Australia’s investment in clean energy projects has slumped 70 percent since 2013, according to a new report by Bloomberg New Energy Finance (BNEF). This means the country has slipped from the world’s 11th largest investor in clean energy to the 31st — below Algeria, Myanmar, Thailand, and Uruguay. This is the latest result of Liberal Prime Minister Tony Abbott’s broad attack on the country’s previously ambitious clean energy and climate goals. Abbott came into power in September 2013 and in July, Australia became the first country to repeal its carbon price, despite the fact that it was successfully working to cut carbon emissions.
Kobad Bhavnagri, an analyst at BNEF, told the Guardian Australia that the country’s renewable energy sector is “in the doldrums” and that “the government’s position has caused this.”
Australia’s government “has had some pretty strong anti-renewables rhetoric, particularly anti-wind, and wants to close certain clean energy programs,” Bhavnagri said. “The review has been particularly protracted. The industry was fearful the recommendations would be extreme and they were. It has been shattering.”
Bhavnagri is referring to the government’s review of the country’s Renewable Energy Target, which mandates that 41,000 gigawatt hours of Australia’s energy comes from renewable sources by 2020. The government has said it will review, and possibly scrap, the target in the coming months.
Under Abbott’s lead, just $193 million was invested in new large-scale clean energy projects in the third quarter of 2014, according to BNEF, bringing year-to-date investment to $238 million. By comparison, Canada has invested $3.1 billion in large clean energy projects so far this year.
Policy uncertainties also led to a weak quarter in the U.K., with Europe dropping to an eight-year low of $8.8 billion last quarter. However, overall global clean energy investment in the first three quarters of the year was 16 percent ahead of the same period of 2013. Clean energy investment in the July-to-September quarter was $55 billion, a 12 percent rise over Q3 in 2013 with a leap in Chinese solar investment leading the way.
In China, solar investment reached a new record of $12.2 billion, more than 22 percent of global clean energy investment over the quarter. Up from $7.5 billion in the same quarter last year and $8 billion in the second quarter of this year, China may add more than 14 gigawatts of solar capacity this year — almost a third of the global total, according to BNEF.
China is fast approaching its goal of installing 35 gigawatts of solar by the end of 2015. China’s National Energy Administration has recently voiced its support for distributed solar power, and is focused on streamlining bureaucracy to help grow capacity faster. According to a statement last month, the NEA has asked local authorities to identify projects where power can be delivered to nearby customers, provide extra subsidies for public organizations, and allow more rural projects to qualify for subsidies. As part of the push for more domestic solar installation, the NEA hopes these changes will encourage industrial and commercial companies to install rooftop solar, including railway stations and airport terminals.
Japan, the world’s second-largest solar market, increased spending 17 percent to $8.6 billion in the third quarter. Japan has approved about 72,000 megawatts of clean energy projects since the country’s feed-in tariff program started in 2012, with about 96 percent being solar projects.
The government may soon update the feed-in tariff so that developers will only qualify for the fixed rates when they begin to sell power, rather than when they get approved. This change, along with requiring solar projects to secure land and equipment within six months of getting approved, will hopefully increase the percent of projects that actually come online. As of June, 11,090 megawatts of approved projects had begun operating, 15 percent of the total approved.
“The patterns of investment are different geographically, with China taking more of a role and other parts of Asia coming on strong, particularly Japan,” Ethan Zindler, a BNEF analyst, said in an interview. “The makeup is really quite different compared with as recently as 2011 or 2012, when Europe accounted for a major share of the total.”
Investment in the U.S. reached $7.3 billion from $5.7 billion, driven by an increased demand for residential and commercial-scale solar, according to Zindler.
“The distributed-generation market for small-scale solar is growing at a nice, steady pace,” Zindler said. “The wind industry definitely has more ups and downs, and the market’s on more of a rebound after what was a very bad year last year.”
While the BNEF report concludes that it is almost certain that clean energy investment will “bounce-back” this year after two years in decline, there is no reason to celebrate when it comes to the overall picture of global greenhouse gas emissions.
“There is no room for complacency because clean energy investment of between $200 billion and $300 billion a year is not large enough to herald the rapid transformation of the power system that experts say is required if the world is to see a peak in CO2 emissions around 2020,” said Michael Liebreich, chairman of the advisory board at BNEF. “There is still too much policy instability holding back investor confidence.”
A recent report from the International Energy Agency (IEA) found that with the right policies, increased stability, and continued technological development, solar power could generate more than a quarter of the global electricity demand by 2050. The agency’s executive director Maria van der Hoeven also emphasized the importance of “de-risking financing” when developing clean energy policies, as solar technologies are capital-intensive and require large up-front investments.