Green Energy Investment Surviving Crisis, Says IEA

Muriel Boselli, PlanetArk 28 May 10;

Investment in renewable energy is faring better than initially expected despite the economic crisis, the International Energy Agency (IEA) said on Thursday.

IEA Executive Director Nobuo Tanaka said the agency was maintaining its forecast for carbon dioxide-free power generation to make up 60 percent of the electricity mix by 2030, a target set in the IEA's World Energy Outlook last year.

The current share is 33 percent. "Our projection for investment in renewables may not necessarily be as pessimistic as initially thought," Tanaka told the Global Reuters Energy Summit.

"Of course it can't grow too high but it might not decline as much as we had expected," Tanaka added. The Paris-based IEA, which advises 28 industrialized nations on energy issues, sees various forms of renewable energy making up around 1-2 percent of the energy mix by 2030.

Green policies in the stimulus packages that were decided by governments during the economic turmoil in 2009, would trickle through in 2010, helping investment, he said.

China's economic stimulus package includes the world's largest green investment programme, earmarking $230 billion compared with the United States' $80 billion and about 25 billion euros ($30.70 billion) in the EU, according to the International Institute for Environment and Development.

IEA Chief Economist Fatih Birol said on Wednesday in Paris that governments should create a framework for renewable energy. Otherwise renewables would not establish themselves due to their high costs and competition from cheap gas as well as because of low economic growth prospects.

But Tanaka said that the agency had observed a historical transition in the green technology sector.

"We are seeing real changes and a historical transition in low carbon technology," he said, citing rapid evolution in electric vehicles as well as solar and wind power.

Tanaka also said that some Group of 20 countries were making rapid progress in their pledge to progressively erase fuel subsidies, which would make alternative fuel sources more attractive.

Governments in several G20 countries, including China, Russia and Indian subsidize fuels such as coal and oil to keep prices artificially low for consumers, boosting demand for hydrocarbons and emissions from them.

Subsidies total $310 billion annually in non-OECD nations.

"We need to phase out fossil fuel subsidies," Tanaka said, adding that China and Russia were making good progress.

(Editing by Anthony Barker)