Climate change worries, coupled with high oil prices and increasing government support, top a set of drivers fuelling soaring investments in the renewable energy and energy efficiency industries which reached US$100 billion last year.

The "Global Investment in Renewable Energy, 2004-2006" report by the United Nations Environment Programme (UNEP) released today revealed that investment capital flowing into renewable energy last year was a record, climbing from $80 billion in 2005 and showing no sign of abating.

The report says that investors poured US$71 billion into companies and new sector opportunities in 2006, a 43 per cent jump from 2005 or up 158 per cent over the last two years, and the trend continues in 2007 with experts predicting investments of US$85 billion this year.

In addition to the US$71 billion, about US$30 billion entered the sector in 2006 via mergers and acquisitions, leveraged buyouts and asset refinancing.

While renewable sources today produce about two per cent of the world's energy, they now account for about 18 per cent of world investment in power generation, with wind generation at the investment forefront.

Solar and bio-fuel energy technologies grew even more quickly than wind, but from a smaller base, the report says.

Renewables now compete head-on with coal and gas in terms of new installed generating capacity and the portion of world energy produced from renewable sources is sure to rise substantially as the tens of billions of new investment dollars bear fruit.

UNEP executive director Achim Steiner said one of the new and fundamental messages of this report is that renewable energies are no longer subject to the vagaries of rising and falling oil prices. They are becoming generating systems of choice for increasing numbers of power companies, communities and countries irrespective of the costs of fossil fuel.

The other key message is that this is no longer an industry solely dominated by developed country industries. Close to 10 per cent of investments are in China with around a fifth in total in the developing world," he added.

The report attributes the sector's boom to a range of global concerns -- climate change, increasing energy demand and energy security foremost among them, as well the November 2006 United States mid-term elections which confirmed renewable energy as a mainstream issue, moving it up the political agenda.

Also spurring the sector's growth has been the persistently high price of oil, averaging more than US$60 a barrel in 2006.

Source: http://www.bernama.com.my