For years, the global wind energy industry has been growing at a 25 per cent clip, driven by surging investment, a slew of government subsidies and tax breaks. By 2007, total installed wind capacity had grown from only six gigawatts globally in 1996 to 94 gigawatts.

Now, however, comes an abrupt reversal in fortunes. From Britain to Australia, developers are facing fierce headwinds as the credit crunch bites and plunging oil prices undermine the economic rationale of more costly renewable energy schemes. In May, Shell provoked uproar when it withdrew from the world's largest offshore windfarm - the London Array in the Thames Estuary - after the costs allegedly had risen from £1 billion in 2003 to £3 billion. Last month, BP followed suit, blaming the spiralling cost of labour and materials on its decision to exit the UK renewables industry. Across the Atlantic, FPL Group, America's largest wind-power operator, is cutting its spending next year by nearly a quarter to $5.3 billion and new wind-power generation to 1,100 megawatts, from 1,500.

Industry executives complain of tough conditions, with bottlenecks in the supply of key equipment such as wind turbine blades forcing up costs. Project finance is also tougher to find and more expensive than it was a year ago, with bankers less willing to lend because of falling oil prices and the turmoil in debt markets.

Yet this is only a delay in the advance of sustainable energy. Global warming is not an issue that is going away and thus the rationale for wind power, solar energy and others will survive its present squeeze. Indeed, this may be the time in which braver players invest, ready for the time that the financial climate changes again.

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