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Investment is down, capacity is up; where does the future of renewable energy lie?

Our latest Talking Points article, by RSM’s economic advisor David Bartlett, discusses the relationship between investment, capacity and efficiency in the renewable energy market. Global investment in renewables fell from $302 to $269 billion from 2011 to 2012; with the exception of Japan, whose energy strategies have been reoriented by the Fukushima disaster, investment by the major developed economies has dipped. Yet capacity is up globally, and this is not simply attributable to growing investment in the advancing economies.

Renewable energy, however, still accounts for just 2% of global consumption. So how do we drive cleaner economies? Do policy directives and promises such as the EU’s 20-20-20 work? The world leader board would suggest so as, surprisingly given the prevailing economic tailwinds, Europe leads the way for renewable energy as a percentage of total consumption since overtaking the US in the early 2000’s. America is set to shortly fall into third place, as Asia takes second, following a decade of strong investment;  China accounted for nearly 25% of the global total last year. Whilst Africa and the Middle East lag behind in current capacity and consumption, the potential for generation in both regions – particularly for water, sun and biomass in Sub-Saharan Africa - is enormous, with South Africa recently becoming the world’s fastest growing renewable investment market.

Bartlett highlights the obstacles and opportunities that have led to this fall in investment and rise in capacity and assesses the future of renewable energy. The pursuit of energy efficiency appears to be key in developing sustainable economies of the future; with two-thirds of this economic potential untapped, the scope for improvement in methods of energy conservation and efficiency are enormous.

For the full debate, click here.

Author

Jean M Stephens
Chief Executive Officer

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