On Wednesday the EU Delegation to the U.S. and the U.S. Department of State hosted a round-table discussion for World Energy Day. The discussion focused on how energy security objectives and energy sustainability objectives are mutually reinforcing.
Ambassador João Vale de Almeida, Head of the EU Delegation to the United States, stated that energy has been one of the central issues in his four years as ambassador, and “energy will continue to be at center stage of the EU’s agenda.” He focused on three pillars of energy. First, on energy and climate, the EU has an ambitious package of environmental and energy targets and measures to get there. “The clean energy revolution is already alive and kicking in Europe,” he said, citing that 44% of the renewable electricity is installed in the EU. The key to meeting the ambitious targets set by the EU is to not underestimate the challenge of the task, but also not to underestimate the commitment of political leaders to do so. The second pillar, energy security, begins with identifying energy vulnerabilities to ensure that the EU is not at the mercy of uncontrollable events. This is done by diversifying supply of energy. In the short term, the EU is comfortable in terms of a crisis, but long-term problems require more work. Finally, he spoke about an international energy market to ensure circulation of energy inside Europe. Free and fair competition must be fully implemented. He concluded by stating that the EU and US share a common vision of energy sustainability, and reassuring the audience of the EU’s commitment and determination to proactively pursue the green side of energy security.
Amos J. Hochstein, Acting Special Envoy and Coordinator for International Affairs in the Bureau of Energy Resources, said World Energy Day gives us an opportunity to focus on those kinds of topics. On energy security, it is “important to use crises to achieve real, meaningful change for the future.” He noted that we have made progress from the 2009 energy crisis in Ukraine. Still needed is diversification of energy supplies and integrated infrastructure. A global energy market would produce more global energy security. The challenge today, he said, is the low price of oil and coal. It is important that the world comes together to get over these challenges; it has to be a global effort, not just the US and EU. Leaders must lay the groundwork for the private sector to follow to make renewable energy economically viable around the world. “We will never be secure if we only rely on the fuels of the past. We have to bring forward the fuels of the future.”
The panel was moderated by Amy Harder, energy policy reporter for the Wall Street Journal’s Washington, D.C. bureau. Panelist included Charles K. Ebinger, Director of the Energy Security Initiative at Brookings in the Foreign Policy Program, Steivan Defilla, Director in the Energy Charter Secretariat and acting Deputy Secretary General, and Andrew Holland, Senior Fellow for Energy and Climate at the American Security Project.
Ebinger began by stating that climate change is taken seriously on both sides of the ocean. In Europe, renewable energy is rising, with countries like Germany, Sweden, and Portugal at the forefront. However, that trajectory comes at a cost. Germany will have a hard time increasing its energy from renewables from the current 24% to 50%. Carbon emission reduction in Europe has not worked well due to burning coal. On the American side, he said, Europe may be critical of the federal government for not doing more about climate change, but there has been real action at the state and city levels with emission trading and renewable energy portfolios. The US Navy and Coastguard have long held that climate change is the number one problem for national security, and the pentagon recently concurred. He stated that natural gas reserves may stretch from 100 to 300 years, making it not just a transitional tool but something that will be with us for generations. “It is difficult to see a transition to renewables with low LNG prices.” Looking forward, “we need to look seriously at rejuvenating nuclear power,” as the next generation nuclear reactors are out there, and they look very different from reactors of the past.
Defilla said that investment protection is important to energy security success. He spoke about the trade-offs between energy efficiency and economic growth. On one hand, countries want to have economic growth. 2% growth each year would increase GDP by a factor of 5 by the end of the century. However, working towards slashing emissions to keep global temperature from rising by 2°C could hinder economic growth. The key variable in the economic growth and environmental protection equation is energy efficiency. However, energy efficiency still does not have the image of an investment; it is still seen as a cost. We must work on making it bankable, he said.
“Energy has been at the center of national security for at least 40 years,” Holland said. He quoted President Nixon in 1976: “At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy.” This, he said, shows how different discussions on energy security are today. We are living in a different world, but reforms from the 1970’s created that world. There are new challenges, too.
“Climate change didn’t exist back then. We have to make sure challenges of climate change are fully integrated with the challenge of energy security. We cannot talk about energy security separate from climate change. It is the height of arrogance to think our problems are so bad that we push security problems out to our children and grandchildren.”
He then spoke about treating energy as a normal business: “To achieve real energy security we need to build these energy markets. The success of the 1970’s was to build oil markets, with one price around the world.” He also looked to energy of the future. “Stop thinking that today’s energy mix will be tomorrow’s energy mix.” Activity in new energy resources is rapidly accelerating in the private sector: Lockheed Martin just announced its plans to have a fusion reactor operational in a decade. He said we cannot assume linear changes in renewables and other energy technologies. “Big inflection points are coming up.” Investing in research and development will be key.
Ebinger responded that we have not had a free energy market in generations due to subsidies. However, externalities in energy sources do not get priced in the market, and the public does not see them in daily life. These external threats must be made real in people’s lives, and the US needs legislative and executive will to achieve that. “We don’t have a rat’s chance in hell of getting that in this country. The only time we will have it is with a catastrophe. I’m sad, but I think that’s what I’m talking about because most people don’t want to have high energy prices.”
Defilla was more optimistic, saying that business opportunities will lead to change. Because technology moves faster than regulations, regulators have had trouble keeping up with trade. It is important that the regulators keep up to date.
Holland added that low natural gas prices may be beneficial in the short term to jump-start economies and prices, but that the prices should go up in the long-term. He added that is natural catastrophes do not happen in areas with large media coverage, it’s as if they don’t happen. He cited the typhoon Haiyan, with winds close to 200 mph. Many people have already forgotten about it. “Just because the catastrophes aren’t happening in New York doesn’t mean they aren’t happening,” he said.
Harder asked the panel for a ‘yes’ or ‘no’ answer on the question: 100 years out, will natural gas have been a net positive? Ebinger replied “yes with CCS,” Defilla replied “for the first half yes, longer term no,” and Holland said “definite maybe.”
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