Austerity measures threaten to delay the uptake of low-carbon technologies as state budget cuts have resulted in the lowest clean energy investments in three years, said the UK's Energy Secretary on Wednesday.
The risk is that recession delays low-carbon investment, leaving us a high-carbon legacy even when the global economy recovers, Edward Davey said addressing energy ministers from 23 countries at the opening of a two-day clean energy summit in London, the day figures also showed Britain itself had slipped back into recession.
Global clean energy investments reached a record high of $263 billion (163 billion pounds) in 2011, but in the first quarter 2012 figures showed investor appetite for the sector fell to the lowest since 2009 to $27 billion (16 billion pounds) with developers spooked by government uncertainty.
Davey urged governments to create the right frameworks for low-carbon investment to encourage private financing as states do not have the balance sheet to fully support clean energy growth.
The threat of an investment squeeze makes our task more urgent, not less, Davey said.
Britain itself is in the process of reforming its electricity market to encourage more low-carbon power generation, such as from renewable energy sources or power plants fitted with carbon-capture and storage (CCS) technology.
Private investors have spent around 4.7 billion pounds ($7.6 billion) on the UK renewable energy sector in the last year alone, added energy and climate minister Greg Barker.
In the context of the summit, the UK government is expected to announce a series of agreements on clean technology development with Brazil, Germany, South Korea and the United States, Barker said earlier this week.
The International Energy Agency (IEA) recommended on Wednesday that ministers at the summit should help create a level playing field for all clean energy technologies, support energy efficiency and accelerate clean energy research.
Ministers, you have an incredible opportunity before you. Please take our warning about insufficient clean energy progress seriously, Richard Jones, deputy executive director at the IEA, told ministers, which represent countries jointly responsible for 80 percent of global energy consumption.
IEA research published on Wednesday showed only one out of eleven key clean energy technologies was on track to meet its 2020 contribution to reducing carbon emissions, namely mature renewable power technologies.
Technology cost reductions and strong annual growth rates have helped onshore wind and solar photovoltaic reach a significant status, the IEA said.
But those technologies which can make the biggest difference in reducing carbon emissions make the slowest progress, such as CCS, vehicle fuel efficiency or energy savings in buildings.
As many as 38 CCS projects are required in the power sector by 2020 to make a significant contribution, while not a single large-scale integrated project is in place to date, the IEA said.
The agency estimates that globally the near-term additional investment cost of achieving carbon reduction objectives would amount to $5 trillion (3.10 trillion pounds) by 2020.
As much as $4 trillion (2.48 trillion pounds) could be saved through lower fossil fuel use over this period, meaning the net costs over the next decade are therefore estimated at over $1 trillion (620 billion pounds), the IEA said.
Other experts believe the costs are much higher at $38 trillion (23.57 trillion pounds) globally by 2035, according to consultancy Ernst & Young.
($1=0.6192 British pounds)
(Editing by Mike Nesbit)