Environmental Engineering Reference
In-Depth Information
of US energy subsidies between 2002 and 2008 by the Environmental Law
Institute put the amount going to fossil fuels at $72bn, compared to $29bn
to renewable energy (of which $16.8bn went to ethanol alone).
As for investment by the renewable energy industry itself, many renew-
able energy companies are naturally still in the incubation phase, growing
in some university or government lab and hoping to attract the attention
of some venture capitalist or private equity investor. But many others have
taken wing and are flying solo. According to New Energy Finance , there
was a trend, before the 2008-9 retrenchment, by European utilities to float
their renewable energy operations as separate, free-standing ventures
rather than as part of a larger parent. This, commented NEF , showed “a
belief that capital markets will rate 'new' energy higher than 'old' energy,
because of its higher growth rate”.
The high point of this trend was the success of Iberdrola, a Spanish util-
ity, managing to profitably sell off 20 percent of its Iberenova renewable
energy subsidiary for €4.1bn at the end of 2007. The 2008-9 recession has
interrupted investment in renewables. But resumption of growth, when it
comes, will be from a fairly high level. According to NEF , capital expendi-
ture in renewables - internal and external sources of finance - totalled
$136bn in 2008, of which nearly $100bn was in new projects.
The future pace of private renewable investing will depend very
much on the degree to which governments underwrite it by regulation
or money. In September 2009, in the run-up towards the Copenhagen
climate summit, a group of 181 institutional investors, representing $13
trillion in assets under their management and including such big names
as HSBC, Hermes and Swiss Re, called on governments to use both instru-
ments. They argued for stringent carbon emission cuts of between 50 and
85 percent by 2050 in order to level the global playing field and to provide
some kind of investment certainty far into the future. In addition, they
suggested government guarantees for their investments.
The money that goes around
Energy trading has become a very big business. And to many who believe
that speculators force up energy prices and/or encourage energy price
volatility, it has also become a very suspect business. For the price of oil is
of obvious importance to the world economy as well as being something
that is influenced by politics - and which in turn influences politics.
 
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