Governments push ahead with green agenda

The research by Deutsche Bank Climate Change Advisors, the bank’s Asset Management’s institutional climate change investment business, found that over the past eight months 250 new government regulations as well as initiatives, amounting to more than £139 billion ($200 billion) in ‘green’ stimulus packages, had been introduced across the globe.

Rather than showing that governments were withdrawing from action on climate change because of tough economic conditions, the report said the findings confirmed that investors in this sector had a set of attractive opportunities across a number of sub-sectors and themes.

“Globally, policy remains a key driver for investment returns in both public and private markets,” said Mark Fulton, global head of Climate Change Investment Research at Deutsche Bank Climate Change Advisors. “We believe this trend towards greater regulation and stimulus spending will provide crucial support to climate change industries during the current global economic downturn, helping to offset the impact of weaker debt markets over time.”

The most recent major initiative to fight climate change is the Obama Administration and the US Congress’ £547 billion ($787 billion) American Recovery and Reinvestment act of 2009. It has committed about £74 billion ($106 billion) to climate change-related initiatives – equivalent to 13.5 per cent of the total global government commitment to address climate change.

The report said the areas of investment with growth potential included wind and solar, lighting, energy efficient buildings, smart grids and low carbon vehicles.

In America alone, it said a number of tax credits and feed-in tariff initiatives would see 20-25 per cent of the country’s electricity coming from renewable resources by 2025, leading to major investment in solar and wind energy.
 
Government mandates to phase-out incandescent and poor-performing light bulbs in the US and EU, as well as the state-sponsored distribution of energy-saving light bulbs in China, made the advanced lighting sector particularly attractive in the mid to long-term, the report said.

It also predicted that there would be “significant growth” in energy efficient buildings and the products and services going into them thanks to almost £37 billion ($54 billion) of allocations in the EU and US stimulus packages to this sector.

It said there was a potential to unleash a “smart grid revolution" with about £8 billion ($12 billion) of investments targeted to the smart electric grid in the EU and US as well as a £48 billion ($70 billion) grid upgrade in China.

The development of hybrid and electric cars was also being encouraged by governments around the world, with £18 billion ($26 billion) of support being provided in the global stimulus packages for battery development, fleet purchase and retooling of manufacturing.