European clean energy investment stalls

Europe is being left behind in the race for technological leadership in clean energy as venture capital and private equity investors focus on opportunities in the US and Asia, according to a White Paper released by New Energy Finance, the independent global analyst of the clean energy and carbon markets.

New Energy Finance Chairman and CEO, Michael Liebreich said: 'Europe has led the world in developing modern renewable energy technologies and introducing carbon trading. But its leadership position is threatened because the venture capital and private equity money is now flowing into the US and Asia, and bypassing Europe. Europe needs to take urgent action or it will fall behind in one of its flagship emerging industries.'

Venture capital and private equity investment in clean energy companies soared by 68% to USD8.6bn in 2006, from USD5.1bn in 2005. The Americas saw the biggest growth, up 138% from USD2.2bn to USD5.3bn. Asia saw growth of 45% from USD930m to USD1.3bn. Investment in Europe, however, dropped 2% from USD2.0bn to USD1.9bn.

The White Paper entitled 'Falling Behind - Europe's Clean Energy Venture Capital and Private Equity Deficit' examines Europe's deficit in venture capital and private equity investment in clean energy.

New Energy Finance has identified eight areas on which the clean energy industry, investors and policy-makers should focus in order to reverse this trend:

  1. Improve general macro-economics in Europe for innovation and entrepreneurship.
  2. Identify and break down regulatory barriers to markets for clean energy providers.
  3. Reduce investment risk by improving stability and longevity of clean energy support mechanisms.
  4. Use the public sector to create markets through preferential procurement of clean solutions.
  5. Increase available market size by rolling out pan-European standards for clean energy, fuels and technologies.
  6. Promote the development of supporting services such as testing & certification, training, information provision and insurance.
  7. Avoid the temptation to pick winners, whether through green funds or any other mechanism.
  8. Decouple all technology support programmes from social and political goals.
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