Fracking Sucks Money From Wind While China Eclipses U.S.

Photographer: Patrick T. Fallon/Bloomberg

U.S. President Barack Obama says natural gas can be a bridge from coal to a cleaner energy future.

Investors are showing its more likely a bridge to nowhere.

The countrys embrace of natural gas means less love for wind and solar. New investments in renewable energy sources declined 5 percent in North America last year to $56 billion, the lowest since 2010, according to Bloomberg New Energy Finance. By comparison, North American oil and gas companies spent $168.2 billion on exploration and production last year, more than double 2009, data compiled by Bloomberg show.

Fracking -- the process of blasting water, sand and chemicals into miles-deep shale rock to extract fuels -- has helped push U.S. natural gas production to new highs in each of the past seven years, according to the Energy Information Administration. Its also more expensive than traditional drilling and contributes to global warming, according to the U.S. Environmental Protection Agency. Renewables, which are getting cheaper, have 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 savior, so Washington has been oblivious to the renewables revolution, but China hasnt been oblivious, said Hal Harvey, the chief executive officer of San Francisco-based Energy Innovation: Policy and Technology LLC, who has 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. Its also changed the way Americans invest, said James McDermott, managing director of the U.S. Renewables Group. He said his Los Angeles-based investment firm, which manages more than $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 $2.3 billion to the Energy Select Sector SPDR Fund, which tracks oil and gas companies. In the same period, investors withdrew $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.

Theres 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 Plc, which oversees about $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. Its 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 U.S. is generating more power from these sources than ever before.

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Fracking Sucks Money From Wind While China Eclipses U.S.