Clean energy investment could reach US$7 trillion by 2030 
(22/02/2008)
According to a new analysis by Cambridge Energy Research Associates (CERA), increasing public concerns about climate change, and its potential economic and political security consequences, are driving public policy and private investment to bring clean energy technologies from the fringes of the global energy industry to the center of activities as quickly as possible.
The result of this rising public and private momentum is an increase in worldwide clean energy investment that could surpass US$7 trillion by 2030 , according to the CERA report Crossing the Divide: The Future of Clean Energy.
“We are seeing a major shift in public opinion, reinforced by the expectation that carbon policies could fundamentally change the competitive landscape of the global energy business,” said Daniel Yergin, CERA Chairman and IHS Executive Vice President. “This is providing a vital impetus that is moving clean technology across the great divide of cost, proven results, scale and maturity that has separated it from markets served by mainstream technologies and processes.”
“The rapidly advancing new paradigms of climate change, energy security, and policy implementation and cooperation among the United States, the European Union, China and others will produce a broad range of opportunities, risks and pitfalls as the modern energy industry increasingly moves to adopt clean technologies that will be part of the alternative, low-carbon pathway to the energy future,” said Robert LaCount, head of CERA’s Climate Change and Clean Energy Group.
“All participants in the global energy business, from traditional incumbents such as electrical power companies and major oil and gas companies to new entrants such as venture capital firms,” he added, “will play a role in shaping this alternative energy future. CERA’s Crossing the Divide analysis offers a number of key insights about potentially significant clean energy opportunities for almost every energy sector participant:
There is already a “bubbling” of clean energy clusters. Some places are becoming concentrations of political, technical, institutional and financial clean energy specialization and experience. Examples include Brazil in biofuels, Germany in photovoltaic (PV) technology, Spain in wind technologies.
Renewable power technologies are poised for substantial growth – Wind will make the largest gains, followed by solar power and biomass — despite near-term bottlenecks in wind turbine manufacturing, supply shortages in silicon, and competitive pressures from escalating component costs.
Government policy remains a key driver for clean energy advancement – Putting a price on CO2 emissions, setting mandates, and providing subsidies all work to kick-start clean energy technologies by overcoming the economic advantage of conventional technologies. The challenge in the years ahead is to provide subsidies in a way that ensures that these technologies get off the drawing board and are able to wean themselves from support – allowing for a phase-out rather than an increase in subsidies – as they become commercially viable on their own.
Nuclear and hydroelectric generation will account for most of the clean energy impact for the next decade, and almost half the gross clean power additions by 2030.
Clean energy technology could have disruptive rather than incremental impact. Modular and distributed PV could disrupt traditional central-station models of electricity production and distribution. Breakthroughs in cellulosic ethanol can disrupt the traditional vehicle fuel system if scale, logistics, and costs prove manageable. Conventional biofuel feedstocks, such as grains and oilseeds, may also produce serious unintended consequences such as disruption in global agricultural prices as well as land and water use patterns, as well as a policy backlash.
Rapid economic growth may push Asian energy needs from 30 percent of current global demand to 40 percent by 2030; combined with its manufacturing cost-competitiveness, this could make Asia a nexus for clean energy technology research, development and equipment production.
Crossing the Divide identified the primary drivers that affect the pace of clean energy technological development and its commercial success:
* Oil & natural gas prices – Directly affect the economics of clean energy technologies, energy security concerns, biofuels development, renewable power and conventional clean energy.
* Government policy – Central to development of all clean energy technologies, with sustained government support ensuring ongoing research, seed money and confidence for investors; the sustainability of support policies shapes the timing and ultimate success of new technologies, particularly to the degree to which it encourages private investment.
* Pace of technology innovation – Movement of technologies from the fringe to the center of the energy business is heavily dependent on policy support and private investment, which, in turn, is strongly affected by fossil fuel price cycles, carbon pricing, and expectations.
* Economic growth – Affects energy demand and carbon emissions as well as the political and financial support for research and development of new clean energy technologies.
* The Big Three: “The Big Three” in terms of energy consumption – the United States, the European Union and China – will have a major impact on development of “clean energy,” along with certain other countries, particularly Japan and Brazil.
CERA’s analysis used a scenarios framework to assess the winners and losers among various clean energy technologies and help define key risks and opportunities as companies seek to place their technology bets. The analysis addressed new and conventional energy technologies that can provide energy with a minimal carbon footprint and facilitate greater energy security. These technologies include biofuels, renewable power technologies, carbon capture and storage, nuclear and hydropower. While CERA’s scenarios provide widely different outcomes, advances occur in at least some clean energy technologies across all three scenarios.
In the Launch Pad scenario, strong energy prices, growing public pressure to control CO2 emissions, and a stable investment environment coalesce to drive the development and adoption of a wide range of clean energy technologies. Renewable power capacity grows from three to 16 percent of global capacity and biofuels grow from less than two percent to 16 percent of the total road transportation fuels market.
The Global Fissures scenario highlights how weaker global economic growth coupled with increasing global tensions and political insecurity could lead to an uneven outlook for clean energy technologies. In the Global Fissures scenario, renewable power capacity grows to seven percent of the global power mix, but nuclear power experiences little growth and carbon capture and storage technology fails to develop commercially by 2030.
The Asian Phoenix scenario describes a world where the global balance of geopolitical and economic power shifts to Asia, expanding Asia’s role as both consumer and exporter of clean energy technologies. Although concerns over climate change influence political agendas, a global patchwork of uncoordinated policies result in inconsistent government support programs leading to periods of fits and starts for private investment flows, and limiting technological and commercial breakthroughs. Renewable power grows to 10 percent of global capacity and biofuels capture seven percent of the market for road transportation fuels.
Related categories: Biofuels and biomass Cogeneration, combined heat and power Eco-friendly Power generation Ground and air source heating Hydroelectric power Solar power and photovoltaics Wave and tidal power Wind power
