Ernst & Young Finds China Surpasses UK In Renewable Energy Investing

For the first time during the past five years, China has surpassed the UK in investing in renewable energy. This information was provided by Ernst & Young’s renewable energy country attractiveness indices which track and score global investments made in renewable energy in the initial six months of 2008.
 

This performance of UK led to a sudden drop fom the fourth to the sixth position in the entire global renewable index. In case of the long term wind index, the position of UK dropped from the second place to the fifth place. The report also reflects that China has been diversifying its energy supply by introducing more sustainable sources into the energy generation process.
 

The root cause of Chinese success story can be partly be for the renewable energy policy of the government which generates 15 percent of the energy of the country from non carbon sources by the year 2020
 

According to E&Y’s Jonathan Johns, ” Investment in China has been boosted by the government’s energy policy, which secures renewable energy as a vital and important part of the country’s energy mix. China’s stellar growth in renewable can also be attributed to the speed at which it has built up its supply chain capability, to the point where it is likely to have nine gigawatts of manufacturing capacity in a few years”.
 

UK delayed in processing the Energy Bill. The Energy Bill is still now in process in the Parliament. Perhaps this is a major cause for UK’s ranking to fall. However this is also a contrast to the pace at which Germany has managed to move up the index to the second place in both long-term wind index as well as the renewable. Germany has managed to do it for its coherent legislative framework. The coherent legislative framework includes the introduction of tariffs to offer support to the industry to bring it in shape to meet the challenge of the renewable directive of the new EU.
 

In this context Johns feels that, “the government needs to consider creating tangible incentives for investors, following the lead of Germany and the ambition of China,”
UK got just 18.1 terawatt-hours for renewable energy production in 2006 while Germany got 72.7 terawatt-hours. Germany also performed better as the consumer price is only 2.6 pence per kilowatt hour compared to 3.2 pence in the UK.
 

The rise in price of the fossil fuels has created some impact on the renewable industry. As Germany has been taking actions regarding incentives, it has forced US, UK and Spain to make reevaluations regarding their business models.