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Renewables need change in global policy, says energy diplomat

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Renewable energy advocates say U.S. subsidies are fair considering the subsidies the fossil fuel industry has received. (AP)

Countries are ready to add big amounts of renewable energy, but changes to public policy and ways to invest in that technology are lagging, said the State Department's top energy diplomat Monday.

Amos Hochstein, the department's special envoy and coordinator for international energy affairs, said that what gets lost in the discussion of falling oil and natural gas prices is that while analysts are looking for a rebound in those prices, costs for solar, wind and other renewable energy are dropping.

That's partly because of private sector innovation, Hochstein said at an event hosted by the Atlantic Council in Washington. But he said policies in the United States and elsewhere aided widespread adoption of renewable power to help make it affordable and that policy changes in developing nations were necessary to continue that process.

"If we can get the regulations to change ... and get governments to change their environments, then the private-sector investment is there," Hochstein said.

Groups such as the International Energy Agency, International Monetary Fund and the World Bank have taken aim at fuel subsidies in developing and oil-rich nations that they say impede the transition to renewable energy. The International Energy Agency has put those fuel-consumption subsidies at $548 billion in 2013. A document by IMF officials puts total energy subsidies at $5.3 trillion worldwide, including consumption as well as environmental damage caused by energy sources.

Wind and solar energy receive subsidies in the United States as well as elsewhere. Renewable energy advocates in the U.S. contend they are fair considering the subsidies given oil and gas, though the fossil fuel industry contends they're business deductions.

Internationally, however, the Middle East and North Africa have some of the highest fossil fuel consumption subsidies. Egypt, Libya, Saudi Arabia, Iraq, Iran and Algeria all have subsidies that account for at least half of the cost of fuel, according to the International Energy Agency.

But the subsidies are also prevalent in countries with high renewable power potential, such as in countries that lack traditional electric grid infrastructure. Countries such as India, where the energy agency says the average subsidization rate is 19.9 percent of fuel costs, are looking to leapfrog such infrastructure in some places by creating self-connected microgrids that rely on distributed power sources, such as solar and wind energy.

"This is the next frontier of growth," Adnan Amin, director-general of the International Renewable Energy Agency, said at the event.

But financing poses another significant hurdle, Hochstein said. He urged greater coordination with the World Bank, International Development Bank and other multi-lateral, non-governmental organizations to move funding into clean energy.

"Part of it is a donor coordination mechanism," Hochstein said.

Regionalization poses some benefits to clearing regulatory and investment hurdles, Amin said. He noted countries that agree on a common set of standards for infrastructure could build a broader network, in turn bringing down costs.

"Regionalizing these issues changes many of the dynamics of investment," Amin said.

Amin and Hochstein pointed to two such examples where that's occurring. One is the Obama administration's Power Africa effort, which aims to leverage enough private-sector investment to add 30,000 megawatts of electricity to provide power for 60 million homes and businesses in sub-Saharan Africa. The other is the Caribbean Energy Security Initiative, a project spearheaded by Vice President Joe Biden.

Hochstein admitted that he left a recent event in South Africa a bit more disappointed than he had entered it because of the technical difficulties in coordinating on such a massive scale. But he said it's not possible or pragmatic from an environmental standpoint to look at "the old school" energy sources when starting from scratch.

"It's ... not the most effective aspect, it's not the best route. We have to look at what are the new technologies," Hochstein said.