Wednesday, 27 May 2009

Gulf can lead on renewable energy

States must ensure renewable energy can help take the place of oil and gas when the wells run dry.
In March, two major international energy companies announced they were cutting back on investment in developing renewable energy technologies. Presenting strategy updates to shareholders, the UK/Dutch Shell Group and the UK's BP said they would focus on developing second-generation biofuels and carbon-capture and storage technologies.
With the price of oil now hovering around $60 a barrel, down from almost $150 a barrel in July last year, the incentive for listed companies to invest in developing renewable energy has weakened.
With oil and gas more affordable, utilities companies are falling back on hydrocarbons to fuel their power stations. With companies such as BP having shareholders to answer to, now may be the time for government initiatives to develop renewable energy instead.
While Abu Dhabi Future Energy Company's (Masdar's) main focus is on carbon-capture and storage, it is investing in renewable energy, setting a benchmark for the rest of the Gulf.
In June last year, Masdar announced a $2bn investment in the development of photovoltaic film technology – converting solar energy directly into electricity – with plans to begin production in Abu Dhabi by the middle of 2010. Following Masdar's lead, Doha responded in March this year by laying out its own renewable-energy credentials.
Lower oil prices may have distracted the private sector away from renewable-energy investment, but the Gulf, having for decades done little more than invest in small, pilot solar-power projects, is now investing large sums to catch up with countries such as Germany, where 15 per cent of energy comes from renewable sources.
The challenge for Gulf governments is to sustain investment for the long term, to ensure renewable energy can help take the place of oil and gas when the wells run dry.

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