Where will the money come from? As climate change targets move ever closer and Europe’s crumbling infrastructure begins to show its age, the continent’s energy sector requires investment on an unprecedented scale. Yet at the very moment those needs have become just too pressing to defer, the financial crisis threatens to choke off the supply of capital.
In the UK alone, Ofgem, the energy industry regulator, believes it will be necessary to spend £200 billion ($313 billion) on infrastructure before 2020 if the country is to satisfy the legally binding environmental commitments it has made while also ensuring that the lights don’t go out. Across the European Union as a whole, estimates of the spending required range from €1 trillion to €2 trillion.
Europe is not alone in requiring such levels of investment. The challenge is the same in developed and developing economies around the world: to fund a new generation of energy projects that will be capable of meeting rising demand in a low-carbon age. But no other country or region of the world has to meet that challenge while labouring under the financial constraints of Europe’s economic downturn, its sovereign debt crisis and its cash-strapped banking system.