The “green” industry – a catchall phrase that refers to alternative energy creation, environmentally friendly products and low carbon upgrades to infrastructure – is growing. With some setbacks due to a low oil price, the sector nevertheless offers great business opportunities.

The European Commission is to invest €105 billion (£97 billion) in green projects in its latest budget – almost triple the amount earmarked in the last round. This is a massive increase on the 2000-2006 allocation. It will be invested through the EU Cohesion Fund and amounts to almost a third of the regional policy budget for the period 2007-2013.

Part of the reason for the focus on green industries is that this is a growing sector. The low carbon sector is currently worth over £3bn in the UK – the country that has taken a lead in these issues. UK consumers spent £4.3bn on low carbon goods in 2008. Internationally, the sector has grown by 40% in the last year alone, and, even during the recession, growth remains strong. Gordon Brown has expressed hope that this sector will create 400,000 jobs in the next decade.

In announcing the EU funding, the press release stated: “In a difficult financial climate, this investment will be instrumental in creating long-term employment and reviving local economies, as well as underpinning the EU’s commitment to the fight against climate change.”

The money will be used to help the EU meet ambitious climate change target of a 20% reduction in greenhouse gas emissions and producing 20% of total energy consumption from renewable energy by 2020. More than half the money – €54 billion (£50 billion) – is to help member states to comply with EU climate change and environmental legislation.

The UK is to get almost €1.6 billion with the majority to be spent on urban and rural regeneration projects, clean urban transport promotion and eco-innovation in SMEs.

The money needs to be used wisely. There is huge debate about how to best spend money allocated to green projects. Some projects that get media hype, and make for great picture backgrounds at political events, are not actually viable unless oil runs out and the price of electricity increase dramatically! Wind farms, for example, do not have good return on investment time frames. That’s why the financial downturn, and drop in oil prices (as well as delays obtaining access to the national grid and planning permission), has caused investment in wind farms to collapse.

For example, Iberdrola Renewables made a decision to cut its investment in wind farms in Britain by more than 40%, or £300 million — enough to build a wind farm powering 200,000 homes. Shell and BP have shelved or pulled out of renewable energy projects, including a £3 billion project for 341 turbines in the Thames Estuary, and questions have been raised over the future of npower’s £2.2 billion Gwint y Mor farm off the Welsh coast.

So, some false starts. Some bad technology. Some setbacks. But great prospects.

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