The price of gold isn’t the only thing crashing these days. Global investment in renewable energy fell 22% in the first quarter compared to a year ago, according to a report released today by Bloomberg New Energy Finance.
Even though the first quarter tends to be weak, the $40.6 billion invested in the first three months of the year is the lowest since 2009, when the global financial crisis was in full swing. Investment dropped 54% in the US and 25% in Europe in the first quarter of this year. And despite China’s ambitious renewable energy targets for 2013, investment there fell 15% to $8.8 billion.
What’s going on? First, many of the government programs launched to jumpstart green tech ventures and pump up the post-crash economy have run their course. In the US, uncertainty over whether an expiring tax credit for renewable energy would be extended led wind developers to embark on a building boom in 2012 that is unlikely to be repeated this year. And while Europe was once the epicenter of renewable energy, the euro crunch has zapped once-generous incentives for solar and wind energy.
Developers meanwhile are building fewer big solar power plants and wind farms. Investment in those projects dropped 34% in the first quarter, to $19.3 billion. A couple of factors contribute here: Solar and wind face competition from cheap natural gas, and utilities in places like California are reaching their government-mandated targets for generating electricity from renewable sources, so they are signing fewer deals.
One sunny spot for renewables is Japan. Investment in solar there more than doubled to $6.7 billion in the first quarter, thanks to government incentives to boost renewable energy production after the 2011 earthquake and tsunami crippled the country’s nuclear power industry.
All of which is bad news for anyone hoping that renewable energy can stem global warming. “For investment in clean energy to play its role in stemming the growth in world emissions, we would need to see investment levels at least double by 2020, rather than fall,” Bloomberg New Energy Finance chief executive Michael Liebreich said in a statement.
More from Quartz