While the United States President Barack Obama has said natural gas can be a bridge from coal to a cleaner energy future, investors are showing it’s more likely a bridge to nowhere.
The country’s embrace of natural gas means there has been less financial love for wind and solar.
According to Bloomberg New Energy Finance (BNEF) new investments in renewable energy sources declined five per cent in North America last year to $US56 billion, the lowest since 2010.
Data compiled by BBNEF shows by comparison, North American oil and gas companies spent $US168.2 billion on exploration and production last year, more than double 2009.
Fracking, the process of blasting water, sand and chemicals into kilometres-deep shale rock to extract fuels, has helped push US natural gas production to new highs in each of the past seven years, according to the Energy Information Administration.
It’s also more expensive than traditional drilling and contributes to global warming, according to the US Environmental Protection Agency (EPA).
Renewable energy, which is getting cheaper, has lost support even as the United Nations warns that time is running out to stem climate change and China forges ahead with sustainable power.
“Everyone in Washington thinks gas is a saviour, so Washington has been oblivious to the renewable energy revolution, but China hasn’t been oblivious,” said Hal Harvey, the chief executive officer of San Francisco-based Energy Innovation: Policy and Technology.
Mr Harvey has previously been appointed to energy panels by presidents George H.W. Bush and Bill Clinton.
The shale revolution has brought the country closer to energy self-sufficiency than at any time in the last three decades, according to the EIA.
It’s also changed the way Americans invest, said James McDermott, managing director of the US Renewables Group.
He said his Los Angeles-based investment firm, which manages more than US$750 million, is currently raising money only overseas.
Hydraulic fracturing, the technical name for fracking, has helped open the money tap for gas and oil.
Since 2012, investors added more than US$2.3 billion to the Energy Select Sector SPDR Fund, which tracks oil and gas companies.
In the same period, investors withdrew US$32.5 million from the Powershares Wilderhill Clean Energy Portfolio, the biggest exchange-traded fund tied to renewable-energy equities, according to data compiled by Bloomberg.
“There’s absolutely no question that investors’ dollars have moved from one to the other,” said Bruce Jenkyn-Jones, a managing director at London-based Impax Asset Management Group, which oversees about US$4.2 billion.
Even as investors have embraced fracking, more Americans tell pollsters they oppose the practice than support it, according to a September survey by the Washington-based Pew Research Center.
It’s true that windmills as tall as 40-story buildings are still sprouting in the Great Plains, and more solar panels are appearing on Americans’ roofs, including at the White House.
The US is generating more power from these sources than ever before, yet the pace is slowing.
Combined capacity for solar and wind power expanded nine per cent to 76,326 megawatts in 2013, down from a 30 per cent increase in 2012, according to data compiled by Bloomberg.
At the same time the use of fossil fuels still dwarfs that of renewable energy.
Half of new power-plant capacity in the US last year was natural gas, 6861 megawatts, according to the Energy Department.
That’s enough to provide electricity to the state of Massachusetts.
It’s also 25 per cent more than the combined capacity additions for solar, wind, biomass and hydro power.
It’s a different story in China even though the country burns more coal than any other, darkening the sky over its biggest cities.
China’s wind capacity expanded 21 per cent to 91,412.9 megawatts in 2013, on top of 21 per cent growth the year before, according to the Global Wind Energy Council.
The country’s solar capacity more than doubled in each of the past five years, according to BNEF.
Its capacity overtook the US in 2013 and is now second in the world only to Germany, data shows.
China is also turning to shale gas to lessen its dependency on coal.
The country holds the world’s largest potential reserves yet its technology is a decade behind the US, BNEF said in a report.
So China is spending as much as four times more than the US to develop shale gas fields, according to the report.
Chinese clean-energy companies already raised US$1 billion in equity so far this year, 46 per cent more than last year and two per cent more than their US rivals, data compiled by Bloomberg show.
US clean-energy companies did raise an unprecedented US$2.9 billion in equity last year.
Yet fossil-fuels companies sold shares valued at more than 14 times as much, also a record, data compiled by Bloomberg show.
The country’s oil and gas output are rebounding after decades of decline.
Hydraulic fracturing and horizontal drilling helped the US overtake Russia and Saudi Arabia to become the world’s biggest combined producer of oil and gas last year, according to the Energy Department.
“Today, America is closer to energy independence than we’ve been in decades,” President Obama said in his State of the Union address in January.
“One of the reasons why is natural gas, if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change,” the President added.
