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One always has to be wary of overinflated expectations. This is clearly an issue for Government - the BBC reports this morning that a fund the UK launched last year to offer developing countries money for climate change adaptation will now partly consist of loans - but also for the private sector. Companies and investors can go crazy for the latest fad, pile everything in and then the market over inflates. We're all painfully aware of such a phenomenon. Two recently released report warn of such a bubble effect in renewable and green circles.
KPMG's Turning up the Heat survey found that half of the world's energy leaders were concerned that such a bubble may be developing in the renewables sector partly due to the surge in prices being paid for companies of late. KPMG partner Andy Cox says: "Our concern is that investors may be ignoring the risks of investing in an embryonic industry that has still to undergo a huge amount of change as it matures."
And while research outfit Frost & Sullivan comes up with a huge growth number for the European green investment market (from 180bn Euros last year to 572bn euros in 2014) it adds a note of caution - beware of the hype. Financial analyst Kirti Timmanagoudar says: "Too much of money flowing into the green investment market can artificially inflate the prices of the green stocks. This could result in a green bubble burst, which can further lead to huge market losses and capital erosion."
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