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Sun shines again for green energy -- but some clouds linger
PARIS (AFP) Sep 01, 2004
Thirty years ago, as the world reeled from the first shock of soaring oil prices, the big talk of the time was the shining future of solar, wind and hydro energy.

Excited headlines in consumer countries spoke of these as clean, renewable energies from dependable domestic sources to replace oil, branded a dirty fuel imported from a chronically unstable region.

Then a slump in the crude market caused the renewables dream to crumple like a deflating hot-air balloon.

Now, in another year of oil shocks and geopolitical turbulence, the argument for green energy has returned stronger than ever.

But is this just another brief turn in the spotlight?

Could renewables once more be booed off stage if oil fights back as it did in their 1980s, lowering its prices to recover its allure?

Fatih Birol, chief economist at the International Energy Agency (IEA), the Paris-based club of energy-consuming countries, says the picture for every energy source is more complex than it was three decades ago.

But, yes, the outlook for renewables has suddenly brightened, and durably so.

In developed countries, oil began to be dethroned long ago by gas for electricity generation and both are beginning to lose ground to wind, especially in Europe, he said.

In the coming decades, that trend will accentuate as rich countries replace ageing power stations, with either wind-only plants or hybrid plants capable of harnessing both wind and gas.

"Wind is now an established source with a maturing techology," Birol said.

"We expect that that by around 2010, very good wind sites with good quality wind will be able to compete with some fossil fuels, the technology is there."

At present, power generated by efficient commercial wind turbines is about 30-35 percent more expensive than that generated by fossil fuels, a calculation based on an oil price at 35 dollars a barrel, he said. The price of gas is indexed on oil.

As for solar energy, the technology is improving but a major price differential with fossil-generated electricity is likely to remain, Birol said.

"We don't expect it to provide substantial input in the future. We see it more as an energy saver by individual consumers, such as solar-heated water panels on roofs."

Where renewables have their biggest problem is attacking oil's dominance in transport, experts say.

Petrol and diesel have a lock on the fuel system used by cars, buses and trucks, and the only big, clean alternative to them -- hydrogen -- lies years away.

To make the switch, car makers and fuel distributors will need massive incentives, in the form of laws and regulations on pollution or an oil price in the stratosphere.

Virginie Schwarz, a specialist at ADEME, France's state-run Agency for the Environment and Energy Use, says a first step towards weakening oil's grip in this area is biofuels, derived from oil-rich plants.

Biofuels can be mixed with conventional fuels -- a maximum of about 10 percent -- without any need to change engine technology. But they are profitable only if oil is priced at 45 dollars a barrel or more, Schwarz said.

An energy expert said that oil barrel prices would have to stay "in the mid-thirties (of dollars) for several years" for consumers and corporations to take the plunge and invest in certain types of renewable technology.

In the case of solar panels, at current oil prices (40 dollars plus) and with expected gains in efficiency, solar will become cheaper than oil for providing electricity to homes in southern California by 2006.

But this carrot shrinks if oil prices fluctuate as massively as they have this year, he said.

Among the world's energy corporations -- the giant firms which will principally determine the outcome of the latest green dawn -- there is a cool response to this year's extraordinary oil market. The lessons of the 1970s and 80s have been well learnt.

"You never base an investment policy on a trend, and for the moment the rise in oil prices is only a spike," said BP France spokesman Philippe Lambert.

"Even now, our investment calculations in oil exploration and production remain based on a 15-dollar barrel."

Green believers are undeterred by the risk of another price plunge and argue fluctuations simply make home-grown renewable energy more attractive.

"A fluctuating oil price shows the risks of dependence on energy from a chronically volatile region," said Antoine Saglio, executive director for the Association for Renewable Energy, a French industry group.

"Renewables can provide a better certainty [than oil] in terms of prices in the long term, although this is also determined by the regulatory framework," said Germana Canzi, a climate change expert with the environmental group WWF.

She and others pointed out, though, that the picture for renewables varies greatly, with most interest focused in Europe where there is the strongest government support, through laws and regulations, mainly to help meet pledges on greenhouse-gas emissions.

The United States, the world's biggest energy user and polluter, lags far behind, and fast-growing developing countries such as China and India have become ferocious importers of oil, a factor that has driven up the market this year.

Even if the renewables revolution takes off, oil is set to dominate the energy mix for years to come.

Renewables accounted for just five percent of world energy supplies in 2000 but 19 percent of electricity production, mainly through hydro plants, according to the IEA. Oil that year accounted for 38 percent of energy needs, coal and gas 50 percent and nuclear seven percent.

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