China spends $34.6b on renewables, Ernst & Young says

Updated: 2010-06-04 14:52
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China joins America as the most attractive location in which to invest in renewable energy after spending $34.6 billion on clean-fuel projects last year, almost double the investments by the US, Ernst & Young LLP said.

The world's third-largest economy climbed two points in Ernst & Young's Renewable Energy Country Attractive Indices while the US fell a point, the accounting firm said in an e-mailed report dated June 3.

China has vowed to cut carbon emissions per unit of gross domestic product by as much as 45 percent of 2005 levels by 2020 to slow global warming linked to greenhouse gases. The government will subsidize manufacturers of fuel-efficient electric motors and power generators, according to a statement this month from the finance ministry.

"China's consistently strong performance underlines its determination to robustly align energy and industrial policy," Ben Warren, Ernst & Young's Environment and Energy Infrastructure Advisory Leader, said in the report.

The US fell a point because of the likelihood that its climate and clean energy bill won't be passed before the November mid-term elections, according to Ernst & Young.

The bill was set back by the Gulf of Mexico oil spill that followed an April 20 explosion on a rig leased by BP Plc, Kevin Book, a managing director at Washington-based policy analysis firm ClearView Energy Partners LLC, said last month. The biggest oil spill in US history has soiled at least 140 miles (225 kilometers) of coastline, halted some drilling in the Gulf and shut a third of its fishing areas.

European rankings

In Europe, the region's sovereign-debt crisis may hinder efforts to cut emissions, said Ernst & Young. Greece, Spain and Portugal have all suffered negative score changes because of worsening capital markets and a downward revision of sovereign- credit ratings by S&P.

"A number of economies are struggling to balance the books, not just in terms of national debt deficits, but also in terms of justifying the cost of supporting renewable energy deployment," Warren said. "There will doubtless be increased stress between the drive to decarbonize and the financial resources available to deliver."

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The UK received a two-point increase following government plans to launch a 2 billion-pound ($2.9 billion) "Green Investment Bank" fund, and approval for a 1 billion-pound upgrade to the country's electricity network to boost renewable energy integration, said Warren.

India rose two points after an injection of more than $1 billion into the "green economy" and the unveiling of plans for as much as 4 gigawatts of wind capacity and 1 gigawatts of solar power to be installed in the "short to medium term," according to Ernst & Young.

Australia dropped two points because of a delay in the planned emissions trading plan until after 2012, it said.