By Michael Szabo
LONDON (Reuters) - In what is being called a "green gold rush," global investment in renewable energy surged some 60 percent to $148 billion in 2007, a UN agency said on Tuesday.
Buoyed by soaring fossil-fuel prices and concerns over the carbon dioxide emissions that fuel global warming, investment in clean energy from sources like wind, solar and biofuels last year rose three times faster then predicted by the UN Environmental Program (UNEP).
"Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe," said Achim Steiner, head of UNEP.
Wind power attracted the most capital last year at $50.2 billion, or a third of all clean energy investment, UNEP's Global Trends in Sustainable Energy Investment 2008 report said.
In March 2008, global installed wind capacity exceeded 100 gigawatts, or enough to power around 75 million homes.
Investment in solar energy soared by 254 percent to $28.6 billion last year, while the biofuel sector foundered with funds falling nearly one third to $2.1 billion, the report said.
Overall, clean energy accounted for 23 percent of all new installed capacity in 2007.
Public investment in renewable energy via the markets more than doubled to $23.4 billion, up from $10.6 billion in 2006, the report said.
The S&P Custom/ABN AMRO Renewable Energy Index gained 70 percent in 2007, but has since fallen 14 percent on weakness in the global economy.
Most new money flowed into renewable energy leaders the European Union and the U.S., though China, India and Brazil attracted a sizable $26 billion last year, up 14 times from $1.8 billion in 2004.
The three developing countries now account for 22 percent of all new renewables investment, UNEP said.
Investment in Africa's clean energy sector grew fivefold to $1.3 billion in 2007, reversing a gradual decline that started in 2004.
"Sub-Saharan Africa, arguably the region that has the most to gain from renewable energy, remains largely unexploited," the report said.
A NEW DEAL
The renewable energy sector is expected to grow to $450 billion in 2012, and up to $600 billion by 2020, UNEP said.
Developing nations like China, which recently surpassed the U.S. as the world's top emitter, are being encouraged by rich countries to embrace renewable energy and adopt binding emissions targets under a new international climate pact.
The Kyoto Protocol's first commitment period expires in 2012, and governments are now racing to negotiate a new agreement that they hope to have in place by the U.N.'s climate talks next year.
"The (report's) findings should empower governments - both North and South - to reach a deep and meaningful new agreement by the crucial climate convention meeting in Copenhagen in late 2009," Steiner said.
In the U.S., as public acceptance shifts to cleaner energy, the government is being called on to lead a "carbon revolution" by passing domestic climate legislation and agreeing to at least halve emissions by 2050.
Both candidates in the U.S. presidential election in November have said they support deep cuts and experts are confident either one will make progress on a U.S. climate bill in the first six months of their presidency.
"A new administration in 2009 is expected to make renewable energy a priority while recent uncertainly (over possible emissions regulations) has put a number of coal-fired generation plants on hold," the report said.
On Monday, a Georgia state court invalidated a permit to build a 1,200-megawatt coal power plant, citing the developers' failure to limit emissions of carbon dioxide.
For additional analysis on the renewable energy market, go to http://www.reutersinteractive.com
(Reporting by Michael Szabo; Editing by James Jukwey)