Recently I started using Amazon Web Services for hosting and what not... some way cool stuff there. Something I immediately ran into was this problem:
When I installed WordPress I could NOT install any plugins and/or updates, through the WordPress interface because it would not let me use SSH2 with my PEM key that AWS gave me.
Solution: Install the wordpress plugin called: SSH SFTP Updater Support once installed; you can than choose SSH2 and upload your PEM key and done! See image below for example:
