Tale/innlegg | Dato: 17.11.2014 | Olje- og energidepartementet
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Distinguished guests, dear friends of the energy industry.
Once again, we are gathered here at the Autumn Conference to discuss energy realities, and energy challenges.
The global basics – more energy
In my thirteen months as Minister of Petroleum and Energy, I have been to quite a few conferences and seminars.Many of them discuss what “changes” mean, and how to deal with them.
However, I would like to comment on one particular fact that certainly has not changed; the world still needs more energy.
About a week ago we witnessed the 25th anniversary of the fall of the Berlin Wall. The unification changed Germany and Europe.
Since last year’s conference, we have had a net population growth on Earth roughly equivalent to the 80 million inhabitants of today’s Germany.
More and more people are also experiencing increased welfare and a higher standard of living.
This is fantastic news, but it makes continued access to energy even more critical. Let me put this into perspective.
Different energy realities
Energy is a global issue, but the realities look different, depending on your home address.
This year, the IEA has published a special report on the energy prospects in Sub-Saharan Africa. The findings contribute with some important perspectives. In sub-Saharan Africa as a whole – about 70 percent of the population lack access to electricity in their houses.Everyday tasks, like cooking, studying, and nearly all forms of communication become much more complicated and time-consuming. For cooking, four out of five still rely on firewood, causing serious health problems.
Better access to modern forms of energy is necessary to unlock the great potential for economic and social development in sub-Saharan Africa.
Asia has for several years been the craftshop of the world. However, most of Asia needs huge quantities of energy to ensure continued economic development and progress.Let´s use a commodity like steel as an example. Steel consumption tends to increase when economies are growing, as investments are made in infrastructure, factories and housing.The steel industry in China has developed into the world`s biggest, and accounted for about half the global production in 2013. China also produces, and consumes, approximately 60 per cent of the world's cement.
These facts tell us that; rapid development, industrialisation and urbanisation all come with a price. Not just in terms of steel and cement, but also enormous quantities of energy.
This year, China will become the world’s largest importer of oil. Since 2011 it has been the largest electricity producer, and coal remains the main fuel.
India is also becoming a driver for growth in global energy demand, and yet; over 200 million Indians are without domestic access to electricity.
In the US rapid growth in tight oil and shale gas have changed the energy realities. These abundant resources are lifting the US economy and is stimulating new growth in manufacturing.
In Europe the realities have different patterns. Security of supply is high on the agenda, so is the need for reduced emissions.While renewable energy is contributing to lower emissions, coal is not. Replacing coal with gas would contribute to lower emissions. Yet, we see that low cost coal and subsidised renewable energy have challenged the power markets, and hence also the economy of gas for power generation.
To sum up so far; energy demand is a global issue. The global demand for energy will continue to rise.
For every student preparing for an exam late at night, and for every family preparing meals, there is energy demand.
For every flight travelled, and even for every cell phone produced or charged, there is energy demand.
The world is becoming more and more interconnected. This is a global trend – a trend made possible with the use of energy!
In today´s energy mix, increased energy use has a closely related consequence; increased greenhouse gas emissions.
The message in the last report from the Intergovernmental Panel on Climate Change – The IPCC - is clear: The negative impacts of climate change are serious and urgent action is needed.
We need a substantial reduction in emissions globally. However, reductions on the scale required will not be possible unless all countries play their part. Large emitters must show leadership and reduce their emissions significantly.
The US and China have, as the two largest emitters in the world, a critical role to play in combating climate change. Their Joint Announcement on Climate Change last week is very good news. This can inject momentum into the global climate negotiations.
A strong international climate agreement in Paris next year will provide the confidence needed for policy reforms, and will send a clear market signal to investors.
The 2030 climate and energy policy framework in the European Union is a step in the right direction. We welcome the ambitious emissions reduction target. This will provide decisive input to next year´s climate conference in Paris.
Norway will present our emissions reduction target by the first quarter of 2015. Norway has a broad range of measures to reduce emissions of greenhouse gases - both domestically and internationally. One important measure is our international engagement to reduce deforestation. We also provide incentives for investments in renewable energy, and we price emissions of greenhouse gases.
Interestingly, The New Climate Economy Report, from former president Calderon and former Prime Minister Stoltenberg and others, challenges the perceived conflict between a need for climate action, and the need for economic growth. It´s possible to have both!
Ideally we should have a global price on emissions. Unfortunately, this looks quite unlikely, but there are positive signs: Emission trading systems are emerging around the world. China is probably the best example. Putting a price on emissions gives incentives to find the most cost effective solutions, and most mitigation per dollar invested.
The oil and gas industry on the Norwegian Continental Shelf face one of the highest CO2-costs in the world. This has significantly reduced emissions from our petroleum sector.
The need for CCS is well documented, and I am glad that the latest report from the IPCC is clear on the importance of CCS. Indeed, the assessment from the IPCC is that without CCS-technology, the cost of reaching the two-degree target increases with 138 percent. The Norwegian Government’s policy on CCS includes a wide range of activities, including research, development and demonstration, as well as efforts to promote this technology internationally.
We also put great emphasis on low emission technologies. Mobilizing financial and technological support to developing countries is necessary to achieve a broad deployment.
Norway has recently pledged 300 million kroner to Green Africa Power to encourage commercial investments in clean energy in Africa.
To sum up; I don’t believe there is one single winning strategy to reconcile climate change mitigation with economically competitive energy systems.
Key elements are pricing emissions, more efficient use of energy, more renewable energy, progress on CCS and less use of coal.
However, I am confident that a precondition for effective climate action is efficient energy systems.
As many of you in the audience certainly remember; the big environmental issue in the 1980s was the depletion of the ozone layer.
That´s where the Montreal Protocol has been extremely successful, and serves as an example on how the world agreed to solve a common challenge. It achieved universal ratification, and managed to reverse the depletion of the ozone layer.
The added benefit of the Montreal Protocol is that emissions of extremely potent climate gasses have been significantly reduced, making it one of the prime contributors in limiting global warming.
In fact, a fellow speaker here today, former United Nations General Secretary Kofi Annan, has termed this protocol “perhaps the single most successful international environmental agreement to date.”
The Norwegian perspective
I mentioned that the perspectives on energy will be different, depending on where you live. Before summarizing, I would like to reflect upon these issues from a Norwegian perspective.
Norway supplies about 1,5 percent of world oil consumption, and 3 percent of world natural gas consumption. We also have a surplus of renewable energy.
First, in every scenario, - oil and gas will remain a crucial part of the energy mix for decades to come.
In this context, The Norwegian Continental Shelf will continue to be a reliable producer of oil and gas to a world that demands huge quantities of energy – for the foreseeable future.
After more than forty years of production, more than half of our expected recoverable resources are still in the ground.
The exploration activity has been stable and successful over the past decade. Many discoveries have been made. Both in mature and frontier areas. One example is Johan Sverdrup – one of the world´s biggest oil discoveries in recent years.
We have now opened up for exploration in the southeastern part of the Barents Sea. Prospects are positive in our northernmost petroleum province.
The Norwegian petroleum sector is also leading the way in carbon capture and storage, with world leading facilities at the Sleipner and Snøhvit gas fields. In addition, we have a world class facility for CCS technology at Mongstad.
It is a common agreed task to further reduce the carbon footprint of our oil and gas sector. We have policies in place that give the right incentives.
Second, just as there is no set expiry date for the oil age, there is no definite date for the realization of a society completely built upon renewable energy.
Starting in the 1880s, modern Norway was built upon use of renewable hydropower resources.
Today, nearly all our electricity production still comes from renewable energy sources. We also have the highest percentage in Europe when it comes to renewable share of total energy consumption.
The access to these renewable energy resources puts Norway in an extraordinary position, as we can heat our houses, and power our industries through the use of clean renewable hydropower. Selling these industrial products to the world market is the equivalent of exporting renewable energy – in a solid form.
Ladies and gentlemen, it is time to summarize.
As the examples from sub-Saharan Africa, Asia and the rest of the globe illustrate - energy realities, and the challenges you face, are quite different - depending on your home address.
What is certain is that we need urgent action on climate change, and we must keep producing energy for a world that needs it.
These are global issues – as I have tried to illustrate. The discussion should reflect that.
Lastly, I would like to say “happy birthday” to the IEA. The world’s most important energy organisation celebrates 40 years this month.
I look forward to the presentation by the IEA’s Chief Economist, Doctor Fatih Birol.
The annual World Energy Outlook is a vital tool, and a key reference that gives us important insights to the changes taking place.
But as we experienced with the fall of the Berlin Wall: Predicting the future is not easy. Or more precisely: Forecasting is easy. The difficult part is getting it right.
The way I see the future, the world needs more energy, it needs cleaner energy and it needs reliable energy supplies.
We can all agree on that. And to that end, Norway will play its part.
Thank you for your attention!