In the last few weeks both Shell and BP have pulled out of developing off-shore wind developments in the UK due to better incentives and support from the US government in the form of tax breaks and incentives.
The same is true for Spain where in the last few years the country has been unprecedented growth in wind farms along the majority of the eastern part of the country. Then just as the country was seeing clean and green as a way forward – they remove the tax break for further development. Almost overnight the work stops, new planned sites are abandoned and people are laid off.
Interesting enough in eastern Europe, such as Bulgaria, Romania and Russia the emphasis is on developing renewables to under-pin existing systems – on the proviso that any investment helps improve infrastructure – its true that the returns are considerably smaller than areas like the UK, but the incentives will be picked up and developed, allowing these countries to develop a trading market to countries that have missed the boat, err that will be you then UK and Spain? Watching the Wilder Hill New Energy index smash down by almost two-thirds this year, wiping out three years of real growth, is indicative of a market in decline, just like all of the other markets. The FT reports that Global IPO volume for hydro, wind, solar and bio-mass companies are all under $4bn in the year to date, down from $14bn in 2007. Add to this the exit by the majors creating additional uncertainty and the clean tech industry is going to have a tough 12 months, without radical change at government level.
Please don’t get me wrong I have not just dropped onto this planet and am well aware of the global credit chaos which is forcing governments to become global bankers. In addition to this I also understand that as a business, companies like Shell need to invest in areas of the world that will generate the best shareholder return, whenever the shareholders return that is. However these decisions are going to have a detrimental impact on the next 20 years for European states that do not have the foresight to support clean/ green initiatives and investment. We have already seen the almost farcical previous state of carbon trading in the US where depending on the controlling power it’s either on the statute or not – hopefully this will change in January for good with the new management in place. But there are lessons to be gained from creating a realistic and sensible playing field that encourages growth for all businesses to understand the pitfalls and the rewards of developing renewable energy – otherwise corporate support will concentrate on tried and tested revenues and green will remain in waiting.