MJC_H2_ECON_P1_QN_P

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2 9732/01/JC2 PRELIMINARY EXAMINATION/MJC/2011 Question 1: Renewable Energy Extract 1: Oil prices should spur investments in energy technologies Oil supply has been hit by uncertainties in the Middle East. Although we have not seen major disruptions, prices for crude oil are fluctuating, ranging up to US$120 per barrel, and most predict the long-term trend will be upwards. To ensure affordability, Vietnam, Indone sia and Malaysia continue to subsidise energy, increasing government burdens as o il prices rise. Their artificially low energy prices increase wast e and destroy incentives to invest in alternative technologies. Studies suggest that energy efficiency measures can achieve at least the equivalent savings in power needs with safe, off-the- shelf technology at a much lower cost. Renewable energy currently costs more but with technological advances, may prove viable in the medium term. Source: Today Online, 27 July 2011 Extract 2: Renewable energy markets in developing and developed countries Renewable energy enjoyed a "r emarkable growth" in inve stment last year, says a recent UN report, rising by one-third to a record $211 billion worldwide. China alone splurged $48 billion on new green energy proj ects to consolidate its position as the world's leader. And, for t he first time, developing countri es collectively spent more on renewables than their richer counterparts. But curiously, this building frenzy coincide s with a wave of cuts to solar subsidy schemes across Europe. The future of sun-pow er does not look so bright in Spain, for instance, where cuts to the subsidy that the state uses to guarantee producers a set price for energy sold to the grid – have been made to tackle the enormous debts run up by the scheme. The government now fa ces lawsuits from its own renewables sector, which had invested heavily o