Credit crunch might not be climate crunch

By Jeremy Lovell - Analysis

LONDON (Reuters) - The global credit crunch may end up being a bonus in the battle to contain the climate crisis as risk-averse investors look for sure returns and shy away from some of the more speculative projects, economists say.

But it depends on governmental nerve and there are many pitfalls on the path.

Investors will scrutinize far more closely where they put their money, meaning some of the more distant clean energy and climate projects might be shelved temporarily in favor of those with quicker results and therefore dividends.

"Businesses will do a lot more due diligence before they invest. This will benefit climate change technology because the investment will be focused in the right places," said climate change consultant Simon Young. "But it is far too early to say where those places will be."

Global figures from New Energy Finance for the first quarter of this year showed clean energy investments down nearly one-third to $2.7 billion with the private equity portion of the total down nearly two-thirds to $878 million.

Solar remained very strong as the technology develops in leaps and bounds although wind dipped as turbine prices soared and biofuels also fell in part due to controversy over crop replacement and rainforest destruction.

Governments, in the throes of negotiating a follow-on to the Kyoto Protocol on curbing climate warming carbon gas emissions, will have to keep their voters with them to tackle the first truly global crisis in human history.

"It needs governmental bravery. They have to tell their electorates what must be done and give investors the policy certainty they need for the long term," said Kate Hampton of carbon merchant bank Climate Change Capital.  Continued...