The worst banking crisis in almost a century will limit Barack Obama's plans to spend $150 billion over 10 years on clean energy from the wind and the sun, New Energy Finance Ltd. said.
Improved prospects for renewable energy following Obama's victory will be challenged by a “massive'' federal deficit and an economic slump, the London-based consultants said today. Gaining energy security through renewable power was a highlight of Obama's campaign.
Expanded Democratic majorities in Congress failed to deliver a filibuster-proof 60-vote majority in the U.S. Senate. Fiscally conservative Democrats in the House may oppose new spending on renewable energy without offsetting budget cuts, said Michael Liebreich, chairman of New Energy Finance Ltd.
“Policies to address climate change and energy security will be given higher priority in the U.S. than they were under President Bush, however there are caveats.'' Liebreich said in a statement. “There will be no automatic 60-vote bloc in the Senate. It also remains to be seen if Obama can back up his soaring rhetoric with an ability to build the coalitions required to enact legislation.''
Around the world, new investments in clean energy in 2008 will total $142 billion, 4 percent less than last year's record amount, New Energy Finance said. Capital flows into wind, solar and biofuel companies had accelerated every year since 2004.
The WilderHill New Energy Global Innovation Index of 91 publicly traded companies rose threefold from 2004 through 2007. The index has fallen 60 percent in the past year.
Renewable Power Investments
Public market investments in renewable power in 2008 will reach $9.4 billion, a 60 percent drop from 2007 as shares suffered from a “ferocious bear market,'' the analysts said. The brightest spot in 2008 has been venture capital and private equity funds, which are expected to plow a record $14.2 billion into clean-energy companies in 2008.
“The sector is not immune to the ills of the wider economic and financial world,'' Liebreich said. “However the growth fundamentals for clean energy remain robust. Policy support has increased in many countries and should get a further boost from the arrival of President Obama.''
New Energy Finance forecasts new investment in clean energy of more than $500 billion a year by 2020.
Obama supports a federal requirement that utilities use renewable energy to meet 25 percent of demand by 2020, and a cap on carbon dioxide that would lower emissions to 1990 levels by 2020. A windfall tax on oil trading over $80 a barrel and revenue from the sale of government-issued emissions credits would help finance renewable energy.
Obama's plan to invest $150 billion would increase worldwide investments in clean energy by about 10 percent and U.S. investments in that area by about 30 percent.