Why is Cleantech Still a Dirty Word for Investors? (podcast)


In the year after the Paris climate accord, advocates for climate action beat the drum loudly for the $1 trillion per year needed to meet the global action plan that has already come force. That “clean trillion” would have represented a rough tripling of 2015's investment level of about $350 million.

Now the 2016 numbers are in, thanks to Bloomberg New Energy Finance. And the worldwide totals are (drumroll) a drop of 18 percent, to $287.5 billion. That was mirrored in the U.S. where investments in renewable energy and energy-smat technology fell to $59 billion from $63 billion in 2015.

What gives? That's the question our Returns on Investment roundtable takes up in our latest podcast.

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Imogen Rose-Smith, senior writer at Institutional Investor, remains bullish on cleantech. She warned against “carbon lock-in” in the form of investments in pipelines and other fossil-fuel infrastructure, which could quickly become “stranded assets” as markets, and perhaps policies, shift toward a low-carbon future.

I added that the energy story is increasingly becoming a tech story, as plunging prices for solar and wind power, along with battery storage, put the energy transition on a similar path as the Internet and telecom revolution of the last 20 years (see “Renewables are no longer ‘alternative.’ Fossil fuels are ‘legacy.’”)

Some of the slowdown was anomolous, as in the U.S. project developers raced to lock-in deals before the expiration of tax credits (since renewed) at the end of 2015. And another part of the declining investment numbers are a reflection of plummeting costs themselves as renewable power projects have become less expensive.

Indeed, Bloomberg reported that developers this year are forecast to build 134 gigawatts of wind and solar in 2017, a record. Rising demand in India, the Middle East and South American is expected to offset a slowdown in China. The question I pose to close the podcast: Can investment kick in anywhere near fast enough to match the immensity of the climate challenge?

As costs continue to fall, renewable and cleantech investment growth this year is expected to be…about flat.

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