Prime Minister Gordon Brown pledged on Sunday to open Britain’s energy markets to foreign investors in a “new deal” designed to promote clean energy and end a conflict of interest between oil producers and consumers.
At an emergency oil summit in Jeddah, Brown unveiled plans to work with Saudi Arabia on technology to capture carbon emissions from energy plants and with the United Arab Emirates on nuclear technology. He told reporters that Britain and Qatar were looking at a new joint energy fund to invest in British energy industries, and that talks with the Abu Dhabi Investment Authority about investment opportunities in Britain were moving forward. “We want them to invest in alternative sources of energy in our economies, just as we want them to allow our efficient oil companies to have a role to play in the oil production of the oil producing countries,” Brown said. He said earlier this year that Britain was open to investment from the huge sovereign wealth funds run by rich oil producers.
Little concrete has been announced, however, and he did not elaborate on plans forged with the Gulf states, except to make clear nuclear energy and renewables were the focus for Britain. “The new deal is that everybody has an interest in a more stable energy market, everybody has an interest in there being alternatives to oil, everybody has an interest in there being a better and more efficient use of oil,” Brown said. Like some other leaders of developed nations, Brown’s popularity has taken a hit as voters grapple with a slowing economy, a squeeze on bank lending, falling house prices and accelerating inflation -- driven by fuel and food prices. The oil price has more than doubled in a year to almost $140 a barrel, triggering protests from Brussels to Bangkok over record fuel costs that threaten the world’s economy.
GREENHOUSE GAS TARGETS
Britain is also striving to meet targets to cut greenhouse gas emissions. It reckons it will need investment of up to £100 billion in renewable energy to meet those goals, and the government sees sovereign wealth funds as a valuable source. On Saturday, Britain’s Energy Minister Malcolm Wicks said the government would unveil a “green revolution” next week which aims at getting 15% of the country’s energy from renewables by 2020 -- up from less than 5% now.
Britain’s prime minister argues that unless there is a better understanding of the global problems of supply and demand, there is little chance of affecting today’s oil price. He says consumers must lessen their dependency on oil by using other energy sources, such as renewables and nuclear power, and by using energy more efficiently.
Oil producers should also be given an opportunity to invest in alternative energy sources to diversify their risk as developed nations gradually move to low carbon economies. “In this way we move from the old conflict of interest between producers and consumers to building what the world needs and can allow us to move forward,” Brown said in his speech to the summit.
Brown has just under two years until he must hold a national election and with his Labor Party trailing badly in the polls, he needs a marked economic turnaround to boost his chances. But while oil prices are high, the inflation rate risks sticking above the central bank’s two percent target, making it harder to justify the early interest rate cuts Labor favors to stimulate growth. (Reuters)