North America, Asia and Europe Compete for Emerging Clean Energy Market

As the world’s population grows and new economies emerge, the urgency of finding alternative fuels and energy resources will continue to dominate the major issues facing the world’s most powerful nations. With the low-carbon energy market expected to triple by 2020, key players including the United States, Japan and China will vie for the largest portion of the emerging economy. The market is expected to reach $2.2 trillion by the end of the next decade.

Analysts predict the biggest jump in Asia, with China topping the list of low-carbon energy consumers. China will surpass the United States in growth, although both countries were world leaders in infrastructure and clean energy investments in the past two years. In 2009, the United States pumped $18 billion into clean energy and China invested a massive $34.6 billion. The current champion of clean energy initiatives is the European Union, which has implemented the most aggressive emissions and renewable energy targets for 2020.

The European Union has the most clean energy projects already installed with the United States remaining in second. China has seen the greatest increase and is expected to continue the trend into the next decade. Clean-tech initial public offerings are led by the United States. Japan, Germany, China and South Korea make up the top five according to London’s Chatham House research group.

All nations with a clean energy goal will have to rely heavily on government subsidies for years to come. Current traditional electricity prices run between $30 and $40 per megawatt hour, making competition extremely difficult. The International Energy Agency estimates the cost of onshore wind generation at $48 to $163 per megawatt hour and offshore wind between $101 and $188. Solar photovoltaic costs are even higher at about $215 per megawatt hour.

According to International Energy Agency data, worldwide government financial support for generation-based renewables was 37 billion dollars in 2009, while subsidies for biofuels reached $20 billion during the same time period. By 2035, 0.17 percent of global gross domestic products could be dedicated to the renewable energy sector. The International Energy Agency puts that number at an impressive $205 billion.

If properly subsidized, renewable energy could account for one third of the world’s electricity generation by 2035, a sharp gain over the current level of one fifth. Over the next 25 years, hydropower will likely dominate renewable power, and combined with wind power, will make up the bulk of renewable energy generation. While solar photovoltaics will quickly increase in production and usage, it will still only hold around a 2 percent share of the market by 2035.

The International Energy Agency predicts investments could increase worldwide to achieve $5.7 trillion in 2035. Analysts are also expecting new investments in geothermal power, ocean energy and concentrated solar power, but say these emerging technologies will be slow to develop and have limited impact for the next several years.