe and Australia. "Even more significant was the pick-up in activity in emerging economies, with China moving strongly ahead with projects in wind, biomass and energy efficiency, Brazil seeing huge investment interest in its sugar-based ethanol sector, and Africa starting to see renewable energy and efficiency as partial answers to its power shortages," the report stated. …