Oil prices encourage poorest to use renewables-IEA

Wed Sep 22, 2010 12:58am GMT
 

* Renewable energy seen more viable vs oil for poorest

* IEA says would cost 3 pct of global energy investment

* Projections presume higher oil prices here to stay

By David Sheppard

UNITED NATIONS, Sept 21 (Reuters) - Higher oil and energy costs mean the world's poorest people should look to renewable energy sources to provide the power generation so many lack, the head of the International Energy Agency said on Tuesday.

Nobuo Tanaka, executive director of the IEA which advises 28 industrialized countries on energy policy, said oil prices near $75 a barrel CLc1 meant rural populations in sub-Sahara Africa should turn to solar, wind and other renewables.

"Higher energy prices have a very large impact on the poorest populations," Tanaka said on the sidelines of a summit on world poverty at the UN headquarters in New York.

"That is why we think that renewables are often the best solution. The issue is how you finance these projects initially."

The IEA was launching a report created with the United Nations Development Programme and Industrial Development Organization looking at energy poverty and how to make modern energy access universal.

It highlights that it would cost $36 billion a year between now and 2030 to provide energy supplies to the world's 1.2 million people who currently lack access. [ID:nLDE68K23U]

The report argues this amounts to just 3 percent of what the world is projected to invest in future energy projects over the next 20 years.

"Lack of access to modern energy services is a serious hindrance to economic and social development and must be overcome if the UN Millennium Development Goals are to be achieved," the IEA said in the report.

Tanaka said current oil prices around $75 a barrel may fall in the short-term if the economic recovery in the developed world falters, saying he saw many risks to growth, but the IEA and its partners do not see prices heading lower for long.

"In the report we're not projecting oil prices will go down significantly," said Minoru Takada,the head of Sustainable Energy at the UN Development Programme.

"We expect the oil price will stay around this level or rise a bit higher."

The report said in this environment, "Small, stand-alone renewable energy technologies can often meet the electricity needs of rural communities more cheaply and have the potential to displace costly diesel-powered generation options.

"One of the main advantages of renewable energy sources, particularly for household scale applications, is their comparatively low running costs (fuel costs are zero), but their high upfront costs demands new and innovative financial tools to encourage uptake."

Takada of the UN Development Programme said they would work with host and donor countries to encourage subsidies for initial projects.

Using primarily renewables to provide energy access to the world's poorest populations would only boost oil demand by less than 1 percent and carbon dioxide emissions by 0.8 percent, the IEA said. (Reporting by David Sheppard; Editing by Richard Chang)

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