Writing in The Business today, I made the point that people are generally far more scared of terrorism than climate change and rightly so.

Even if you believe the worst case scenarios, most people would be relatively untouched by climate change, warming the atmosphere a few degrees or 6 by 2100. And if you're a technological optimist like me and have read "The Singularlity is Near" by Ray Kurzweil, there really will be almost no problems that we can't solve by that date, if not decades before. The risk though of a weapon of mass destruction in the hands of at least a few terrorists seems to move ever closer.

The far better argument to make for alternative energy is based on drying up the fee supply of capital to oil rich nations in the Middle East who then use it to fund Madrassahs, terrorism, undermine Liberal Democracy abroad and keep their people repressed at home. Whatever you may think of the Iraq War, the irony is that because it has inadvertently added a good 15 to 20 dollars to the price of a barrel of oil, the indirect consequence has been to partly-fuel an alternative energy investment boom.

AEI takes a global tack on the evolution of alternative energy. So that's why the latest world rankings as compiled by Ernst & Young merit close attention. The top 10 are;

1. Spain
2. USA
3. India
4. UK
5. Germany
6. Italy
7. France
Joint 8th - Portugal and China
Joint 10th - Ireland and Canada

As this article confirms, opportunities are now dropping off in Germany "a result of the declining availability of good sites for wind turbines" (as touched upon in my previous blog). If these attractiveness indices have a weakness, it is that they only cover 20 countries out of the world's total of 193.

Apart from that, the background story to absorb is that policy frameworks and economic systems are at least as important to the development of alternative energy as the actual underlying cost of the plant itself. The most inexpensive windpower in the world is produced in Texas (which just surpassed California in nameplate capacity) at 5 cents or less per kilowatt hour. The most expensive wind is in Germany at around 10 cents per kilowatt hour. The plant however is often identical. The cost of doing business in Germany, the high level of subsidy and low windspeeds would not be competitive in the US electricity marketplace.

International investors therefore need to keep a close eye on the political climate's conduciveness to alternative energy.

No technological evolution has ever been completely independent of politics.