Fears about global warming, frustration over high oil prices and growing backing from governments have lured more investment money to renewable energy sources like wind, solar power and biofuels, the U.N. Environment Program said. About a fifth of 2006 investment was in the developing world.
Today renewable energy accounts for only 2 percent of the electricity around the world, however, the report said. Renewable energy makes up 18 percent of the world's investment in generating power.
The trend report analyzed venture capital, the stock market and acquisitions, studying how investment money on renewable energy is being spent around the world. Though high oil prices are helping drive interest in renewable technologies, the field is growing more independent of fossil fuel prices.
"One of the new and fundamental messages of this report is that renewable energies are no longer subject to the vagaries of rising and falling oil prices," UNEP Executive Director Achim Steiner said. "They are becoming generating systems of choice for increasing numbers of power companies, communities and countries irrespective of the costs of fossil fuels."
After $71 billion invested last year, the report forecast $85 billion in new capital pouring into the sector in 2007.
Investment through public markets more than doubled in 2006 to reach $10.3 billion, it said. The biggest growth has been in venture capital and private equity investments, which hit $7.1 billion in 2006, more than twice as much as the previous year.
Developing countries are getting deeper into the renewable energy business, the report found. Investment in the developing world made up 21 percent of the total last year.
Nine percent of worldwide investment took place in China, where large reliance on coal is a world environmental concern and where the lack of oil in its territory is helping motivate efforts to find other energy sources. India is slightly behind China, while Latin America amounted to 5 percent of investment. Sub-Saharan Africa lags, but there is nonetheless interest there.
"The growth in the number of countries who are talking to us about renewables — it's just unbelievable how that's kind of ballooned in the last 12 to 18 months," said Nick Gardiner, the director of energy at Fortis Bank and a member of the advisory board of UNEP's Sustainable Energy Finance Initiative.
"There's a lot of liquidity around, there's a lot greater understanding of projects now ... renewables is very much considered a mainstream activity, so investors are interested and looking."