China Leads G-20 Members in Clean Energy

Last year, China invested $34.6 billion in the clean energy economy (wind power, photovoltaic, electric vehicles) — nearly double the United States’ total of $18.6 billion. Over the last five years, the United States also trailed five G-20 members (Turkey, Brazil, China, the United Kingdom, and Italy) in the rate of clean energy investment growth.

In the Who’s Winning the Clean Energy Race? Growth, Competition and Opportunity in the World’s Largest Economies, Pew examines key financial, investment and technological trends related to G-20 members and the clean energy economy. The report tracks and measures global investment activity — ranging from venture capital, initial public offerings from companies seeking to expand, mergers and acquisitions and lending for large-scale projects — in this sector. Pew found that the global clean energy economy has experienced remarkable growth:

* Globally, clean energy investments have increased 230 percent since 2005.
* Investment by nearly all G-20 members grew by more than 50 percent over the past five years.
* Despite a worldwide recession, global clean energy investments reached $162 billion in 2009.
* G-20 members accounted for more than 90 percent of worldwide clean energy finance and investment.
* More than 250 gigawatts of renewable energy generating capacity have been installed around the world, producing six percent of global energy.
* Global clean energy investments are projected to reach $200 billion in 2010.

"Even in the midst of a global recession, the clean energy market has experienced impressive growth," said Phyllis Cuttino, who directs the Pew Environment Group’s Global Warming Campaign. "Countries are jockeying for leadership. They know that investing in clean energy can renew manufacturing bases, and create export opportunities, jobs and businesses."

"The facts speak for themselves," said Bloomberg New Energy Finance Chief Executive Michael Liebreich. "2009 clean energy investment in China totaled $34.6 billion, while in the United States it totaled $18.6 billion. China is now clearly the world leader in wind energy and solar power attracting new capital and making new investments in this area."

Countries with strong nationwide policy frameworks, including renewable energy standards, carbon markets, priority loans for renewable energy projects and mandated clean energy targets, such as China, Brazil, Spain, United Kingdom and Germany, have the most robust clean energy sectors as a percentage of their economies. Countries without such policy frameworks including the United States, Japan, and Australia lag behind.

The U.S. still leads the world in installed renewable energy, with 52.2 gigawatts of wind energy, small hydroelectric, biomass and waste generating capacity, the Pew report said.

But China is quickly closing the gap, as a doubling in wind power capacity alone boosted its own installed renewable energy capacity to 49.7 gigawatts in 2009. Germany trails with 30.9 gigawatts.

It said much of the impact from $184 billion in stimulus spending earmarked for clean energy by governments of the Group of 20 industrial nations is yet to come. Of that amount, China is due to spend nearly $47 billion on improved energy efficiency, clean vehicles, installation of solar power and improvements to its overtaxed electricity grid.

U.S. spending on renewable energy fell 42 percent in 2009 from the year before, constrained by tight credit and the lack of a strong policy framework. But it is likely to rise faster this year, helped by the enactment in 2009 of production tax credits for wind energy and investment tax credits for solar power.

The report noted that the U.S. still dominates venture financing and technology innovation for clean energy, but in manufacturing it lags behind China, which has become a powerhouse in production of both solar cells and wind turbines. With climate change legislation stalled in the U.S. Congress, the outlook for faster growth remains uncertain.

China has adopted national targets for renewable power including mandates for 30 gigawatts each from wind and biomass energy by 2020. It also has a fixed feed-in tariff for wind farms, which guarantees a minimum price for electricity from the source that’s higher than that from traditional power sources like fossil fuels.

Many US states have renewable portfolio standards mandating utilities to generate minimum levels of power from clean sources. But amid delays in climate legislation Washington has not developed a national standard. The United States lacks feed-in tariffs for clean energy.

US Senators John Kerry, a Democrat, Lindsey Graham, a Republican, and Joseph Lieberman, an independent, hope to release an outline of a compromise climate bill next month. Sources have said the plan would impose cap-and-trade on power plants and refineries in 2012 and on manufacturers by 2016. But it could face opposition from lawmakers from fossil fuel-rich states.

In terms of clean energy investment relative to the size of its overall economy, China ranks third in the G-20 at 0.39 percent, well behind Spain, which leads at 0.74 percent. The U.S., at 0.13 percent, was 11th, the report said.

"The United States’ competitive position is at risk in the emerging clean energy economy," said Cuttino. "Our nation has a critical choice to make: pass the federal policies necessary to position us as the world leader in the large and growing global clean energy market or continue to watch as China and other countries race ahead."

The United States’ clean energy finance and investments lagged behind 10 G-20 members in percentage of gross domestic product. For instance, in relative terms, Spain invested five times more than the United States last year, and China and the United Kingdom three times more.

The United States did lead G-20 members in venture capital and private equity investments associated with technology innovation. However, it trailed in 2009 asset financing, with only $11.2 billion, while China led with $29.8 billion. Asset financing serves as a key barometer of clean energy deployment, job creation and business growth.

Pew published Who’s Winning the Clean Energy Race? to highlight how G-20 members are participating and where they rank in the clean energy economy. The data have been compiled and reviewed by Pew’s research partner, Bloomberg New Energy Finance, the world’s leading independent provider of news, data, research and analysis to decision-makers in renewable energy, carbon markets, energy smart technologies, and carbon capture and storage. The report’s primary focus is on investment as it is the fuel that propels the innovation, commercialization, manufacturing and installation of clean energy technologies.