On January 12, 2012, Bloomberg New Energy Finance released data on clean energy investment, which showed a new high in clean energy investment at US$260 billion in 2011.  That’s a five percent increase over 2010 and five times the amount invested in 2004 in clean energy.

The driver behind the investment appeared to be solar with a 36% surge, significantly ahead of wind investment,.  That is notwithstanding a significant decline in photovoltaic modules costs and some pretty spectacular bankruptcies (Solyndra, SpectraWatt and Evergreen Solar).  The leading countries for investment were the US, much of it driven by government programs, and China.  Europe increased its clean energy investment by 3%.  The most notable project in Canada cited by Bloomberg is the Boralex inc. and Gaz Métro Limited Parnership 272MW Seigneurie de Beaupre wind farm phases one and two for $756m. After wind and solar, the  energy-smart technologies, including smart grid, power storage, efficiency and advanced transport, saw the greatest levels of investment.  While VC and private equity investment saw an increase, public market fund raising fell by almost $3 billion. 

Can the growth continue without government subsidy?  In the US, where the production tax credits are about to expire in 2012 unless extended, tax subsidies have been crucial to development. Wind installations in the US grew 300% year over year when tax equity incentive mechanisms have been in place[1].  President Obama, in last week’s State of the Union address urged Congress to maintain the production tax credit to ensure that the wind industry kept up with international competitors such as China and Germany. 

If Canada is sincere in its commitment to renewable energy progress, it will have to find ways to support this industry.  Are Canada’s investment in tax credits, research grants, accelerated CCA enough to keep the industry vibrant, competitive and innovative?  And are we pointing the incentives at the right place.    

[1] Bloomberg US Clean Energy White Paper (November, 2011)