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.
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.
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