"Renewable energies are no longer subject to the vagaries of rising and falling oil prices – they are becoming generating systems of choice for increasing numbers of power companies, communities and countries irrespective of the costs of fossil fuels," said Achim Steiner, executive director of UNEP. "The other key message is that this is no longer an industry solely dominated by developed country industries. Close to 10% of investments are in China with around a fifth in total in the developing world."

Today, renewable sources produce about 2% of the world's energy, but account for about 18% of investment in power generation. Wind generation won the most investment, while solar and biofuel technologies exhibited the fastest growth rates.

The report attributes the boom in renewable energies to factors such as climate change, increasing energy demand and energy security, as well as the persistently high price of oil.

"Growing consumer awareness of renewable energy and energy efficiency – and their longer term potential for cheaper energy, and not just greener energy – has become another fundamental driver," says the document. "Most importantly governments and politicians are introducing legislation and support mechanisms to enable the sector's development."

In 2006, investors spent $71 bn on sustainable-energy companies and opportunities, up 43% from 2005. A further $30 bn entered the sector via mergers and acquisitions, leveraged buyouts and asset refinancing. According to the report, the fact that capital is coming from the venture investment community, the stock markets and internal refinancings indicates that the sector has shifted to a more mainstream status.

The largest single source of renewable energy investment in 2006 was asset financing of new generation capacity, which represented around 40% of the $71 bn. Most of these deals were in the wind sector, followed by biofuels.

Venture capital and private equity investors in 2006, meanwhile, put $2.3 bn into biofuels, $1.4 bn into solar and $1.3 bn into wind. Much of this cash went to increasing manufacturing capacity.

"We will need many sustained steps towards the de-carbonizing of the global economy," said Steiner. "It is clear that in respect to renewables those steps are getting underway."

More than 70% of investment in sustainable energy was in either the US or Europe, with 9% going to China, slightly less to India, and 5% to Latin America (mostly for bioethanol plants in Brazil). That said, the amount of investment in developing countries is increasing – 21% of the 2006 total went to developing countries, compared with 15% in 2005.

Renewable-energy investment was almost evenly split between the US and Europe. But US companies won more technology and private investment, whereas Europe's publicly quoted companies attracted the most public stock-market investment.

New Energy Finance prepared the report for UNEP's Sustainable Energy Finance Initiative.