There has been an exponential growth in the volume of FDI in the area of environmental technology. The number of crossborder greenfield investment projects has grown five-fold from 83 projects recorded in 2003 to 428 in 2007.
The latest data from fDi Intelligence shows that in the first seven months of 2008, the volume of capital investment and job creation has already exceeded the record levels of 2007 – with almost $60bn of investment creating about 80,000 direct jobs in 2008 to date.
In June 2008 alone, there were 100 investment projects – more than in the whole of 2004.
By the numbers
With explosive growth, environmental technology has become the fastest-growing segment of the global investment market. The market share is growing year-on-year, increasing from less than 1% of global investment in 2007 to 8.5% in Q1 2008, making it the sixth major sector worldwide for FDI. The environmental technology value chain can be broken down into four main segments: (1) alternative/ renewable energy, comprising mainly wind, solar thermal, hydro, biodiesel, ethanol electricity generation; (2) electronics, of which solar panels is the major component; (3) industrial machinery, mostly for renewable energy as well as industrial recycling; and (4) engines and turbines, primarily the manufacturing of wind turbines.
An estimated $150bn of investment has been recorded by fDi Intelligence in environmental technology, of which nearly $120bn was in alternative/renewable energy. The largest projects tracked by fDi Intelligence in July 2008 are mainly wind farms.
German firms have developed a clear lead in crossborder environmental technology investment. With 80 overseas investment projects in 2007, German firms had over one third more projects than US firms. Siemens is the leading German investor. Other major players are from Spain, the UK, France and Japan. Chinese firms are rapidly catching up, with 18 crossborder projects in Q1 2008 – more than the whole of 2007 – and more than Spain, the UK and France.
From 2003 to Q1 2008, China has attracted the highest number of FDI projects in environmental technology, reflecting the vast energy needs and environmental issues facing the country. But, in an emerging industry driven by fast-changing consumer behaviour and government policies, the race to be the leading location is far from over. The US led in 2007, while in Q1 of 2008, Spain eclipsed both the US and China to number one spot. The UK, France and Germany are attracting high volumes of investment and India is rapidly catching up.
Dr Henry Loewendahl is product director for fDi Intelligence.