17th October 2006

Every emerging sector has its "tipping point". That definitive moment when alternative becomes mainstream - the unpopular populist.

Few, however, can boast an ageing muscle-bound Hollywood actor turned governor, and a man who came "second" in a US presidential election, as all-important catalysts for change.

But Arnold Schwarzenegger and Al Gore have helped politicise the importance of renewable energies in tackling climate change in a way that non-governmental organisations such as Greenpeace and Friends of the Earth can only dream of.
And the financial markets are slowly responding. According to a report by energy consultants McIlvaine, the global renewable energy sector is set to double in size by 2008 from $27bn to $48bn.

There are already clear market leaders.

Japan currently manufactures 48% of the world's photovoltaic (PV) production for example.

Germany, Spain and Denmark are considered the leading innovators of wind-generated power.

Even the once cynical US is quickly storming the field as an increasing number of states help drive the marker by taking advantage of local eco-friendly initiatives.
But for multi-million investment in the renewable energy sector on a truly global scale look no further than Teesside.

Over the past 12 months, more than pounds 100m has been invested in alternative energies, with the promise of a further pounds 460m subject to planning permission or fundraising.

Only this month, Losonoco, a US-based energy company, confirmed it has set its sights on Billingham to build a pounds 60m renewable energy plant with the creation of 80 direct and 220 indirect jobs.

The plant, which will turn wheat crops into ethanol fuel, will also use biodegradeable waste as well as other energy crops, short rotation coppice such as willow and even contaminated wood, to increase its ethanol capacity.

When asked why it had chosen Teesside, the response was familiar.

Teesside's expertise in chemicals and business support made it a centre of excellence for biofuels - and, after all, who wouldn't want to be keen to play an active role in its development?

According to Anthony Platts, assistant director of Thornaby investment management firm Wise Speke, the private sector's confidence in the renewable energy sector will continue to grow.

"Organisations like the Carlysle Group, one of the UK's biggest private equity groups, and venture capitalists such as 3i, are increasingly investing in this market," he said.

"For private sector investors it's important to identify a potential customer line. There is clearly one for green fuels."

But he warns that the demand is not so obvious for renewable energy supply.

"Private investors will always want to see how they are going to make money, and at the moment it isn't so obvious," admitted Mr Platts.

"I think renewable energy will need a push from Europe to get the sector really moving."

Others say that more research and development is needed.

But a study from the Engineering and Employers Federation reveals that the UK only spends one tenth on R&D in this field - less than all EU members except Portugal and the US.

According to Dermot Roddy, chief executive of Renew Tees Valley, the body set up to champion the renewable sector on Teesside, that is unlikely to change until people are made to pay the full cost of their CO2 impact.

"You cannot let market forces alone drive useage," he said.

"Yes we'll get there, but not quickly enough."

More worrying, it seems that no one green solution is without its problems.
The grain required to fill the petrol tank of a Range Rover with ethanol, for example, is sufficient to feed one person for a year.

Developing nations are seeing rapid destruction of natural habitat as farmers clear land for crops.

Even the growing and harvesting of fuel crops uses energy and emits CO2.

That tipping point may not have been reached after all.