Energy leaders plan shift from high-carbon
Jun 9, 2008 - renewableenergyfocus.com
LONDON, UK - The world's energy sector is
in the throes of a transformation from high-carbon to low-carbon,
but the scale of the challenges remains daunting, according
to clean energy insiders who attended the first New Energy
Finance Summit earlier this year.
While the last three years have seen total
investment in the sector of US$300 billion, this pales into
insignificance compared with the US$10 trillion that must
be spent by 2030 to create a low-carbon energy industry.
However, the size of the task has created “almost unlimited
opportunities,” said Michael Liebreich, New Energy Finance
chairman and Chief Executive Officer (CEO).
The results of the Summit, on 28 and 29 February,
have now been published in a special 64-page book, including
a wealth of previously unpublicised material on the investment
outlook for the clean energy sector. Over 150 delegates
at the Summit, representing leading clean energy companies,
investors, regulators, utilities and traditional energy
players, discussed frankly the challenges ahead under “Chatham
Their views were stimulating and often surprising.
Renewable energies such as wind are often criticised for
being intermittent, but many clean energy executives hit
back, saying that the real problem is “intermittency of
policy” in countries such as the US, where the Production
Tax Credit for wind is due to expire at the end of 2008.
Traditional energy players saw themselves
as part of the move to low-carbon rather than an obstacle
on the way, and they identified a key role for themselves
in working with customers to promote demand-side energy
efficiency and micro-generation. There was lively debate
on the merits of nuclear as a way to curb emissions, with
one proponent arguing: “New nuclear offers a solution to
climate change and energy security and should not be confused
with old nuclear.” Traditional energy companies also pointed
out that, if carbon capture and sequestration could be made
viable, fossil fuels had a bright future. However, there
was a lack of clarity in regulation and over who would pay
for the development of the technology.
Policy-makers were in strikingly upbeat mood,
stressing their commitment to implement the measures that
would bring about the necessary investment in renewables.
Equity investors, unusually, were more cautious – debating
hard among themselves whether renewable energy valuations
got out of hand in 2007, or whether the sector’s strong
fundamentals would drive share prices further forward. One
said: “Unlike the internet, renewables offer a longer term
investment return, so the sector does not have bubble characteristics.”
In his keynote speech at the start of the
Summit, Mr Liebreich said that the latest science suggested
the extent of climate change was even bigger than realised,
but he added that improvements in energy efficiency and
the amount of renewable energy being installed would exceed
official forecasts. There was more than enough oil to take
CO2 levels beyond 750 ppm, which would lead to 3-5ºC of
warming. “We either leave the stuff in the ground or we
kiss the climate goodbye or we figure out carbon capture
and sequestration. Those are the only three choices that
we have,” he said. While achieving reductions in CO2 emissions
was going to cost a lot of money, “I believe we will see
a peak in carbon dioxide before 2020,” Mr Liebreich added.
Lord Browne, the former head of BP and European
managing partner and managing director of Carlyle Group/Riverstone
Holdings, outlined the key conditions for the large-scale
implementation of energy efficiency and renewable energy.
The first was to establish a price for carbon, which would
boost the viability of low-carbon energy and promote energy
efficiency in an economically efficient manner. Tailored
technology incentives were needed to accelerate the development
and deployment of low-carbon technologies while policy barriers
to deploying low-carbon solutions also needed to be removed.
These included planning laws, grid regulations, a lack of
consistent technical standards and subsidies for conventional
energy, which total about US$200bn, against US$33bn for
nuclear and renewables. Finally, government needs to intervene
to create renewable energy-friendly infrastructure. “To
do all this will require soaring vision – capturing the
public’s hearts and minds. But we will also req uire lead
shoes to keep us on the ground,” with lots of hard, detailed
technical work to back up the vision, he concluded.
The Summit examined the role of renewable
energy technologies, the role of traditional energy, the
stance of policy-makers, the outlook for equity finance,
the role of the carbon markets and the provision of project
finance. Among the main obstacles to continued rapid growth
in the sector, delegates said, were uncertainty over regulation
and bottlenecks ranging from a shortage of silicon to a
lack of skilled staff and entrepreneurs who can grow a business
The Summit book also includes the results
of the New Energy Finance Awards, based on the firm’s league
tables, which objectively rank investors, banks and law
firms according to the volume of business they completed
in 2007. There were five general categories, split according
to asset class: Venture Capital, Public Markets, Project
Finance, M&A, Carbon Finance.
A full version of the league tables for 2007
can be found by visiting the White Paper section of New
Energy Finance’s website. Click here.