Energy Discussion

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.

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