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Clean Energy Dollars Heading to Developing World

There are plenty of good intentions here in Cancun to accelerate climate financing to reduce our global carbon footprint: GreenTEK announced a $150 million Mexico Fund dedicated to climate change mitigation in this host country. The U.S. government unveiled plans for $300 million in financing to support renewable energy projects in developing countries. Deutsche was even touting a new project to reduce methane emissions from Mexico's tequila industry.

Still, there's universal agreement here that these are only baby steps and that global climate investments are still woefully inadequate. Worldwide, clean energy investments this year will total about $200 billion, less than half the $500 billion a year that economists say is needed in the coming decades to limit global temperatures increases to below 2-3 degrees.

But there's some positive trends when you dig into the numbers. Surprisingly, the biggest clean energy action is in developing countries -- and not just China.

For the first time ever, wind energy installations in developing countries this year, more than 22,000 megawatts, will outpace those in industrialized countries. China is a big reason why, but India, Mexico and other developing countries are also seeing healthy jumps in wind power production.

"The notion that wind power is only for rich countries has been proven wrong," said Steve Sawyer, secretary general of the Global Wind Energy Council, speaking at a GreenSolutions panel in Cancun.

This upsurge is a direct result of developing countries putting strong clean energy policies in place, in marked contrast from the United States. A few examples:

• India has introduced a new tax on coal consumption, with the revenues expected to be used for a new green investment bank.
• Korea is dedicating the majority of its fiscal stimulus to environmentally-related infrastruture and industrial initiatives.
• China's seven prioritized industries all have strong links to low-carbon models and is expected soon to launch a pilot carbon trading system.

"If policy ambition has stalled in the industrialized world, it has, if anything, accelerated this year in key emerging markets," wrote HSBC Global Research in a recent Cancun policy brief. "This defies the traditional 20th century worldview whereby developing countries always follow in the wake of the developed."

So where does the United States in all of this? At the bottom of the heap.

Climate policy gridlock in Washington has thrown cold water on the industry. Wind energy installations this year will be half of those in 2009, when a record 10,000 megawatts was installed.

"We're going in the wrong direction," said Denise Bode, CEO of the American Wind Energy Association, whose 2,500 members employ 85,000 workers across the U.S.

In addition to killing jobs, Bode says the policy uncertainty is spawning more investment in coal and other higher-polluting power sources. "For the first time in many years, we're looking at 70 percent of new power production this year coming from coal and other fossil fuels," she said.

But there's a bright lining in the U.S.: state policies. Bode heaped praise on the governors in California, Colorado and Ohio for enacting policies that support renewable energy and clean energy jobs.

"In Ohio, by changing their tax policy treatment of wind power, we're going to increase capacity from seven megawatts to 1,100 megawatts (in the next two years)," she said.

Let's hope there are more Ohios out there, even if they are not here in Cancun.

Image CC licensed by Flickr user DesertNana aka majamom.

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