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Energy efficiency outperforming climate investment, says HSBC

The energy efficiency and management sector is outperforming the climate change sector thanks to recent government stimulus measures, according to the latest HSBC Climate Change Index.

The report, published today, finds that the energy efficiency and management sector posted returns up 16% year to date thanks to receiving the lion’s share of investment from recently announced US and Chinese economic stimulus packages.

Since October 2008, the HSBC Climate Change Index estimates that $184 billion has earmarked for energy efficiency and management measures out of the total climate change investment of $350 billion.

“Over the past eight months policymakers and governments have chosen to include some form of climate change component in their economic recovery plans,” says Joaquim de Lima of HSBC. “The upshot is that globally we have seen governments allocating a rising proportion of their stimulus packages towards laying the foundations for growth within a sustainable low-carbon economy.”

In general, those companies that produce goods and services addressing climate change have shown the strongest performance – and are most able to benefit from stimulus packages.

“Despite a turbulent market, climate change investing remains not only valid but essential for growth,” adds de Lima.

The report paints a less rosy of overall efforts to move towards a low carbon economy. Despite efforts, global concentrations of CO₂ will reach a new high of 389.1 ppm – a 139% increase over pre-industrial levels.

And despite improvements in energy efficiency, energy use is tail growing – up 15% between 2001 and 2006. Meanwhile, energy intensity per GDP, which is an indirect measure of a country’s energy efficiency, reveals that progress in OECD countries has stalled.

The report suggests that this is unlikely to indicate that further gains in energy efficiency are harder to achieve, but rather that tougher regulation is needed.

Only the EU and China have set actual energy efficiency targets. China has made impressive progress in recent years and the HSBC report expects that it will easily reach its target of a 20% reduction in energy intensity by 2010. But the EU’s target of a 20% reduction in energy consumption by 2020 look more vulnerable to slippage, says the report.

The main targets for improving efficiency are buildings – which account for a third of global energy consumption, industrial processes and transport – another third of energy usage.

The HSBC Climate Change Index reports some improvements in space heating, but Europe lags in this area – primarily because of the high proportion of older properties that are poorly insulated. Transport has shown very little improvement – energy efficiency of passenger transport up just 0.5% between 1990 and 2004. Industrial processes remain an area of huge potential for progress, but is highly fragmented, says the report.

Meanwhile, the development of renewable energy sources has stagnated, says the report, thanks to the resurgence in the use of coal. Although many countries have set renewable energy targets, only China and Germany have already met their targets – others, including the EU overall, are lagging behind.

For further information:
www.hsbcnet.com/solutions

15 June 2009

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