Asia to be top destination for green investment

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Source: GLOBE Foundation

Asia is set to become the world's biggest destination for clean energy financing, said  experts at the Clean Energy Expo Asia in Singapore.

'Almost certainly when we get to the end of this year, we'll see that Asia has overtaken Europe as a centre of investment for clean energy,' said Michael Liebreich, chief executive of Bloomberg New Energy Finance.

Global investment in clean energy, he elaborated, has been steadily increasing over the past decade, from US$52 billion in 2004 to US$243 billion last year, and the sector is the fastest growing by far. Renewable energy, in fact, is a major source of energy supply, accounting for 11 per cent of total global energy production and 19 per cent of global electricity production.

Yet, the traditional destinations for these large quantities of money are becoming fewer and less appealing. Mr Liebreich gave two examples: the pervasive atmosphere of climate scepticism in United States politics and the European financial crisis. 'How can you invest in a Greek solar project if the country in which it resides may be insolvent?' he asked.

In contrast, Asia, with its high growth economies, is emerging as a more attractive investment destination. 'China is the big growth engine,' said Mark Fogarty, chairman of the Renewable Energy & Energy Efficiency Partnership.

Describing the Chinese approach to clean energy as 'very intelligent' for its focus on upgrading grid capacity, he added that China has partially cleaned up its act with regard to research and development and intellectual property (IP) in the last few years, making it slightly more attractive to technology companies.

Some companies do seem ready to take the plunge with their eyes open, even though the IP protection environment in China is still uncertain at best.

'There is a risk, but we're conscious of the risk,' said Robert Gleitz, vice-president of marketing for power generation company Alstom. Both he and Mr Fogarty were discussing the growth prospects of the clean energy sector in Asia at the expo's first plenary session.

IP protection in China is not the only potential stumbling block for the sector. Political will can be as much of a challenge as it is in the US, said Gil-Hong Kim, director of the Asian Development Bank's (ADB's) Sustainable Infrastructure Division. Many countries adopt policies to develop and promote the use of clean energy, he noted, 'but whether these policies will be backed by strong political leadership, resources and technologies - that's the challenge.'

The plenary panellists agreed on an additional barrier - the fact that many Asian countries, including China, are not so much focusing on clean energy as they are embracing it as one of many initiatives. And investment between clean energy and traditional methods may be split as a result, meaning the switch from traditional to clean would be gradual, said Mr Gleitz.

Mr Liebreich, who moderated the panel, said that in high-growth Asian economies, the introduction of new power generation methods does not require existing assets to be retired. The ADB's Mr Kim added that his institution still invests in traditional methods if they are more efficient, and Mr Fogarty concurred that he is seeing more investment in improved methods such as integrated combined cycle, a cleaner version of coal power generation.

The panellists also noted that investment in the clean energy sector is not just an end in itself, but a means to an end. Commenting on what factors would impact climate change the most, Mr Kim singled out the development of new technology, while Mr Fogarty pinpointed a reduction in technology costs - both of which could be addressed by funding to the sector.

And for the purely economically minded, Mr Gleitz had this piece of advice for companies weighing the pros and cons of investment in Asia's clean energy sectors: 'If you're not part of the game, you're out of the game.'

At GLOBE 2012,taking place March 14-16, 2012, Experts from government and the private sector will explore the relationships between finance, sustainable development, capital markets, and the green economy. Get More information on GLOBE 2012 here

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