Who’s wining the clean technology race?

The world’s low carbon energy market is expected to treble in a decade, and analysts say major economies including Japan, the United States and China will be jostling for a slice of the market likely to be worth $2.2 trillion by 2020.

Mounting pressure on land, water and energy as a result of growth in emerging economies and world population will add momentum towards a more efficient global economy .

Annualised capital investment in a low carbon market would grow from $460 billion in 2010 to $1.5 trillion in 2020, with the biggest market expansion expected in Asia.

By region, the low carbon energy market will grow fastest in China, which will leap-frog the United States but still trail the European Union, which has set itself tough renewable energy, emissions and efficiency targets by 2020.

The European Union has an early lead in the market, although other economies are catching up fast. China and the United States led the world in new clean energy and infrastructure investment in 2009, at $34.6 billion and $18 billion respectively.

Together, they accounted for the top five clean-tech initial public offerings last year. And although Germany is in third place in new clean technology patents worldwide in 2009, the other four countries in the top five are the US, Japan, China and South Korea, according to London-based research group Chatham House.

The European Union still leads in installed clean energy projects, followed by the US. China has made huge strides in clean tech and would remain among the world’s largest markets for clean tech in many years to come.

Renewable energy provides nearly a fifth of the world’s electricity generation now. But it could account for a third of total electricity generation by 2035.

Wind energy and hydropower will supply the most renewable power over the next 25 years, with hydropower likely as the dominant source over the period. Electricity produced from solar photovoltaics increases rapidly, though its share of global generation reaches only around 2 per cent by 2035.

Analyts predict the world will see increased investment in geothermal power, which taps heat trapped below the earth’s surface to run turbines and generate power, a well as other emerging technologies such as concentrated solar power or Concentrating Solar Power and ocean energy.

But their development will likely be slow, with the technologies marginally contributing to total energy generation. Total investment in renewable energy for power generation may reach $5.7 trillion by 2035.

Investment needs are greatest in China, which has now emerged as a leader in wind power and photovoltaic production, as well as supplier of renewable energy equipment.

Renewable energy would require government subsidies for many years to make it cost competitive against fossil fuels. Government support worldwide reached $37 billion in 2009 for generation-based renewables, and $20 billion for biofuels.

The cost to generate onshore wind power is at $48 megawatt per hour (MWh) to $163, while offshore wind turbines costs about $101 to $188 per MW, based on wind farm projects for commissioning in 5 years.

Solar energy photovoltaic can cost about $215 per MWh. Though costs are expected to trend downwards over time, competing with conventional electricity prices, currently at $30 to $40 per MWh, would be tough. Rising prices for carbon amid earth’s limited supply of oil and gas could work towards making clean energy cost-competitive.