Private Investment Dollars Pour into Clean-Energy Industries

Private sector investment—notably venture capital—is pouring billions into clean energy despite the economic downturn. And the public sector has sent a signal that these industries are here for the long haul. The American Recovery and Reinvestment Act allocated nearly $85 billion toward federal and state-level clean-energy programs, loan guarantees, and tax incentives. And climate bills being debated in Congress will put a price on carbon emissions, giving a leg up to zero-emission technologies. Yet it is private investment that will sustain these industries in the long term.

Clean energy is a beacon in the economic storm

• Clean-energy venture capital investments suffered alongside overall venture capital during this recession, but the clean-energy sector did exceptionally well relative to its peers in the first quarter of 2009, outperforming average venture capital investments and hard-hitters like the telecommunications and media sectors.
• Investors spent 52 percent more in the clean-energy sector in 2008 than in 2007 despite the recession.
• Seven of the top 10 biggest deals of the year were in clean energy. Global investors spent $30 billion more in renewable energy than in fossil fuels in 2008, and renewables accounted for 56 percent of all energy investment.
• Paul Krugman—New York Times columnist, economist, and winner of the Nobel Prize—recently declared that, “A commitment to greenhouse gas reduction would, in the short-to-medium run, have the same economic effects as a major technological innovation: It would give businesses a reason to invest in new equipment and facilities even in the face of excess capacity. And given the current state of the economy, that’s just what the doctor ordered.”

Clean energy and job creation in the American Recovery and Reinvestment Act

• ARRA contains approximately $86 billion of clean-energy spending, including investments in federal programs, funding for state and local programs, tax incentives, and loan guarantees.
• A joint study between the Center for American Progress and the University of Massachusetts-Amherst’s Political Economy Research Institute estimates that ARRA’s clean energy and environmental incentives will generate about $180 billion in additional local, state, and private investment.

Private sector investments in the United States

• $2.7 billion of venture capital funds in 2007 were invested in renewable energy technologies, representing nearly 10 percent of total domestic venture capital activity.
• Investors directed $5.9 billion into American businesses in the clean-energy economy in 2008—a 48 percent increase over 2007 investment totals.
• $13 billion in public and private investment capital went into U.S. clean-energy industries in 2007, $9 billion of which went toward wind energy.

Global clean energy investment

• Clean-energy investments accounted for 15 percent of all global venture capital investments in 2008, up from 9 percent in 2007.
• Approximately $100 billion of global investment went toward clean energy in 2007, continuing a steady trend of growth since 2001 ranging from 20 to 40 percent.
• Venture capital investment in clean technology has totaled about $12.6 billion during the past three years, rising substantially from the $1 billion threshold in 2005.
• If Europe maintains its goal of generating 20 percent of its electricity from renewable sources by 2020, its policies are on track to create 410,000 new jobs within 10 years.