Saudi Arabia Warns on Rapid Shift to Renewable Energy

By Tara Patel

March 16 (Bloomberg) -- Saudi Arabia, the world’s largest oil exporter, cautioned against falling investment in fossil fuels and a “premature shift” to renewable energy, which may leave the world short of fuels when the economy recovers.

All energy sources have a role in meeting the energy demand though the fossil fuels of oil, natural gas and coal will remain the world’s energy “work horse” for many decades to come, Saudi Arabian Oil Minister Ali al-Naimi said in a speech at the Energy Pact Conference in Geneva today.

“The days of easy oil may be over, the days of oil as a primary source for the people of the world are far from over,” he said.

Switching too early to “slowly evolving” alternative fuels risks lowering levels of investment in fossil fuels and increasing market speculation on oil prices, he said. “The consequences can be deeply counter-productive to global energy security.”

Saudi Arabia and other OPEC members agreed yesterday in Vienna to maintain current production quotas, concerned that a fourth cut since September risked increasing energy costs while the global economy deteriorates.

New technologies, such as carbon capture and storage, will help make fossil fuels more environmentally acceptable, and advances in understanding oil reserves will help find and recover more crude, he said.

Solar Energy

The country’s state energy company, Saudi Aramco, hopes to become the world’s biggest solar energy provider in future years, taking advantage of the desert kingdom’s plentiful sunshine, the minister said.

Saudi Arabia intends to become “the world’s largest exporter of clean electric energy produced from our abundant sunlight,” he said.

Oil reserves in Saudi Arabia, the world’s largest, will last for about 80 years at current production rates and the world will rely on fossil fuels for four-fifths of its energy needs for many decades to come, he said.

Earlier today al-Naimi, said he was “very happy” with the outcome of yesterday’s meeting of the Organization of Petroleum Exporting Countries.

To contact the reporter on this story: Tara Patel in Geneva at tpatel2@bloomberg.net
Last Updated: March 16, 2009 12:20 EDT