CLIMATE:

Cleantech investing slows, foretelling a future GHG problem

Investments in new wind farms and other "clean" energy projects are slowing with the crumbling global economy, and that could make climate change's bite harder in the decades ahead, financial analysts warned today.

With coal-fired power plants, steel mills and cement kilns producing less, greenhouse gas emissions are falling in the short term, the London-based market analytics firm New Energy Finance says in a report today. But flat investment in lower-emission alternatives in the next two or three years -- presumably the time it takes for economies to rebound -- could push what the analysts dub "peak carbon" back by more than a decade.

Investments in renewable energy and other "clean" technologies must reach $500 billion annually by 2020 so that the global energy system's carbon dioxide emissions peak at 30.8 gigatons in 2019, the report says. Reaching peak carbon by such a date, followed by an emissions cut of 50 percent by 2050, should limit the global average temperature increase to between 2.4 to 2.8 degrees Celsius.

The U.N. Intergovernmental Panel on Climate Change's 2007 assessment pegs the range of expected global average temperature increase during the next century at 2 to 4.5 degrees Celsius, with a best estimate of 3 degrees Celsius. The consequences of a warming world include harsher heat waves, deeper floods and faster glacial melting, the scientists warned.

"The more you warm up, the greater the number of systems there are at deeper risk," said Stanford University climatologist Stephen Schneider, who contributed to all four IPCC reports.

The 2007 IPCC report did not set a range of ideal dates for reaching peak carbon, said Schneider, who dismissed doing so as a nominal exercise. Even so, NEF analysts warn that reaching peak emissions before 2020 looks "highly unlikely" as the United States and other countries sink deeper into a recession.

"In the short term, the momentum of this sector's growth has been blunted by the economic downturn," NEF analyst Ethan Zindler explained in an interview.

Global investment in renewable energy, energy efficiency and carbon capture and storage projects grew to $150 billion last year from $34 billion in 2004, according to the firm. But global investment in cleantech will remain flat through at least 2011, Zindler projected.

If that holds true, cleantech investment would reach $270 billion annually by 2015 and $350 billion by 2020. Emissions from the combustion of coal and other fossil fuels would rise to nearly 36 gigatons annually by 2030.

"The recession's direct impact on CO2 emissions is likely to be moderate, reducing the total by around 1 gigaton per year, and certainly not enough to avert a continued upward trend," the report concludes.

As a point of comparison, the International Energy Agency's 2008 world energy outlook projects cumulative investment of more than $26 trillion in all fossil and renewable energy sources between 2007 and 2030. The power sector would account for $13.6 trillion, or 52 percent of the total. Non-hydro renewables' share of total power generation would increase to 4 percent in 2030 from about 1 percent today.

"The current financial crisis is not expected to affect long-term, investment," the IEA report notes, "but could lead to delays in bringing current projects to completion, particularly in the power sector."

"Greening" the energy system will require additional investment of $3.6 trillion in power plants and $5.7 trillion in energy efficiency between 2010 and 2030, the IEA report continues. The investments correspond to 0.6 percent of GDP annually but would result in annual fuel cost-savings of roughly $6 trillion.