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The ballooning price tag for energy

A huge chunk of world wealth goes to its unquenchable energy thirst, but an expert says not enough money is invested in newer, cleaner energy solutions.

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By Steve Hargreaves, CNNMoney.com staff writer

WASHINGTON (CNNMoney.com) -- As the world spends more to meet growing energy needs, nations seeking cleaner alternatives to fuel their expanding economies will have to spend much more.

Even though the world will spend over $1 trillion a year on energy projects over the next two decades, governments and industry will have to dig deeper to switch to newer, cleaner energy if the worst effects of global warming are to be avoided, according to one expert.

"Current federal energy R&D programs are not commensurate in scope and scale with the energy challenges and opportunities the 21st century will present," John Holdren, a professor of environmental policy at Harvard University, said Wednesday at the Washington International Renewable Energy Conference.

President Bush and Energy Secretary Samuel Bodman touted the administration's efforts to advance renewable energy earlier in the conference. Bush said his administration has spent $12 billion on renewable energy research since he's been in office, and Bodman said the private sector invested over $2 billion in clean technology in 2007 alone.

While research spending has increased slightly over the last few years, Holdren said the government is still spending about the same amount as it did in the early 1980s, despite a much larger economy and energy footprint.

Holdren said worldwide, both public and private spending on energy research totals about $30 billion a year, a minuscule fraction of the world's total annual economic output of about $60 trillion. This is despite the fact that the world spends about $5 trillion a year buying energy - 10% of its total economic output.

"Any assertion that we can't afford to increase research and development is simply wrong," he said. 'We can easily afford it."

Chevron (CVX, Fortune 500) Vice Chairman Peter Robertson, also speaking at the conference, said that investment should come in the form of more education to grow talent.

"I don't think we're raising enough people to do the R&D," said Robertson. "In the U.S., science and engineering grads are pathetically low."

Robertson said the world is at a crucial juncture right now, where much of the energy infrastructure it needs to build to meet a projected 50 percent increase in power over the next two decades has yet to be constructed.

"Energy infrastructure, once built, is incredibly long-lived, lasting generations or even centuries," he said.

But be it renewables like wind and solar or conventional fuels like coal and oil, Robertson said the world will need all the energy it can get.

"None of them is a solution in it's own right," he said. "We'll need all available sources." To top of page

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