The United States has extended its lead as the most attractive location in which to invest in renewable energy projects.

The country’s increasing desirability is directly linked to a conviction among investors that politicians are now firmly in support of renewable energy.

The findings by Ernst & Young come just two weeks after President Bush used his annual State of the Union address to call on Americans to cut fuel consumption by 20 per cent over the next decade, giving warning that the country had been dependent on foreign oil for too long.

Jonathan Johns, author of the E&Y report, said that the country’s commitment to renewable energy was reinforced by the recent renewal of tax credits for large-scale projects until at least next year.

He said: “President Bush has, for the first time, admitted that climate change is a serious challenge and, while falling short of specifying emissions targets, offers hope that the US might finally be prepared to support a successor to Kyoto.”

Mr Bush has also given strong support to biofuels, which use natural crops and commodities to reduce the carbon footprint of vehicles.

Traditionally America has been a “long way down” the rankings, Mr Johns added. “Five years ago, the political support was just not there.”

The E&Y Country Attractiveness Indices rank countries according to their desirability as locations for investing in renewable energies such as wind and solar power.

The rankings are dependent in part on the size of the domestic energy market, indicating the opportunities available to producers. However, the forward-looking survey also measures political engagement in the green energy movement, explaining the increased attractiveness of the US.

“For the first time, the power of individuals and business appears to be influencing the path we take for meeting our future energy needs,” Mr Johns said.

India rose from third to joint second place with Spain as politicians indicated their willingness to allow producers to exploit market oportunities. The country committed itself in the latest quarter to producing 16 per cent of its power from renewable sources within 25 years.

Spain became less attractive as an investment location over the quarter, largely because of signs that there is a slowing interest in encouraging renewable energies. However, it retained its second place, in part because of its notable solar industry.

The UK remained in fourth position. Mr Johns said that although the UK has one of the best positions in Europe to exploit wind energy, the size of the market will always limit its attractiveness.

He said that within five years the US, China and India would probably take the top three places in the renewables index. China remained in sixth place despite the size of potential demand, in part because of its poor infrastructure.

“The industrial powerhouses of India and China have relied on on-site generation for a number of years, often because of concerns over the reliability of municipal utilities,” Mr Johns said in the report.

He said this stance on generation had prompted many big users to create their own supply, sometimes by investing directly in renewable projects.

In the index the US has 72 points, Spain dropped to 63, India was unchanged at 63 and the UK was held steady at 62.

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