Low oil price threat and
opportunity for renewables: U.N. climate chief
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[January 23, 2015]
LONDON (Reuters) - The current low
oil price is both good and bad for the renewable energy sector, United
Nations climate chief Christiana Figueres said on Thursday at the World
Economic Forum in Davos, Switzerland.
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Crude oil prices have fallen by around 60 percent since June,
triggered by oversupply. Analysts expect prices to remain under
pressure, prompting cuts to price forecasts in 2015 and 2016.
"It is both a threat and an opportunity," Figueres said at a
televised debate in Davos, referring to the oil price crash.
When oil prices fall, low-carbon sources of energy such as wind and
solar power may seem less attractive to investors, creating doubts
about the pace of the world's transition to clean energy.
"Some renewable energy projects which aren't completely bedded down
are certainly being delayed but at the same time, (the low oil
price) is already taking off the market very expensive oil
projects," Figueres said.
Tar sands or exploration in the Arctic have become less attractive
due to the oil price crash, she said.
Renewables sectors which are mature and well-established, such as
wind and solar, will likely weather the storm as their technology
costs have fallen dramatically over the past few years.
"Renewables which do have their financials bedded down are actually
moving forward...Oil is temporarily low but will go back up," said
Figueres.
She also said that there was a "fantastic opportunity" for
governments to cut subsidies on fossil fuel consumption. "This is
the moment to do it," she said.
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Feike Sijbesma, chief executive officer and chairman of Dutch
nutrition company Royal DSM, said many businesses wanted tougher
action to fight climate change including a price on carbon.
"Of course, the low oil price makes renewables less competitive in
half a year's time, therefore it is the right moment for a global
carbon price," he said.
Former Mexican President Felipe Calderon, who led a study last year
concluding that fighting climate change would not brake world
economic growth, also questioned whether low oil prices would be a
shock for renewables.
"The impact ... will be less than you are expecting," he said.
(Reporting by Nina Chestney and Alister Doyle; Editing by Michael
Urquhart)
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