Nick Snow
Washington Editor
WASHINGTON, DC, Jan. 21 -- Billions of dollars in investments will be required annually to achieve global energy security by diversifying supplies, suppliers and supply routes, US Secretary of Energy Samuel W. Bodman told business leaders in Saudi Arabia.
"These three elements are the key to enhancing global security. To achieve them is, perhaps, one of the most significant challenges of our time. And to address them in a timely manner, we will need literally billions of dollars annually, over many years," he said in prepared remarks that were released Jan. 19.
The International Energy Agency estimates that $22 trillion of investment will be needed between now and 2030 if the world is to meet expected energy demand, Bodman said in his breakfast address in Riyadh. "This investment must be global, in developed and developing nations alike, and at all stages in the energy cycle," he said.
Government and business leaders also should recognize that greater environmental responsibility is required in all energy cycle phases, he said. This means harnessing scientific and technological resources, as Saudi Arabia is doing at its King Abdul Aziz City for Science and Technology, and soon at the King Abdullah University of Science and Technology to develop cleaner energy sources and technologies, Bodman said.
"That's not even the whole picture. We must also consider the impact energy prices have on our economies. The tremendous economic growth in China and India and their growing demand for more and more energy has received much attention. What has not been as widely discussed is the impact high prices have on smaller and developing countries," he said.
Economic impacts
Bodman said he doesn't consider it an overstatement to suggest that high oil prices can hurt a country's economic health. They can restrict development in ways that keep businesses from growing, inhibit improvements in health care and other critical areas, and generally prevent rises in living standards, he said. Both consuming and producing nations must act responsibly to encourage economic growth worldwide, raise global living standards, and improve environmental health, he said.
Achieving this goal will require many different efforts in several different areas, Bodman said. "We must start by asking: 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?"
Bodman suggested that it is time to stop taking what he termed "purposeful market distortions" that clearly won't help, such as restricting supplies, reducing production, and creating price floors and ceilings. "I can't stress this enough: The global oil market must be allowed to function in a predictable and transparent way," he declared.
The world also requires new energy options beyond hydrocarbons, Bodman said. "Everyone—governments included—has an important role to play in the development of alternative fuels and advanced energy technologies. But the private sector cannot do it alone. We need a new ay of thinking about how we can work with the private sector. Even our research priorities must be developed with substantial input from corporations, utilities and universities. And research needs to be conducted in a coordinated way."
Governments should commit
To that end, Bodman has challenged many countries' governments to publicly commit to increase investment in research and development necessary to achieve the necessary alternative fuels and energy efficiency breakthroughs, and to achieve the right balance between energy security and environmental stewardship. "This requires significant public and private global investments. But it's worth it," he said.
Increased investment in energy research and development also would help meet another global challenge: the shortage of qualified engineers and technical staff needed to meet the demand for rapid innovation, Bodman said.
"We need to invest in the next generation of leaders to steer us through the energy challenge, and we must get beneficial technologies into the marketplace more quickly. That means sharing the risk that capital markets and the private sector are not yet ready to take on," said Bodman.
One example is a new technology commercialization and development fund that DOE is developing at several of its national laboratories, he said. The fund will permit the labs to use prototype development, demonstration projects, market research and other deployment activities to move clean energy technologies which have moved beyond the research stage toward commercial viability, he said.
"We must leverage the power of private equity, as we are doing in the example I just cited. We must make smart public funding and regulatory decisions, and unleash the world's best scientists and engineers on the problem of developing cost-effective, market-ready advanced energy technologies," said Bodman.
"Without sustained global investments, and without a new global commitment to invest in new sources of energy and breakthrough technologies, we will not achieve the innovations we must have to solve the world's critical energy problems," he warned.
Contact Nick Snow at [email protected].
