Global investment in clean energy has risen by 30% year-on-year, reaching a total of $243bn according to Ernst & Young's latest report. China has consolidated its position as the most attractive country globally for renewable energy development; however, there are significant disparities between countries, and uncertainty over political support persists.
Citing Bloomberg's New Energy Finance data, the analysis of financial consultancy firm Ernst & Young confirms that investment in renewable energies has recorded strong growth in 2010. The report evaluates countries based on their renewable energy policies, technologies, and infrastructure; and confirms China's leadership position, which is the result of the nation's increased wind and solar power development. This has certainly contributed to China's reduced level of energy intensity (energy use per unit of gross domestic product) which has fallen by 4% year-on-year; however, its absolute energy usage is still growing.
The top five countries (China, the US, Germany, India, and the UK) have remained unchanged. Overall, China benefitted from a strong infrastructure index score, which assesses the general regulatory infrastructure in place for renewable energy. According to this metric, the UK would come second, closely followed by Italy. For the UK, this was largely down to improved support for clean energy, as promised by the coalition government's Electricity Market Reforms.
However, Spain, Germany, Italy, and the UK have also recently cut or are considering cuts to their feed-in tariffs, thereby reducing investor confidence and increasing risk. Other examples of unstable and unpredictable legislative regimes include France's three-month ban on new projects, and the respective decisions of the Dutch and Australian governments to roll back some of their renewable energy support mechanisms and incentives, in order to reduce the burden on the taxpayer. In the US, meanwhile, the downward trend has been temporarily stemmed by extension of the 1603 Treasury Grant Program through to the end of 2011.
The worldwide investment outlook for renewable energy development remains uncertain. As governments struggle with the aftermath of the economic crisis and seek to rein in their spending, confidence in feed-in tariffs and other incentives continues to be highly volatile. Clean energy developers are well advised to follow the national legislative discussions closely before committing to an investment. However, given the enduring aim of reducing global carbon emissions, renewable energy is unlikely to fall out of favor any time soon.