JEDDAH, Saudi Arabia (Reuters) – Prime Minister Gordon Brown will pledge on Sunday to open energy markets to foreign investors in a “new deal” designed to end the conflict of interest between oil producers and consumers.
According to an advance copy of his speech to an oil summit in Jeddah, Brown will unveil 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 said Britain and Qatar were looking at a new joint energy fund to invest in British energy industries and talks with the Abu Dhabi Investment Authority on investment opportunities in Britain were moving forward.
Brown said this year Britain was open to investment from the huge sovereign wealth funds run by rich oil producers, although little has been announced yet and the advance copy of his speech did not elaborate on the plans with the Gulf states.
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 and reckons it will need investment of up to 100 billion pounds in renewable energy sources to meet those goals — and the government see sovereign wealth funds.
On Saturday, Energy Minister Malcolm Wicks said the government would unveil a “green revolution” that aims at getting 15 percent of the country’s energy from renewables by 2020 — up from less than 5 percent 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 both by using other energy sources, such as renewables and nuclear power, while also using energy more efficiently.
And oil producers should be given an opportunity to invest in alternative energy sources so they have a long-term hedge against their output as developed nations 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.
“We need to do all this in a way that is not the old zero sum game where we hurt producers if we benefit consumers and vice versa, but a new win-win for both.”
Brown has just under two years until he must hold a national election and with his Labour Party trailing badly in the polls, he needs a marked economic turnaround to stand a chance.
But as long as oil prices stay high, the inflation rate risks sticking above the central bank’s 2 percent target — making it harder to justify the early interest rate cuts Labour would like to see to stimulate growth.