Subsidies – can’t live with them, can’t live without them: at least that’s how it often seems in the power industry.
They often dominate debates at energy conferences around the world, and it was no different at POWER-GEN Middle East in Abu Dhabi in October.
“Subsidies are the biggest ailment that afflicts the Middle East power sector,” said Dr Hisham Khatib, honorary vice-chairman of the World Energy Council.
Speaking at the opening ceremony of POWER-GEN Middle East, Dr Khatib said that Middle East power generation subsidies use 8.4 per cent of the region’s GDP and account for half of the energy subsidies in the world.
He said the continued use of subsidies was the key factor in the Middle East’s rocketing energy demand – up to 8 per cent a year for the last decade, which is almost four times the figure for any other country in the world.
Yet he added that “subsidies benefit the rich, less the poor”.
And while he said that there were “shy” attempts to phase out subsidies, he stressed that these needed to be made a “top priority” and put a price tag on this of $140 billion of investment in the next five years – which rises to $230 billion if transmission and distribution work is included.
Dr Khatib was joined on the stage at the opening ceremony by Russia’s deputy energy minister Yury Sentyurin, who used his speech to stress the importance of international collaboration on energy projects.
He said that “the global power markets are becoming more dynamic yet less predictable” and that the “silver bullet” to secure energy supplies for countries around the world was “politically unbiased co-operation”.
Mr Sentyurin also later spoke at Russia Day, a special event being held as part of POWER-GEN Middle East, which returned to Abu Dhabi for the first time in 12 years.
He told a packed audience that renewables were going to play a key role in the Russian Federation’s future energy mix.
He said a target had been set of having 6 GW of renewables online by 2020, which would account for 4 per cent of the Russian Federation’s energy mix.
“We are doing our utmost to be in line with global trends and develop these lines of generation,” he said.
Also speaking at Russia Day was Adnan Amin, director of the International Renewable Energy Agency (IRENA), who said that meeting the world’s rising energy demand with the current global energy mix would be “catastrophic”.
Mr Amin said that any move to meet demand with fossil-fuelled technology would “lock in pollution and climate change”.
He said what was needed was a shift to more renewable technologies and added that this was already happening.
“Investment in renewables is booming,” he said. “More than 100 GW of capacity has been added every year for the past years.”
He said financing of renewable projects was getting cheaper because the perceived risks associated with ‘green’ technologies were dropping.
Amin added that “Russia can play a very important role in the renewables story” and that the Federation has “vast potential” to embrace clean technologies.
Russia plans to derive 4 per cent of its power from renewables by 2020, which Adnan said was “a viable target”. He added that if Russia – which has applied to join the International Renewable Energy Council – hit this target, it would displace six million tonnes of carbon dioxide a year.
IRENA has just published a new report called REthinking Energy in which the organization explores “the changes that are transforming the way we produce and use energy, and how they will affect governments, businesses and citizens alike”.
In the foreword to the report (look out for our feature in next month’s PEi), Amin says that it is “no longer a matter of whether but of when a systematic switch to renewable energy takes place – and how well we manage the transition”.
Probably true, even if he’s talking in decades. What is certainly true – in the Middle East and every other region of the world – is his next statement: “The power sector is changing so fast that policymakers are finding it hard to keep up.”
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