Friday 25 July 2008

Renewable energy

As a social, economic, and political trend, the deployment of renewable energy technologies is accelerating at record rates, in part through government subsidy support fomenting the industry, with subsidies reaching $16bn (£8bn) worldwide in 2007. This remains trivial in comparison with fossil fuels, which is still the most heavily subsidised global energy source at $200bn for the same period, with oil comprising $90bn of this total.
Evidence of the durability of the clean technology sector lies in the investment going into clean technologies as they become institutionalised and politicised. The United Nations Environment Programme and New Energy Finance state that $150bn was invested in clean technologies in 2007.

Temporary setbacks will inevitably occur as supply chains build out, and as governments balance subsidy initiatives. However, the fundamental drivers of growth will remain intact.

The areas of greatest investor attention are mature technologies, both renewable energy generation and energy efficiency, that provide an alternative to the increasing cost of fossil fuel-derived energy sources. As an example, wind generation is competitive with oil at $70-$90 per barrel, and is therefore lucrative at today's oil price of around $130 a barrel. Given that wind is a zero-cost fuel source, the long-term economics of wind become increasingly attractive.

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