Turning Green to Gold
Author — Dan Woynillowicz Category — Carbon
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Not long ago, renewable energy was considered a boutique industry—an opportunity for investors to “green” their portfolios and the world’s wealthy to feel better about their energy-intensive habits.

How times have changed.

“Investors are better positioned than ever before to address climate risks and seize the economic opportunities presented by clean energy.”

A recently released study by the non-profit Ceres and Bloomberg New Energy Finance identified a $12 trillion opportunity for renewable energy investment over the next 25 years. As Ceres president Mindy Lubber noted at the report’s release, “Investors are better positioned than ever before to address climate risks and seize the economic opportunities presented by clean energy.”

So where are those investment dollars going to flow?

According to professional services firm Ernst and Young, there are numerous factors that determine how attractive a country is for investors looking to put their money into renewable energy. The firm’s most recent Renewable Energy Country Attractiveness Index (RECAI) saw Canada hang onto a spot in the top-10—coming in at ninth place.

But it’s the trend that’s disturbing.

In previous assessments Canada ranked as high as fifth, but we have been slipping down the list in the last few years. And we can see Canada’s loss of stature reflected on the ground: in 2015, clean energy investment deals in Canada were down 46 per cent to $4 billion US.

According to Ernst and Young, to assess the attractiveness of a country for investing in renewable energy, investors consider the answers to five questions:

  1. Does the country have a long-term need for additional or replacement energy supply? And if so, is there a strong case that it will come from renewable resources?
  2. Are there policies that hinder or help the development of these renewable energy resources?
  3. To ensure project delivery, are essential components like long-term contracts, grid infrastructure and finance availability in place?
  4. How does the strength of the resource, the track record and project pipeline inform the outlook for particular renewable energy technologies?
  5. In addition to everything else, will the macro stability and investment climate of the country enable or impede the ease of doing business?

In the most recent edition of the Index, developing countries held five of the top 10 spots—including second (China) and third (India). The United States—which saw US$56 billion of clean energy investment deals in 2015—topped the ranking.

RenewableEnergyAttractiveIndex

Now, it’s worth noting that Canada is a global leader already in renewable electricity, which supplies nearly two thirds of our power. So it’s not entirely surprising that countries like China and India — where some people are still plugging into power for the first time — are leading the way in new renewable energy investment and deployment. The United States, meanwhile, has a power grid dominated by coal, so to clean up air pollution and cut carbon emissions, states are creating attractive conditions to ramp up renewable energy in place of shuttered coal-fired power stations.

But that isn’t to say we should rest on our laurels. Alberta and Saskatchewan stand out in Canada with power grids still heavily reliant upon fossil fuels, but both recently released targets for significantly more electricity generation from renewable sources. Federal Natural Resources Minister Jim Carr is mandated by the Prime Minister with bringing “cleaner, renewable energy onto a smarter electricity grid.” Across the country, the potential to power more of our economy—buildings, transportation and industry—with clean, renewable electricity provides one of the most significant opportunities to reduce carbon pollution in keeping with the climate change commitments Prime Minister Trudeau made in Paris last December.

As Clean Energy Canada’s annual Tracking the Energy Revolution — Global report indicates, a record US$325 billion was invested in clean energy last year. That’s serious money.

Doing this means attracting significant investment capital to Canada. As Ernst and Young notes, “there is nowhere to hide for those markets or companies who don’t deliver — developers and investors will simply go elsewhere.”

As Clean Energy Canada’s annual Tracking the Energy Revolution — Global report indicates, a record US$325 billion was invested in clean energy last year. That’s serious money.

Even more notable is the fact that more money was invested in clean energy in developing countries than in developed ones. China and India alone saw more than one-third of total global clean energy investment.

Renewable energy isn’t boutique anymore — it’s mainstream. Clean energy is catching on from Germany to Ontario, from China to Texas, and just about everywhere in between. There’s big money to be made: As the sector scales up, technology and financing costs keep falling and profits are getting bigger for renewable power developers and their investors.

So what can Canada do attract more renewable energy suitors?

That’s the question policy makers and business leaders need to answer if Canada is going to compete in clean energy.

In Ottawa on June 9? Join Clean Energy Canada and a panel of experts from Ernst and Young, ArcTern Ventures and Innergex Renewable Energy Inc. to discuss The Attractiveness Index – How to Make Canada the Destination for Renewable Energy Investment.


Originally published in iPolitics June 3, 2016.

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