Prime minister Gordon Brown yesterday pledged to make it easier for oil-producing countries to invest in UK renewable energy projects as part of a "new deal" designed to provide producers with a financial incentive to support the transition to a low-carbon economy.
Speaking at an emergency summit in Saudi Arabia between the world's largest oil-producing and oil-consuming nations designed to address soaring oil prices, Brown said that the world economy was going through its "third big oil shock" and that part of the response had to be a shift away from fossil fuels.
"I am going to make it absolutely clear that we are going to reduce our dependence on oil," he said. "I want the oil-producing countries also to diversify out of oil and I want us to get a more balanced energy market."
As part of the proposed "new deal" Brown said oil producers would be encouraged to invest some of their foreign currency reserves in alternative and nuclear energy projects in the West. He said such a strategy would give oil producers the "stability that is lacking in the oil markets" and allow them to reap the rewards promised by a low-carbon economy.
There is evidence that this approach is already being adopted by some oil producers, with Abu Dhabi's Masdar cleantech initiative ploughing billions of dollars in funding into many alternative energy ventures in recent months and the Bahrain government having recently invested in the planned North Hoyle wind farm off the north Wales coast.
However, other nations have shown scant interest in diversification and Brown's plan received a lukewarm reception from delegates at the summit with no mention of renewable energy featuring in the communique issued at the close of the meeting.
The summit also appeared to make limited progress in addressing high oil prices, with delegates at loggerheads over the cause of the recent spike in prices.
The UK and US team insisted the problem is being caused by a failure of supply to keep up with booming demand and urged OPEC countries to increase supply to help bring prices back under control.
However, this interpretation was dismissed by OPEC president Chakib Khelil, who reiterated his view that recent price increases were "not a problem of supply" and were instead the result of speculators.
The only succour for oil-consuming countries was offered by the Saudi Arabian government, which pledged to raise its output of daily crude by 200,000 barrels to 9.7 million barrels. However, the price of a barrel of US light crude for August delivery still rose by $1.76 (90p) to $137.12 (£69.98) a barrel with market analysts saying the increase in production was still insufficient to meet demand.
Concerns were further heightened by reports last week of continued rebel attacks on pipelines in Nigeria and fears over deteriorating relations between Iran and Israel in the wake of Pentagon claims that an upcoming Israeli military training exercise could prove a trial run for an attack on facilities in Iran.
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