Global investment in clean energy will decline perceptibly this year for the first time in eight years, signalling an unwarranted complacency in the fight against climate change. A report by Bloomberg New Energy Finance says funding for renewable energy generation in the first three quarters of this year was $164.2 billion, down from last year’s $196.4 billion. The downturn is the steepest at 62 per cent in heavily polluting America and 29 per cent even in environmentally friendly Europe. Even if China somehow pushes up funding for its clean energy initiatives, there seems little chance of total global investment in this vital field matching last year’s $280 billion. Worse, the most noticeable investment slump is in the most advantageous, cost-effective and inexhaustible sources of renewable energy.
Memories are still fresh of the damage and misery caused by recent storms like Hurricane Sandy and Cyclone Nilam. The incidence of drought, unusually heavy cloudbursts, abnormally severe summers and exceptionally cold winters has been on the rise in recent years. The impact of such events on agricultural output is now a major determining factor for the price of food. Any laxity on reversing global warming will make it tougher to cope with its outcomes.
True, the recession has eroded the capacities of governments as well as business to invest in this sector. However, there are also signs that the international commitment to counter global warming may be waning. Many ideologues, for example, continue to deny that extreme weather events are human-caused, in spite of increasing evidence to the contrary. Creating the illusion that there is still a debate has a political impact, increasing the reluctance of most countries – particularly richer ones – to take on tougher emission reduction targets and finance green energy. It seems highly doubtful now that a consensus-based successor to the Kyoto agreement on climate change, which expires next month, can be evolved in the near future.
Uncertainty over this count and, more so, over the future of the carbon trading system has further depressed investors’ interest in renewable energy initiatives and environmentally friendly technologies. Carbon trading has, ever since its introduction as the clean development mechanism (CDM) under the Kyoto pact, served as a vital tool to spur industries in both rich and poor countries to switch over to cleaner technologies. Besides, it has helped developing countries to access finance as well as technologies for setting up wind, solar and bio-energy projects. The lack of any signal emerging from climate change talks about the continuation of emission trading beyond this year, coupled with concerns about European recession, has led to a crash in the prices of certified emission reduction permits in recent months, paving the way for the collapse of this system. Should this happen, the world’s goal of ushering in a green economy will become unachievable.