A clean energy investment slump?

High energy prices are supposed to make solar and wind power all the more attractive. But new figures suggest that sustainability is losing some steam

Published August 27, 2008 9:02PM (EDT)

Buried in the confusing Reuters article "Even 'Green' Energy Needs Lower Oil Price" is an eye-opening statistic from the London-based research firm, New Energy Finance (NEF).

Global investment in clean energy from April to June was less than the same period last year, and at $33 billion barely half the last quarter of 2007, initial NEF figures show.

It's hard to know what to make of that number. Earlier this summer, the report "Global Trends in Sustainable Energy Investment 2008," which was co-authored by New Energy Finance, stated that "overall investment during the first half of 2008 has been just above what was seen in the first half of 2007. And on August 5, the Wall Street Journal reported that "Private equity and venture capital deals in clean-energy companies notched a record $5.8 billion in the second quarter, according to New Energy Finance."

(Also worth noting -- even if the $33 billion for all global investment in clean energy in the second quarter of 2008 is accurate, that's still more than the total for all of 2004. Growth, by any measure has been astounding. $28.6 billion in 2004, $54.6 billion in 2005, 86.5 billion in 2006, and 148.4 billion in 2007.)

The reason for the purported recent fall-off, suggest Reuters reporters Gerard Wynn and Nichola Groom may have more to do the weakening economy than anything else -- a state of affairs that high oil prices have contributed to. But more to the point -- high oil prices, write Wynn and Groom, are making governments less willing to subsidize relatively expensive renewable sources of energy, or otherwise tackle climate change, because energy affordability has become the primary concern of citizens, instead of the environment.

There's a paradox here: High oil prices make renewable sources of energy more economically feasible, but at the same time make governments less willing to fight climate change by instituting carbon taxes or cap-and-trade systems which would inevitably result in even higher prices for energy. But if investment in clean energy really did start to slow down in the second quarter, even as oil prices reached record levels, then that's just one more illustration of how hard it will be to move the global economy in a sustainable direction.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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