Green investment: is the battle lost to build a clean, green future?

>> Jan 03, 2013


Peter Dickson, technical director and partner at cleantech investor Glennmont Partners, says fears over energy security, not climate change, is driving the massive investment programme required to build a clean, green future.
Despite the best efforts of policy-makers and pressure groups, Europe is unlikely to meet its obligations to generate 20 per cent of its power from renewable sources in seven years time. As little as two years ago, there were signs that EU member states could exceed their targets for 2020 but the tough economic climate has been a barrier to progress as governments cut spending and businesses delay investment decisions until the worst of the storm has passed. So, after nearly two decades of outstanding success for the green movement, is the battle lost?

Driver for change: energy security
At Glennmont Partners, a specialist clean energy infrastructure investor formerly part of BNP Paribas, we don’t believe so. In fact, whilst we think that emphasising climate change as the main driver for diversifying the power generation portfolio is misguided, we believe the positive change that many have worked towards for so long is only just beginning. In our view, progress is not being driven by threats to the environment; the change is being driven by fears over energy security. 
Europe has an enormous power deficit and currently attracts insufficient levels ofinvestment to replace its ageing infrastructure. The continent as a whole is a net importer of energy, a factor that should keep presidents and prime ministers awake at night. In the UK alone, the investment required to replace our nuclear fleet and the capacity lost from 60 coal-fired power stations closing in the next 10 years is estimated by the Department of Energy and Climate Change to be in the region of £110 billion. And all of this comes at a time when fossil fuels are on a long term, upward price trend. 
Various options to tackle these challenges are being considered. Increasingly, clean energy alternatives are being seen as the answer. Clean infrastructure is today seen as 'must have’ not 'nice to have’ in order to ensure that European economies adapt to a post hydrocarbon world and reduce our reliance on Middle Eastern oil or Russian gas. 
In the UK, there are widespread opportunities in the wind power sector as well as in biomass. Italy and Portugal have favourable solar prospects, whilst in France represents a good all-rounder with infrastructure potential across the technology spectrum. 
But how will this massive investment programme be funded? By effectively directing private capital into high quality, low risk, clean infrastructure assets. These assets have already attracted significant capital from insurance companies and pension funds and will continue to do so in the months and years ahead. There are trillions of Euros in need of a good home. Investment managers are seeking exposure to assets which offer consistent annual yield, capital growth and a shelter from inflation over long periods of time and very few asset classes can claim to meet those requirements better than clean energy infrastructure. 
Earlier this month, UN Climate Change Secretary, Christina Figueres reminded us "…we must implement, implement, implement. The legislation on paper does you no good and the climate no good. You have to ensure that once the work of adopting is done the next challenge is implementation." We agree – and with a mature and stable regulatory framework in Europe in place, private capital can support the implementation of a modern, clean and sustainable power infrastructure that will be good news for our energy security, investors and the environment. 
Source: Green investment news

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