Renewable Energy Co.s Getting More Investment Cash than Oil Co.s

Renewable energy companies including solar, wind, biofuel, and others for the first time in 2008 got more investment capital than conventional oil & gas companies.  Green energy companies received more investment funding than fossil fuel companies as per a report from the United Nations.

Clean technologies including wind, solar, and others attracted over $140 billion in new investment dollars while gas & oil attracted $110 billion.  Over 1/3 of the green investment dollars were for European companies.  This continues Europe’s forward thinking amongst government, people, and investors on how to find ways of getting greener.  They are being closely followed now, by now China, India, and other countries rather than Canada and the United States.

Some of the reasons I believe is that Europe has long been using cap and trade systems for carbon credits while in North America most of us are still trying to understand the concepts of carbon tax and cap and trade.  China and India out of necessity of trying to find alternative cheaper energy and less issues of disposal and pollution have embarked on it to help continue to grow their economies in this economic downturn.

Achim Steiner, executive director of the United Nation’s Environment Program said that this recent milestone of more investment dollars attracted to renewable energy is a tipping point for for global energy versus fossil fuels.  He is also encouraged by African countries like Kenya and Angola have entered into the field.

United Nations though still believes that $750 billion needs to be spent between 2009 & 2011, especially when in 2009 so far renewables energy investment has only totalled $13.3 billion.

Even with the new investment dollars the industry wasn’t immune to the stock market downturn as investment capital dropped by 51 per cent to $11.4 billion and stock prices dropped by over 60 per cent according to the Global Trends in Sustainable Energy report done by New Energy Finance (NEF) in London.

The United States though is one of the leaders in wind energy investment with over $51.8 billion and $33.5 billion for solar energy. Solar energy investment rose by over 50 percent year over year.

Biofuel was the next most popular investment at $16.9 billion but has come across environmental and political issues regarding ethanol creation at the expense of farming crops and rising food costs.

The trend in 2009 is alarming though to the United Nations as renewables energy investment as they have forecasted that current investment would lead to about $95 billion to $115 billion in new investment.

Green Investment as Per Cent of Global Economic Stimulus is shown below in the table below:

Written by Richard Wong, CMA   rwong@firstchoicecapital.ca