By Samuel Bodman
It’s A PLEASURE TO BE BACK INCAIRO. I would like to thank Omar (Mohanna President of American Chamber of Commerce In Cairo) for that kind introduction. I’m also honoured that my counterparts — Ministers Fahmy and Younes — have joined me at today’s lunch.
Let me get right to the point: the world needs safe, reliable, clean, affordable, and diverse energy supplies — and in considerably greater numbers than we now have. This is a global challenge, perhaps one of the most significant of our time — and one that you all understand acutely.
The International Energy Agency’s most recent World Energy Outlook, estimates that the world’s primary energy needs will grow by 55% by 2030.
Addressing this challenge in a timely way will require literally billions of dollars annually over many years. The IEA estimates that $22 trillion of investment will be needed between now and 2030 to meet expected demand.
We also know that this investment must occur around the world — in developed and developing nations alike — and at all stages of the energy cycle.
At the same time, we all must recognize the realities of global climate change and look for ways to develop cleaner sources of energy that at the very least do not worsen — and hopefully can improve — the health of our earth’s environment.
So the energy scenario we must confront is this: if we are to encourage economic growth around the world, if we are to raise living standards for all people of all nations, if we are to improve our environmental health, the world needs clean, affordable, diverse energy supplies, as well as new suppliers and supply routes. And achieving that demands responsible action both from consuming nations and producing nations.
I don’t want to sound too alarmist, but in some ways, what we are really talking about is reducing the world’s energy insecurity.
So what do we do about it? That answer is complex, of course, and the solution is multifaceted. But, it can be summarized this way: we must grow the pie of what’s available.
For conventional fuels, the principal challenges facing us are: Will the necessary investments be made to bring sufficient hydrocarbons to market? Is the investment climate in producing countries conducive to inviting such capital flows? Are large consuming nations having the right type of discussions and collaborations with producing nations? If not, why not? And, are we adequately investing in ways to produce fossil energy more cleanly and efficiently?
Beyond hydrocarbons, the world absolutely requires new energy options in the form of alternative fuels and advanced energy technologies: the development of commercially competitive cellulosic ethanol; advanced hybrid vehicle technologies — with a focus on developing better batteries; hydrogen fuel cells; solar energy, including an acceleration of the development of solar photovoltaics; high- efficiency wind power; and carbon sequestration and clean-coal technologies.
Besides, any global energy strategy must include efforts to expand access to emissions- free nuclear power in a way that responsibly manages waste and dramatically reduces proliferation risks. The Egyptian government shares this belief. It is a topic that I’ve been discussing with officials during my visit to Cairo, including this morning in my meeting with President Mubarak.
To advance this global effort, nearly two years ago President Bush introduced the Global Nuclear Energy Partnership, which aims to facilitate the worldwide expansion of nuclear energy for peaceful purposes in a safe and secure manner. Among other things, GNEP establishes the common goal of creating reliable fuel services that will provide a viable and economic alternative to the spread of sensitive nuclear technologies.
The partnership seeks to take advantage of the best available fuel cycle approaches to recycle spent nuclear fuel to reduce the amount of waste and tap its unused energy.
In all these areas — from traditional hydrocarbon development to alternative energy to nuclear power — governments certainly have a tremendously important role to play. But the public sector cannot do this job alone. Even our research priorities — the research and development agenda itself— must be developed with substantial input from corporations, utilities, and universities. And, research needs to be conducted in a coordinated way. As we ramp up research and development investment, I believe we also must find innovative approaches to get beneficial technologies out into the marketplace quickly and to share the risk that the capital markets and private sector are not yet ready to take on. In the United States we are doing this through a range of collaborative models, including cost-sharing partnerships and loan guarantees.
At the Energy Department, we are also establishing an Entrepreneur in Residence programme, which aims to bring venture capital- sponsored entrepreneurs into three of our National Laboratories to help commercialize new technologies. And we are developing a new Technology Commercialization and Deployment Fund. This fund will allow our laboratories to move clean energy technologies toward commercial viability though prototype development, demonstration projects, market research, and other deployment activities.
In general, our strategy recognizes that many of the transformative breakthroughs are likely to happen in and in conjunction with — the private sector. . . and that the government must take an active role in encouraging that activity. Personally, I believe that we are already seeing results.
Having spent a good chunk of my career in the financial sector, I can honestly say that for the first time in my life we are seeing the venture capital community put sizeable amounts of money into entrepreneurial companies in the alternative energy business.
In the first three quarters of 2007, investments in the so-called “clean tech” sector (which includes alternative energy and conservation technologies, among other things) by U.S. venture capital firms totaled $2.6 billion — the highest annual dollar volume ever (even with just 3 quarters worth of data) — according to a recent industry report. Of those investments, solar energy was the biggest sub-sector funded, with 35 solar-related deals totaling $664.6 million. And, I interpret this as a clear sign that the clean-energy market is viable — indeed, thriving.
All this illustrates the coalescence of forces that we’re seeing in the energy arena in the United States — and indeed, throughout the world. Governments around the world recognize that there is an urgent need to accelerate the development of these technologies and to bring them to market. And, at the same time, the private sector recognizes that there’s a big opportunity here: one that can favourably impact their balance sheets as well as the world’s energy security and environmental health.
The challenges that we face are too large and too important for a “business as usual” approach. We must bet on technology and we must take some risks.
One final point, which I make with particular emphasis: we must promote increased energy efficiency across the global economy. The truth is the biggest source of immediately available “new” energy is the energy that we waste every day. I believe that improvements in energy efficiency can be achieved — in relatively short order — on a global scale in our industrial and power-generating sectors, our government agencies, our homes, our offices, and our transportation sector.
Collectively, these measures will not only take some pressure off of demand, but also improve the health of our shared environment.
Together, with the right leadership and funding commitments from governments around the globe, with the talent of our world’s scientists and engineers, and with (he capital, commitment and innovative power of our commercial sectors — which you all represent — we will solve this problem . .we will achieve a cleaner, affordable, and secure energy future for all people of the world.
The Honourable Samuel W Bodman, United States Secretary of Energy at lunch with the American Chamber of Commerce in Cairo, January 2008..