Clean tech revolution stalled by economic crisis

The global impact of climate change could become more severe as investments in clean energy and renewables dwindle, according to a study released by analysts.

As part of its Global Futures Summit 2009 report released this week, carbon market analyst New Energy Finance (NEF) said that although reduced economic activity due to the financial crisis will help reduce CO2, in the long term a lack of funding for carbon-reduction investments could have an adverse effect on emissions.

NEF expects investment in clean energy to hold steady at about $150bn (£106bn) per year through the economic downturn. However, the organisation claims that in the long term, investment in clean energy – renewables, energy efficiency and carbon capture and storage – needs to reach $500bn per year by 2020 if CO2 emissions from the world's energy systems are to peak before 2020.

Scientific experts fear that continued growth of emissions beyond 2015, or 2020 at the latest, would create the strongest risk of severe and irreversible climate change.

"This should be a wake-up call," said NEF chairman and chief executive Michael Liebreich. "New Energy Finance is generally on the optimistic side of the debate: even with the current recession we are more bullish on the shift to clean energy than most mainstream analysts. However, it is no longer possible to say we are on track to achieve peak CO2 by 2020. Something has to happen, either in terms of restoring credit to clean-energy projects, or in terms of a surprisingly substantial outcome in Copenhagen."

The lack of economic activity during the recession will have some positive impact on carbon emissions, according to NEF – reducing the total by about one Gtonne per year or about three per cent – but it will not be enough to change the general upward trend, the analyst firm claimed.

"Our work at New Carbon Finance indicates that climate change policies and specifically carbon cap-and-trade systems are making a material difference to shifting from high carbon to low," said Guy Turner, director of NEF's new carbon finance division. "However, the Global Futures 2009 work is sobering: it shows that it is not happening fast enough."

But despite concerns that investment in clean energy is not yet at a sufficient scale, NEF still sees a healthy future for some renewable energy technologies. "The costs of photovoltaic technologies may fall by a factor of four or more between now and 2030, to levels that are highly competitive with alternative forms of generation," the analyst firm said in a statement.

As for wind power, the company claims that although investment in wind technology will drop during the recession, there will be a longer-term expansion in off-shore and on-shore wind farms. "The most prominent markets will be Europe, thanks to wind sites' proximity to consumers' markets and supportive policies, as well as the US and China," the analyst claims.