LONDON (Reuters) - Investment in renewable energy is down and achieving oil prices that spur “green-growth” should be a goal for December’s Copenhagen conference, the chief economist of the International Energy Agency said on Monday.
The global financial crisis, falling oil demand and a slide in barrel prices have prompted many investors in the industry to scale back spending and delay projects in both outright energy investment as well as in renewable projects.
At the sidelines of an energy conference co-sponsored by the United Nations in Vienna, the IEA’s chief economist Fatih Birol told Reuters TV that “right financial signals” were needed from governments to spur renewable energy investment.
“It’s up to the policymakers in Copenhagen at the end of the year in Denmark to agree on a framework that gives the right financial signals to investors.”
Nearly 200 countries have been trying to reach an agreement to replace the Kyoto Protocol on global warming with a December deadline in Copenhagen fast approaching.
“A deal in Copenhagen would give the right signals to energy investors in wind, solar efficiency...even car manufacturers or refrigerator producers,” Birol said.
In May Birol said the IEA expected 2009 oil and gas upstream investment to fall 21 percent, or about $100 billion, from 2008, as the credit crunch has limited companies’ access to finance and lower energy prices have sapped revenues.
Spending on renewable energy was falling even more rapidly, and the IEA in May said it expected a 38 percent slide in investment this year compared to 2008.
Last year oil shot up to above $147 a barrel, but then fell as the economic recession took hold, bottoming near $32 in late December. On Monday U.S. crude dropped more than 2 percent to below $67 a barrel.
“High oil prices have two impacts...the higher the oil price, the more impetus it gives to alternative technologies such as renewable energies. If today renewable energy investment has collapsed badly, and it has, that is mainly because of the global oil crisis,” Birol said.
Birol, who in early May warned the Organization of the Petroleum Exporting Countries that higher oil prices would slow global economic recovery, called for prices to be balanced in favour of investment and sustainability.
“A good indication if prices are high enough is that they then can give a certain impetus to renewable energy investment,” Birol said.
“But at the same time, if they are far too high, it is bad for economic growth and would lessen the affordability for countries, persons and industries to make those investments.”
Additional reporting by Jane Grieve