Clean energy surge or dip?

The glass appears half-full for the clean energy sector with investment surging in the second quarter, yet remaining below the numbers of last year. Elsewhere, EU carbon loses ground and solar support is hit in India.

New figures released by Bloomberg New Energy Finance last week showed clean energy investment rose in the past three months, while India’s biggest solar producing state sought to join governments from Spain to Greece in backtracking support for renewables. Elsewhere, two of the world’s biggest emitters gave carbon capture and storage technology a joint plug.

Global investment in clean energy was $US53.1 billion ($A57 billion) in the second quarter of 2013, up 22 per cent from the first quarter thanks to an upturn in the financing of wind and solar projects and a 170 per cent surge in equity funding for specialist companies on public markets.

These figures were drawn from Bloomberg New Energy Finance’s database of deals and projects worldwide in renewable energy and energy smart technologies.

The second quarter rebound was led by the US, which saw investment jump 155 per cent compared to a weak first quarter, to reach $US9.5 billion, and also China (up 63 per cent at $US13.8 billion) and South Africa (up from almost nothing to $US2.8 billion in the second quarter).

Europe, on other hand, saw investment fall 44 per cent compared to the first quarter, reaching just $US9.5 billion – that is the continent’s lowest quarter total for more than six years. The downturn in Europe helped ensure that global investment in clean energy in Q2 2013 ended 16 per cent below the figure for the second quarter of last year. European investment has been hit hard by cuts in support for renewable energy.

Unexpectedly last week, more possible cuts in support for renewable energy were mooted, only not in Europe. It was revealed last week that India’s biggest solar power-producing state is seeking to cut the subsidised rate it pays to plants by 28 per cent.

Gujarat Urja Vikas Nigam Ltd (GUVNL), the government-run bulk buyer of solar power in the western state, is asking for permission to lower the average megawatt-hour price, according to a petition copy obtained by Bloomberg News and confirmed by Gujarat Electricity Regulatory Commission Chairman P.K. Mishra.

The petition risks derailing an industry that drew $US6.9 billion of investment in two years to make India the world’s fastest-growing major solar market, according to Bloomberg New Energy Finance. A first hearing on whether regulators will accept GUVNL’s case will be held on July 23.

In the US, there was a potential advancement in President Barack Obama’s climate agenda.

China and the US, which together burn more than 40 per cent of the world’s coal, agreed to jointly develop technology to capture carbon dioxide from power plants and take other steps to combat climate change.

The two nations will implement ‘large-scale, integrated’ demonstration projects aimed at capturing, utilising or storing carbon dioxide, according to a statement released by the US State Department. “These demonstrations will engage companies in both countries and allow for enhanced trade and commerce.”

Implementation plans for the initiatives will be made available by October. Politically, cooperation between the world’s biggest greenhouse gas emitters could make it easier for the Obama administration to advance its domestic climate agenda, according to Bloomberg New Energy Finance. US opposition to unilateral actions to restrain emissions and mandate increased energy efficiency would be muted by China’s commitment to take corresponding actions.

Finally, the WilderHill New Energy Global Innovation Index, or NEX, which tracks 98 clean energy stocks, was a leading participant in last week’s global equities party, adding 3.2 per cent to close on 12 July at 155.09.

The top NEX weekly gainer was Germany's Solarworld. The module supplier’s shares leapt 24.6 per cent in a week when news outlets reported that trade officials from the EU and China were progressing in discussions to head off new import duties on solar hardware.

EU carbon

European Union carbon fell back last week on light trading and low hedging demand after the bloc’s parliament passed a measure that will temporarily delay the sale of some permits.

European Union allowances (EUAs) for December 2013 lost 5.8 per cent over the week to close at €4.04/tonne on Friday, compared with €4.29/t at the end of the previous week. Earlier last week, EUAs for December dipped as low as €3.93/t on Wednesday afternoon after the EU added plaster and plasterboard to a list of industries deemed exposed to the risk of competition from rivals without a carbon limit. Four sub-sectors were added, including open-die forging and solid whey and two relating to processed potato products.

Also on Wednesday, the EU Climate Change Committee endorsed draft rules for limiting the use of United Nations emission offsets in the eight years through 2020. The rules will limit the use of UN Certified Emission Reductions (CERs) and Emission Reduction Units (ERUs) exchangeable into EU carbon permits by factories, power stations and airlines. CERs for December 2013 gained 1.9 per cent last week to close at €0.55/t.

This article was originally published by Bloomberg New Energy Finance.