Renewable Energy: A Strong Consestant for Investors

Renewable energy investment

Worldwide investment in energy sources fell by 8% last year to $1.8tn (£1.4), reflecting low prices in gas and oil as well as cost falls in the sector, new data shows.

Nearly half of this descent was accounted for by the US, where plunging oil prices and a recent spike of interest in the production of shale gas, along with cost deflations in the production of energy, have played an increasing role.

Renewable Energy Investment

image courtesy: RMI Outlet

Worldwide, China remained the biggest investor in energy, with $315 billion spent in 2015 in spite of a slowing in the pace of its headlong economic growth.

Despite falls overall funding directed at renewable energy remained robust in 2015, as per the reports of the International Energy Agency, the global energy watchdog, which put the statistics together. Countries pursuing low carbon-growth are setting up energy policies that are driving this new trend.

Roughy $313 billion was put into low- carbon types of energy and renewable sources last year, representing about 20% of total energy spending. Much of it was directed at the generation of electricity and even there renewable power takes the lion’s share of available investment funds. This has been further aided by steep falls in the cost of accessories such as solar panels and wind turbines.

By contrast, investment around the world in energy generation backed by gas, touted as a bridge between coal-fired and renewable energy, fell by close to 40%.

The investment figures show the shows the predominant inclinations before the milestone consensus that was reached in Paris in December of last year. Under that accord, close to 200 countries decided to hold spikes in global temperature to a maximum of 2C above temperature levels before the industrial revolution.

This will entail curbs to greenhouse gas emission in all the major economies of the world both developing and developed, and meeting these targets will require new policies to favour eco-friendly energy sources above fossil fuels. Such actions should mean further boosts to sources of clean energy in years to come.

The World Energy Investment 2016 report compiled by the IEA purported a broad re-orientation sweeping across the World’s energy systems that sought to promote a clean energy sources and higher energy efficiency. But the organization said that investment in these must be stepped up much further if the aims embraced in Paris were to be achieved.

Fatih Birol, executive director of the agency, said: “We see a broad shift of spending towards cleaner energy. Government measures can work and are key to a successful energy transition. But while progress has been achieved, investors need clarity and certainty from policymakers. Governments must not only maintain, but heighten, their commitment to achieve energy security and climate goals.”

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However, his emphasis on renewable forms of power generation was disputed by Benjamin Sporton, the chief executive of the World Coal Association. He said that the ongoing use of coal, as seen especially in Asia where it is predominant, warranted the need for increased investment directed towards carbon capture and storage (CCS) facilities, which barely figure in investment plans today.

He said: “In many countries, coal is the logical low-cost power choice, particularly in Asia. To assume that fossil fuels will not be required or can be substituted in the next few decades is likely to lead to cheaper, less efficient coal technology being deployed, threatening the ability to deliver global climate objectives. It is critical that energy investment is directed towards all forms of low-carbon technology. Policy parity for CCS is essential if we are to achieve the best outcomes possible.”

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