Global spending on renewable energy hit $270 billion in 2014, reflecting significant growth since last year, according to Global Trends in Renewable Energy Investment 2014, a new report from the United Nations Environment Program (UNEP). The report excludes large-scale hydroelectric power, focusing instead on solar power, wind, biomass, biofuels, geothermal, and small-scale hydro. Wind and solar power were the leaders both in terms of new capacity and financing. More generally, renewable energy accounted for nearly half of all net generating capacity added in 2014. However, the report also notes that spending on renewable energy is still lower than overall investment in fossil fuels and that reaching 20% of global energy generation at the current rates will take until 2030.
Renewable Energy Growth
The $270 billion investment in new renewable energy in 2014 is a 3-year high that shows 17% growth over 2013. Although investment in 2014 is $9 billion shy of the all-time record investment in 2011, the rapidly declining price of solar and wind power means that last year’s investment was more productive. In fact, the amount of wind and solar installed reached 95 gigawatts (GW). This record figure is significantly higher than the 70 GW installed in 2011. In short, renewable energy is continuing to offer more bang for the buck.
Renewable energy investment is starting to become more equitably spread across the world as well. Investment in developing countries grew by 36% since 2013, reaching $131.3 billion. In contrast, investment in developed countries was only slightly greater, at $138.9 billion, and grew much more slowly, up only 3% since last year. Because a major goal for climate change mitigation is economic development without large-scale carbon emissions, this record investment in renewable energy in developing countries is excellent news for the world.
China was the largest market for renewable energy by far, with $83 billion invested. That figure reflects an incredible 39% growth since last year. This year, China accounted for roughly 30% of global investment in renewables. The United States took second place, with a total investment of $38.3 billion, but as a region Europe pulled ahead with an investment of $57.5 billion.
Overall, renewable energy accounted for 48% of new generating capacity in 2014. In terms of capacity, this means that renewables now account for 15% of global generation. In terms of actual energy generated, the figure is somewhat lower, with renewables supplying 9.1% of global energy, an all-time high that reflects consistent annual growth and represents an impressive global achievement.
Growth in Perspective
The figures from 2014 are encouraging but also demonstrate that renewable energy still has ample room to grow. At the current rate of development, it will take until 2030 for renewables to supply 20% of global energy. Investment in renewables is still below investment in fossil fuels, and atmospheric CO2 concentrations are still rising. Renewable energy offers a way to combat climate change and grow the global economy, but only if nations commit to making serious investments and serious commitments to changing the power grid.
Renewable energy growth rates in different countries offer a powerful lesson on the value of policy. In China and Europe, supportive policies such as feed-in tariffs created growing markets that attracted over half of all global investment. In stark contrast, dithering and uncertainty over a renewable energy target in Australia led investment to plunge from $2.1 billion in 2013 to a mere $330 million in 2014. As U.N. Secretary General Ban Ki-Moon noted in his introduction to the report, “Policy uncertainty and other barriers to investment need to be abolished.”
The United States has clear steps it can take to promote a stable policy environment that will grow renewable energy markets. Congress should extend tax credits for renewable energy development. The Environmental Protection Agency should finalize the Clean Power Plan and states should act quickly to develop robust compliance plans. U.S. States should follow the lead of California and Hawaii by expanding Renewable Portfolio Standards. By taking these steps, the United States can guarantee a stable policy framework that will support a strong market for renewable energy.