Remarks as Prepared For Delivery by Secretary Bodman
Thank you, Michael for that kind introduction. And my sincere thanks to Minister Al Hamili for his remarks.
It's always a pleasure to be here in Abu Dhabi.
Let me commend you on the Masdar Initiative, which clearly demonstrates Abu Dhabi's leadership role in the area of alternative energy.
The government and the people of the UAE recognize that even in a region blessed with tremendous hydrocarbon resources, the time is here to aggressively develop and deploy innovative alternative energy solutions.
This conference is a very public expression of that commitment.
This event brings together representatives of government, industry, the financial community, and academia from around the world.
And the diversity of this gathering is absolutely necessary. The truth is we are facing a set of energy challenges that require the active involvement of everyone. No one nation or one sector can do this alone. And so I'm grateful for this chance to share a few thoughts with you today.
As Minister Al Hamili knows quite well, I have a reputation for being fairly direct. So let's get to the point: the world needs safe, reliable, clean, affordable, and diverse energy supplies - and in considerably greater numbers than it now has.
This is a global challenge, perhaps one of the most significant of our time. And, as if we needed more evidence of its scope, the International Energy Agency's (IEA) most recent World Energy Outlook provides it.
It 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, between now and 2030, $22 trillion of new investment will be needed 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.
Climate change is a global challenge and requires a global response . . . and, I want to reiterate that the United States has been and remains committed to doing our part.
Of course, that's not even the whole picture.
In the United States - as in many other countries throughout the world - we are closely monitoring the impact of energy prices on our economy, our families, and the health of our businesses. And we all know about the tremendous economic growth taking place in China and India - and the resultant demand for more and more energy.
But what we do not hear as much about is the effect that high energy prices have on smaller, developing economies.
The impact can restrict development over the long term in a way that prevents business growth and, more notably, inhibits improvements in the health and well-being of so many around the world.
As a matter of principle - and a matter of policy - I believe that we all must keep the energy needs of the world's poorest nations in our discussions. We cannot leave the developing world behind.
What I'm saying is that this is a global problem . . . 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 this set of global challenges demands responsible action both from consuming nations and producing nations.
I don't want to sound too alarmist, but what we are really talking about is reducing the world's energy insecurity. That's the crux of the issue.
Now comes the hard part: what do we do about it?
That answer is complex, of course, and the solution is multifaceted.
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?
On this front, it is time to stop doing the things that we know will not help.
For example, we know that purposeful market distortions - such as rationing supply, cutting production, or creating price floors and ceilings - do not work.
Market interventions have been proven ineffective for controlling prices.
I can't stress this enough: the global oil market must be allowed to function in a predictable and transparent way.
But beyond hydrocarbons, the world absolutely requires new energy options in the form of alternative fuels, increased nuclear power, and advanced energy technologies.
Governments certainly have a tremendously important role to play here. But, as I said at the outset, the public sector cannot do this job alone.
We need a new way of thinking about how we work with the private sector.
It is no longer sufficient or wise for government to direct the solutions 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.
To that end, I challenge governments around the world to make a public commitment to increase investment in the research and development necessary to achieve the technical breakthroughs we need, as well as the right balance between energy security and environmental stewardship.
The Masdar Initiative provides a ready example of what I mean.
Through its graduate-level academic programs - and here I must mention its partnership with my alma mater, the Massachusetts Institute of Technology - as well as its research network and its $250-million clean-tech private equity fund, Masdar demonstrates the type of innovative, comprehensive solutions that are needed.
Because the size of the problem we face requires massive global investment - in the public and private spheres.
Not incidentally, increased investment in research and development would also help to alleviate another global challenge that we share: the shortage of qualified engineers and technical staff needed to meet the demand for rapid innovation.
We need to invest in the next generation of leaders to steer us through the energy challenge.
And even as governments ramp up their research and development investments, I believe we also must find innovative approaches to getting these advanced technologies out into the marketplace quickly - to share the risk that the capital markets and private sector are not quite ready to take on.
In particular, I would highlight technologies like: 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.
In the United States we are doing this through a range of collaborative models, including cost-sharing partnerships and loan guarantees.
For example, in the biofuels area - a favorite topic of mine - we are making cost-shared investments in three cutting-edge Bioenergy Research Centers (on the order of $375 million over five years) as well as a series of small- and large-scale biorefinery projects focused on producing ethanol from a wide variety of non-food plant materials.
President Bush recently signed a new law which includes a Renewable Fuel Standard, requiring fuel producers to use at least 36 billion gallons of biofuels by 2022 . . . and these types of strategic investments will help us meet this new mandate.
Another example involves the development of carbon sequestration capacity - something that I know is a focus of the UAE's research efforts as well.
The Department of Energy recently announced awards for the first four cost-shared carbon sequestration projects in the United States, and these projects will conduct large volume tests for the storage of one million or more tons of carbon dioxide in deep saline reservoirs.
Collectively, the formations of all the carbon sequestration projects have the potential to store more than one hundred years of CO2 emissions from all major sources of pollution in North America. Eventually, this will help enable us to use coal without emitting greenhouse gases into the atmosphere.
These are just a few examples - of many - to underscore the larger point: the key to unlocking our energy future is innovation. And our best hope for ensuring that this innovation occurs is intense, strategic collaboration among government, the private sector, and of course academia.
To all of this I would just add one final point: we must promote increased energy efficiency.
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 sectors.
Collectively, these measures will not only take some pressure off of demand, but also will improve the health of our shared environment.
So, let me tie this up, if I might, with a few points.
Point one: the global demand for energy is only going to grow. And that's a good thing because that demand is fueling economic growth around the world.
Point two: for a whole host of reasons - be they economic, environmental or security-related - we cannot depend on hydrocarbons alone.
And so, that takes us to point three: we must grow the pie . . . we must expand the availability of and access to clean, affordable, diverse sources of energy around the world and promote enhanced efficiency.
To do that, we need a global response . . . and, by that I mean all nations, including those that produce our world's oil supply.
In my view, the idea of moving toward increased use of alternative energy should not be viewed as a threat to any oil-producing nation.
Such a move provides an opportunity to diversify energy industries around the world - with plenty of advance warning. After all, even an aggressive transition to alternatives will not happen overnight.
And the introduction of alternatives will actually prolong the life of earth's fossil fuel supply, which is certainly not unlimited.
There is another global benefit: the pursuit of new energy sources will allow developing nations to "leap-frog" over some of the dirtiest (but most rudimentary and prevalent) fossil-fuel-based technologies - improving public health and our earth's environment.
However, without sustained global investment . . . without a new global commitment that will support - not discourage - new sources of energy and breakthrough technologies . . . we will not solve this problem.
We can't afford to have anyone sitting on the sidelines here - protecting their own short-term interests. I believe we all should get into this game.
In additional to being good public policy, I think this is sound business advice.
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.
A recent industry report indicates investment in the so-called "clean tech" sector by U.S. venture capital firms totaled $2.6 billion - for the first three quarters of 2007, the highest annualized dollar volume ever.
Of those investments, solar energy was the biggest sub-sector funded, with 35 solar-related deals totaling $664.6 million.
It is clear that Minister Al Hamili shares my view that no one can stand back and watch this happen.that everyone needs to play a role.
The Masdar Initiative will further the innovation that will propel us to a more secure energy future. Right now and into the future, I believe that if we work together . . . we can expand our world's energy supply in a way that is cleaner, more diverse, more secure, and more affordable to all people of all nations.
I thank you very much for your time.
Location: Abu Dhabi, the United Arab Emirates
Media contact(s): Megan Barnett, (202) 586-4940