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September 13, 2011
Scoreboard Details Increased Investment in Green Economy
    by Robert Kropp

The Green Transition Scoreboard of Ethical Markets Media finds that private sector investment in green companies and technologies is likely to reach $10 trillion by 2020.

The Green Transition Scoreboard (GTS), published annually since 2007 by Ethical Markets Media, tracks global private sector investment in green companies and technologies, with the goal of encouraging $10 trillion in such investment by 2020.

The latest GTS, published in August, found that since 2007, more than $2.4 trillion has been invested in renewable energy, energy efficiency and green construction, cleantech, smart grid, and corporate research and development. Controversial subsectors such as nuclear power, food-based biofuels, and coal carbon sequestration are omitted from the study.

The finding "shows global investors and countries on track to reach $10 trillion in investments by the 2020 goal." On the other hand, the increase in overall green investments has slowed since 2010. "To ensure meeting the target," the report states, "Institutional and other investment funds need to shift… toward investing at least 10% of portfolios directly in companies driving the global Green Transition."

Earlier this year, a report from Mercer recommended a far more drastic shift in asset allocation. Warning that the economic cost of climate policy could lead to as much as a 10% increase in portfolio risk in the next 20 years, Mercer recommended that at least 40% of the portfolios of institutional investors include investments in climate change mitigation and adaptation.

With over $1.5 trillion dollars in investment, renewable energy continues to lead the transition to a low-carbon economy. However, the report noted a substantial increase in corporate research and development, from $163 billion in February 2011 to $258 billion in July. The increase "may reflect greater management awareness of the need for redesigning products and services for greater energy and materials efficiencies," the report stated. Also, "Reporting standards are improving as investors are demanding more disclosure."

As debate continues over the implications for the green transition of President Obama's recent speech on jobs creation—Energy Secretary Steven Chu wrote that the establishment of a national infrastructure bank would "continue to build off of the significant strides we’ve made in clean energy sector through our Recovery Act-funded Loan Program"—a new report from ABI Research predicts, "The US photovoltaic (PV) market will become the largest market for annual PV installations in 2013, overtaking Germany, Italy, and Japan."

"An estimated 900 MW of installed capacity came online during 2010 in the US PV market," the report states, "And that number is expected to almost double in 2011." In 2013 alone, the report predicts, five GW of solar PV will be installed.

Projects funded by the US military are expected to contribute to the substantial increase in solar installations, as the Defense Department has committed to having at least 25% of its energy needs come from renewable sources by 2025. Last week, the military contracted with SolarCity to install up to 160,000 rooftop solar installations on more than 100 military bases in 33 states. The project, which could double the number of residential solar PV installations in the US, is expected to generate 371 MW of power.

Energy Secretary Chu, whose department has offered a $344 million loan to help secure financing for the project, stated, "This is the largest domestic residential rooftop solar project in history."

Also last week, the US Navy awarded a $500 million contract to three solar developers, who will compete to build and operate distributed solar power systems on more than 11 naval facilities in Hawaii. The systems, which will be installed on Navy rooftops, parking structures, and vacant parcels of land, are part of the Navy's goal to receive 50% of its energy from alternative sources by 2020.

In addition to its loan guarantee for the SolarCity project, the DOE has also finalized a $91 million loan guarantee to Cogentrix for a 30 MW solar PV power generation facility to be located in south-central Colorado. The facility is expected to produce enough power for more than 6,500 homes, and will avoid the emissions of over 43,000 metric tons of carbon dioxide per year. Cogentrix estimated that the project will support up to 100 construction jobs.

Meanwhile, installed wind energy doubled in total MW of capacity during the first half of 2011 compared to 2010, according to the American Wind Energy Association (AWEA). Over 1,000 MW of wind power were installed during the six-month period, and the industry now totals more than 42,000 MW of cumulative wind capacity.

The Governors' Wind Energy Coalition, a bipartisan group of 24 state governors, has expressed concern that the scheduled expiration in 2012 of production and investment tax credits could jeopardize the continuing growth of the industry.

In a letter to President Obama, the Governors warned, "Wind-related manufacturing will slow if the credits are not extended, and some of the tax credit's benefit will be lost if Congress pursues a last-minute extension."

"The wind manufacturing industry in the US will benefit even greater if the extension of these credits would be for at least seven year," the letter continued.

Underscoring the urgency of legislative and regulatory support for renewable energy technologies in the US are reports that China is increasing development targets for renewable energy over the next five years. China, with $54.4 billion in investments in 2010, surpassed the US in the production of renewable electric power in 2008.

China's new goal is to have 100 GW of wind power generating capacity, and 10 GW of solar power capacity, by the end of 2015.

In its latest GTS, Ethical Markets described the potential benefits of increased investment in a low-carbon economy, stating, "Investing $1 trillion annually until 2020 can ramp up material and energy efficiencies, reduce costs of wind, solar, geothermal and other renewable energy, increase sustainable land-use and forestry, and support smart infrastructure, transport, building and urban re-design to solidify the Green Transition worldwide."


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