http://uk.reuters.com/article/2012/09/18/climate-revenue-idUKL5E8KILI220120918
Global climate revenues fell 5 percent in 2011 to $539 billion from an all-time high the previous year, mainly dragged down by the weak performance of low-carbon energy companies hit by the global economic slowdown, a report by HSBC said on Tuesday.
Climate revenues were unlikely to exceed 2010's all-time high of $567 billion over the next few years. Revenues could contract further in 2013 and flatten through 2015, HSBC said in its annual climate change index review.
The HSBC Climate Change Index tracks the performance of 347 stocks across the low-carbon energy production, energy efficiency, environment and land-use management and climate finance sectors.
The index declined 5.2 percent in 2011, compared to a 9.9 percent gain in 2010, and underperformed the MSCI All Country World Index by 15.1 percent.
Global engagement in climate change seems to have temporarily stalled as many governments have to focus on overcoming an economic downturn and as companies suffer from the slowdown.
"The global economy continues to face headwinds with the resulting backdrop not being particularly supportive for the climate sector," the report said.
In Europe, the euro zone crisis has forced some governments to cut subsidies for renewables and constrained capital for new clean technology investments and the United States' low-carbon agenda is uncertain due to presidential elections this year.
Global revenues from low-carbon energy production dropped 12.1 percent to $310 billion in 2011 from the previous year.
This was mainly due to the weak performance of firms involved in generating renewable energy like geothermal, bioenergy, hydro, solar and wind power, which together posted losses of 10.5 percent year-on-year, the report said.
The energy efficiency sector was the only sector to experience revenue growth in 2011, rising 12.7 percent to $150 billion.
Europe had the biggest share of global climate revenue at 49 percent in 2011. North America had the second largest chunk at 28 percent followed by Asia at 21 percent.
"While the largest portion of global climate revenues are still derived in developed markets, the growth of emerging market countries and their presence in the climate sector continues," the report said.
The United States occupied top position in the top 10 countries based on climate revenues, followed by France and Japan. China occupied eighth place while Brazil was tenth.
"While the state of the global economy continues to put pressure on the climate sector as well as increased competition places the sector in a state of flux, new market participants will continue to emerge, attracted by the opportunities created by the low-carbon transformation," HSBC said.
The Asia Pacific region (excluding Japan) will be an attractive region for investment in the water, waste and pollution control sectors as HSBC expects 12-month forward earnings growth of 25 percent, cheap private equity valuations and policy support. (Reporting by Nina Chestney, editing by William Hardy)