China leads world in green energy investment

15 September 2011 Last updated at 23:02 GMT By James Melik Reporter, Business Daily, BBC World Service Coal remains the prime energy source in China, accounting for 70% of the energy mix Global investment in renewable energy jumped 32% in 2010 to a record $211bn (£130bn; 149bn euros), according to the Global Trends in Renewable Energy Investment 2011 report.

Published jointly by the UN Environment Programme and the Frankfurt School of Finance, it shows that China has become the largest investor in renewable energy projects.

But the country still faces grave cases of pollution despite progress in cutting down on the number of new coal-burning power stations during the last five years.

According to Zhang Lijun, vice-minister of environmental protection, coal consumption increased by a billion tons between 2006 and 2010.

"And it is likely to see another one-billion-ton rise in the coming five years," he adds.

Security concerns

Yet the Chinese government is spending tens of billions of dollars every year on so-called clean-tech projects - commonly referred to as green energy.

"There is a very clear trend in Asia that people are becoming more and more interested in clean energy and clean-energy investing," says Vivek Tandon of Aloe Private Equity.

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If you create a new industry by bolstering the clean energy sector, you can also create jobs”

End Quote Vivek Tandon Aloe Private Equity "One major reason is the need for energy security, particularly in China, which has an enormous demand for energy," he says.

At current levels of production, China has coal reserves which should last 40 years, although most reserves are located in the north and north-west - and that poses logistical problems for supplying electricity to the heavily populated coastal areas.

Demand for coal is currently outpacing production - a situation made worse by the government's increasing closure of antiquated and unsafe coal mines.

The public's perception of the deteriorating ecology and environment around them has been instrumental in the growth of renewable energy.

Furthermore, it is also seen as a forum for job creation.

"If you create a new industry by bolstering the clean energy sector, you can also create jobs," says Mr Tandon.

China is already the biggest producer of coal and home demand continues to grow Volatile market

Apart from the Chinese government investing in green technology, money is also coming from outside the country.

Some investors are getting a bit nervous about where the global economy is going and whether or not recovery can be sustained.

There is the danger therefore, that investment into green technology in Asia might not remain at current levels if the recovery is derailed

Johanna Klein, who invests in private equity funds on behalf of the Asian Development Bank (ADB), says clean energy is probably past the point of being the "flavour of the month" in terms of being the latest fad where investors want to put their money.

"The trend is fairly robust and fairly long-term at this point," she says.

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China is building a coal plant a week, but is dedicated to having the clean energy sector take off”

End Quote Johanna Klein Asia Development Bank She does not believe that clean energy is going to be any more volatile or any more affected by the oscillations of the markets than any other assets, but neither does she think that it will be protected from those phenomena.

The governments of some Asian countries also provide subsidies and backing for some of the green technologies.

"Governments have their own programmes to offer incentives to people to invest in clean energy," says Ms Klein.

"China is probably the most obvious example. They have an enormous programme of giving subsidies at all different levels from the federal to the local, to help the nascent clean energy industry really take off."

Forging ahead

India is also trying to develop its clean energy industries but in China there is a very deliberate policy of offering direct support to the industry to help it evolve and mature.

"I feel as if Asia took a long time to get on the bandwagon of supporting clean energy and clean tech, but I feel it has now taken a quantum leap ahead of countries like the US where we are still see a lot of dithering around when trying to decide on policies with regard to the whole industry," Ms Klein maintains.

"What Asia can probably deliver to the world is not just a vision, but an ability to execute," she says.

"China is building a coal plant a week, but is dedicated to having the clean energy sector take off. That is amazingly visionary and inspirational."

The US and Europe, which used to be at the forefront of renewable energy innovation, are going to start looking to countries like China as having forged a path to a greener future.

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Classic cars rev up their investment credentials

16 September 2011 Last updated at 22:33 GMT By Lucy Burton Business reporter, BBC News, at the Goodwood Revival Paul Laznante, shows the BBC around a Ford GT40 which won at Le Mans

A low throaty roar reverberates around the Sussex countryside as a procession of classic cars winds its way over the South Downs to the Goodwood Revival.

Out of pristine E-type Jaguars, AC Cobras and sleek Aston Martins step World War Two soldiers, Teddy Boys and spivs.

The Revival is an annual event where cars from the "golden age of motor sport" are admired and raced.

Here enthusiasts, dealers and racing divers mingle - all dressed immaculately in period costume.

For many, the Revival is simply an opportunity to appreciate vintage engineering, but some attend for far more mercantile reasons.

Automotive Art

Over the last 30 years or so the value of classic cars has risen inexorably.

A number of the cars go for eye-watering prices at the auction

Until recently the market was driven by enthusiasts who drove the cars as a hobby. The fact that the cars often rose in value was an unintentional side effect of what these connoisseurs call "automotive art".

However, as the economic outlook remains gloomy and the financial markets remain volatile, people are starting to invest more seriously in tangible assets like art, wine and classic cars.

This perhaps accounts for the eye-watering transactions carried out here at Goodwood.

On Friday, in a packed tent, Bonhams auctioneers sold a Rolls Royce Silver Ghost for £485,500, and a Ferrari 365 GTS/4 Daytona sold for £595,500.

Visible Assets

This trend has been reflected in the classic car indices run by the Historic Automobile Group International (Hagi).

Its founder, Dietrich Hatlapa, says the indices have been performing particularly well recently, "showing very little correlation to the standard market".

He believes people feel safer investing in visible assets and "the rising price of commodities like gold offers separate proof of this".

The Hagi indices suggest that classic car sales are generating as much as a 12% return.

At the moment it's the vintage Ferraris that are giving drivers the biggest financial boost.

"They have performed best by a mile," says Mr Hatlapa.

The Ferrari GT Spyder - a car once owned the radio DJ Chris Evans - could be bought in the 1960s for $94,000 (£60,000). Today, these cars sell for a reputed $7m.

Mr Hatlapa credits their enduring success to the fact that they were built in small numbers, were technically sophisticated and were successful in various competitions.

Emerging markets

The classic car market has been given a massive boost from the emerging markets.

Classic car prices have risen strongly

A few years ago wealthy Middle Eastern and Asian enthusiasts were buying flashy super-cars to flaunt their new found riches.

But they soon realised that as impressive as cars like the Lamborghini Gallardo Coupe are, they can depreciate by as much as a $1,500 per week.

So, they have started to buy classic cars - and in particular those manufactured in Britain.

Automobile fund

You only have to meet some of the drivers at the Goodwood Revival to understand that much of the joy of investing in classic cars comes from restoring and running them.

But a new hedge fund has been set up that has taken this hands-on involvement out of automotive investment.

IGA Automobile was set up by ex-racing driver Ray Bellm. He says he has spent the last 30 years watching the value of rare cars rise and rise.

The fund aims to buy $150m worth of some of the world's most iconic cars in order to sell them on at a profit some years down the line.

Among some of the cars Mr Bellm has his eye on is a Ferrari 250 GTO, an Aston Martin DB4 Zagato, and a McLaren F1. "We'll be looking at the heritage, quantity and perception of the cars," he says.

The group hopes to attract sovereign wealth funds and ultra high-worth individuals, and is offering them a return of 15%. But Mr Bellm admits that the greatest weakness of the fund is that the investors won't actually be able to drive the cars.

Affordable classics

Of course, not all of us can afford to buy high end Ferraris or invest in hedge funds.

The event attracts a well-dressed set

So is it worth buying a classic car from the lower end of the market?

"Absolutely, why not?" asks Dave Selby a classic car analyst.

"If you've got £5,000 sitting in an ISA why not put that money into a classic car? You'll get a lot of pleasure from it and won't lose money."

He says cars like the MGB Roadster and Triumph Stag will accrue value, and like all classic cars, when they come to be sold the owners don't have to pay capital gains tax.

But Mr Selby does offer some words of caution, and says that a classic car purchase must be properly researched.

"Before a car becomes a classic, it must have gone through the second hand market and reached the bottom of the depreciation curve," he says.

In other words, you shouldn't just buy any old banger from a second hand car dealer.

But, if you pick the right car - whether it's worth £100 or £1m - you gain an asset you can have fun with.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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