Global investment in clean energy in the first quarter fell to its lowest level for four years, driven by cuts in tax incentives at a time of austerity, a report by Bloomberg New Energy Finance said on Monday.
The report said investment in renewable energy, energy efficiency and smart technologies declined 22 percent to $40.6bn from the first quarter of last year.
Investors in the European Union have been deterred by cuts in clean energy support amid the euro zone sovereign debt crisis and there is continued uncertainty about wind projects in the United States even after a tax credit was extended at the end of last year, the report said.
Rapidly developing economies like China and Brazil have seen a lull in financing for renewable energy in the first three months of this year.
"The last 18 months have seen a number of significant support programmes launched in the aftermath of the financial crisis come to an end," said Michael Liebreich, chief executive of research company Bloomberg New Energy Finance.
"The plummeting cost of clean energy technology has kept activity high in terms of megawatts of capacity, but not so much in dollar terms," he added.
Investment in the United States plunged 54 percent to $4.5bn in the first quarter from a year earlier. Chinese investment declined 15 percent to $8.8bn and there was a 25 percent fall to $13.4bn in Europe.
Clean energy investment in the rest of Asia, however, excluding China and India, jumped 47 percent to a record $10.1bn. Japan accounted for $8.2bn of that total.
Asset financing of utility-scale projects such as wind and solar farms experienced a decline of 34 percent to $19.3bn in the first quarter of this year, the report said.
In Europe, investor confidence in countries such as Germany, Bulgaria and Romania, has been dampened by government plans to cut funding for renewable projects.
Wind farm investment in the United States stalled during the winter because a tax credit to support the industry looked like it was going to expire at the end of last year.
Even though the credit was extended, uncertainty has continued to affect the financing and construction of US wind projects.
Total new investment in clean energy worldwide in 2012 was $268.7 billion, down from a peak of $302.3bn a year earlier. This, however, was still over five times the total in 2004.
Analysts say the United States has shown increased interest in recent years in developing shale gas, which diverts money away that otherwise might be invested in renewable sources.
US shale gas output has seen Europeans import cheaper U.S. coal to burn in power stations, while the value of official financial incentives to use cleaner fuel has diminished.