Phase II of Renewable Energy in America

National Policy Conference

November 28-29

Cannon Caucus Room, Washington, DC

American Council On Renewable Energy (ACORE)

My goodness.  What an introduction.  I do not plan on talking about the GEF.  I want to talk about what I have been doing after the GEF and where I see renewable energy going.  But I really want to thank Mike for this invite.  But more important, really, to thank him for all the hard work and all the commitment and contributions to the cause of renewable energy.  We also worked together on the U.N. [ph?] 21 steering committee and the bureau, which I chair.  And he just joined the bureau, but has been, of course, a member of the steering committee of U.N. 21 that you have heard several times from Ambassador Reno Harnish.  So let me start by saying that the world today is entering a new energy era, marked by concern of our energy security, climate change, and access by the poor to modern energy services.  Two billion people do not have access to modern energy services.  These are the same two billion people who live on less than one dollar a day.  And they live in that dark part of the map that you saw of the earth at night.  Because there is no electricity.  There is no energy out there.  These people, also, being in these remote areas, particularly in Africa, have no access to the grid and will not have any access to the grid for many decades to come.  So you can imagine the important tool of distributed energy and the renewables for improving their lives and their livelihoods.  Energy security, on the other hand, is becoming a center of priority for all nations.  Nations who are concerned, whose promoting healthy economic goals and maintaining internal as well as external stability.  But energy security is more than just assurance of future oil sources.  It includes diversification of energy sources, increasing domestic supply to meet future demand and strengthening efforts to reduce such demand.  Climate change, as you have been hearing, is clearly a serious and long-term challenge, one that is global in its causes, potential effects and possible solutions.  The impacts of climate change are already occurring and future damages are a certainty.  Globally climate change is emerging as the most difficult energy environment linkage.  The production and use of energy contribute more than any other human activity to the build up of green house gases [ph?].  And future energy trends will determine how quickly these levels continue to rise and by how much.  Let me see if I can operate this thing.  Oh, it works.  Okay.  In its report, Energy and Sustainable Development, the IEA, said, “No matter we define sustainable development, current systems of energy supply and use are clearly not sustainable in the economic, environmental or social terms.”  End quote.  In the absence of new policies by governments and International and financial institutions, the world energy needs will be almost 60 percent higher by 2050-- by 2030, I'm sorry, than they are now.  And as you might have guessed, CO2 emissions will, also, increase by about the same rate.  So continuing along the current path of energy development is not only incompatible with sustainable development objectives, but also means that the world’s vulnerability to supplied <inaudible> will increase with the expansion of International trade and competition.  The continued steep rise in oil prices reflects the emergent concern about meeting the fast growing global demand for energy and the risks of dependency on fossil fuels, which currently supply around 80 percent of global energy needs.  In 1931, Thomas Edison met with Henry Ford, who had invented the gasoline-powered car, and told him, I quote.  “I put my money on the sun and solar energy.  What a source of power.”  End quote.  He continued to say, “I hope we don’t have to wait until oil runs out before we tackle that.”  Seventy-five years later, investment in new renewable energy capacity was 55 billion in 2006, and projected to be around 66 billion in 2007.  You are going to say, “Wait a second.  Somebody suggested 100 billion.  Somebody said 70 billion.”  Well, I think the difference here is that these are innovation to capacity or actual assets, as compared to total investment.  But regardless, we don’t have to start a fight over numbers, because whether it’s 60 or 70 or 100, it’s a very, very small investment.  It’s very impressive, in terms of the rate of gross of this investment.  But it’s very small compared to investments in fossil fuels.  And since renewable energy started from such a low base, we cannot just continue at the same rate or these minor jumps.  We need to go quantum leaps, in terms of scaling up the renewable energy as important share of the total global energy supply.  So it has taken longer than Edison expected.  But the transition from all the energy to new energy is on the way.  And I truly believe that.  The recent influx of capital, however, needs to multiplied, as I was saying, many times in order to obtain renewable energy potential and significantly scale up the share of renewable energy in the total energy supply.  As capital pours into renewable energy investment, the most powerful driving force for the growth of renewables is simple economics.  Clean energy technology costs, in general, are falling as the costs of fossil fuel energy are increasing.  And one of the great advantages of renewables, as we all know, is price and stability.  Capital expenditures is made up front and amortized, and there are no costs for fuel.  In 2002, and you heard a little bit about that from Judy, world leaders gathering in Johannesburg for the World Summit, on sustainable development agreed to substantially increase with a sense of urgency, the global share of renewable energy sources in the total energy supply.  This was in recognition-- and I’m not going to spend much time on that.  You all know that stuff.  In recognition that substantial expansion of renewable energy is a win-win proposition for developing countries.  Because it provides opportunities for poverty education, helps generate employment, helps curb global warming and air pollution that causes earth problems in many of the developing world.  Enhances energy security to rely on domestic energy sources.  So to build up on the results and the agreements reached in Johannesburg-- and we all really should be indebted to the German government for starting that process.  That as you then saw from previous slides continued with China, Beerak [ph?], Beijing International Renewable Energy conference.  And now, we have Wyrick [ph?] coming and of course, as Mike said, it will be like the Olympics.  And I see it at the Olympics in terms of breaking records so that every one of these conferences could break new records, in terms of advancing the cause of renewable energy and not just reporting on what has happened in the past.  We need to be always looking forward on that front.  So I’m not going to spend much time on what happened in BON [ph?], which I had the honor of facilitating.  But there was a political declaration from the International program and the policy recommendations.  In my mind, even though the political declaration is the place where Minster has made commitments on behalf of their government, it’s truly the International Action Program of pledges that stands out of the BON conference.  And recently, these were 195 voluntary actions, targets and commitments, which would mobilize billions of dollars in investments for generating energy from wind, solar, bio <inaudible> thermal and <inaudible> and cut down on emissions of greenhouse gases.  When 21 analyzed or reviewed the IAP, the International Action Program, recently and found out the results.  And I show this, because it really is important to follow up on these commitments.  You can’t just announce commitments one day and then, you forget about it.  And you wonder whether anything happened or not.  You need to view it regularly, not to shame anybody, but to show how progress can be made, how progress has been made.  And here you can see two actions not yet begun.  We’re not saying which ones they are.  That’s not really the point.  The point is what do you learn from all of this and what has it accomplished.  Then, came to China or Bierak [ph?].  And here, the emphasis in China was on developing countries.  One can say in BON there was more emphasis on the OACD countries and the actions by the OACD countries here in China.  And naturally, so the emphasis was on developing countries, who did not-- most of them have not benefited from the expansion in the development and use of renewable energy.  And in this case, there was the political declaration, as well, which spoke, you know, a great deal about the importance of private sector resources.  The importance of policies to remove barriers and level that playing field for renewable energy.  And emphasis, also, on research and development and capacity building for developing countries.  So to get back to the point I was making about we need to invest several times, or several orders of magnitude of the investigation that exists right now, in order to obtain the potential of renewable energy.  When 21 prepared their report that was presented, I presented it at the GlenEagles-Dialog, the last meeting in Berlin, on the potential of renewable energy.  And here, you can see that the potential is truly huge.  And the focus of the report was the 20 countries, the 20 major economies that were presented at the GlenEagles-Dialog.  And that’s G8 plus five that meet at the G8 Summit and the seven extra countries major economies, China, India, Indonesia, South Africa, and so on that form the 20 of the GlenEagle-Dialog.  And they will present they consume 80 percent of the world’s primary energy and produce a similar share of global greenhouse gas emissions.  So one of the key findings, which you see here, is that the overall technical potential of renewable energy is several times the actual total energy demand.  And this is particular, too, for electricity generation.  See that block at the end here.  That’s the consumption, according to the IEA scenario.  And you have the potentials on the other side.  But if you go to electricity, in particular, in the 20 countries, you can see the potential here.  So in the case of electric power markets, renewable energy could, by 2050, contribute at least half of all electricity generation in each of the large economies.  And in some cases, could contribute about 90 percent.  In the medium term, 2030, wind energy may achieve a considerable share, in addition to hydropower, which could reach its full potential during this period.  Renewable energy can also meet a high proportion of incremental energy need in the short and medium term, when combined with energy efficiency to reduce demand.  The high potential of renewable energy technologies represents great opportunities to countries, not only for attaining higher energy security and fostering innovation and employment, but also, for addressing climate change.  In addition, in the large economies, which still have a significant portion of the population without access to modern energy services, renewable energy can be a cost effective way to bring sustainable development and eradicate poverty in remote areas, as compared to grid extensions.  At present, almost all of the 20 countries, including this assessment, have national policies for renewable energy.  But only a few have policies in place for creating the framework conditions incentives and the research and development needed for attaining renewable energy’s full potentials.  The reality is that investment in renewable energy remains policy rather than purely commercially driven.  In that regard, it is extremely disappointing that renewable energy portfolio standards do not feature prominently in the energy bill before Congress.  Earlier this year, the International Renewable Energy community welcomed the announcement by the state department that the United States government will host Wyrick [ph?] in March of 2008.  Wyrick provides a great opportunity to continue the International momentum created by BON and Beijing to follow up on Johannesburg’s agreement to substantially increase, with a sense of urgency, the global share of renewable energy.  We need to move beyond incremental gains and pursue strategies for scaling up the development and the adoption of renewable energy.  We know that the three major drivers for scaling up are policy, technology and finance.  Policy includes actions that enhance research and development and technology and innovation.  Support market adoption of renewable energy technologies and in carriage private investment.  With regard to technology, I would emphasize the need for significant public and private investment in research and development to increase the efficiency and reduce the cost of renewable energy technologies.  With regard to finance, as I mentioned earlier, there is a need to multiply several times the level of current investment in new renewable energy capacity.  However, the policy and the institutional barriers that hamper larger scale private investment, especially in developing countries.  Since public funding sources, for example, the multilateral development banks and the GEF are too small for the scale of needed investment.  In my view, though, all of these institutions should be mostly in assisting developing countries in setting appropriate framework conditions for private investment, as well as buying down risk and providing guarantees.  Finally, climate change and outcome of the conference of the parties next month in Bali, can provide a significant impetus for large-scale deployment of renewable energy as a key component of any climate change mitigation strategy.  Wyrick’s proposed clay gender view that was described earlier by Ambassador Harnish, could be an important step in that direction.  That’s what I wrote to myself.  And he said, pretty much, really the same thing.  So I was very glad to hear him really say that.  As a prelude to a comprehensive agreement, post 2012, long-term policies, as well as measurable targets, could be adopted by all countries to scale up the use of renewable energy and to promote greater efficiency in energy production and use.  Pledges-- and that’s just a proposal.  Pledges could be organized and recognized with regard to the benefit to CO2 emissions reductions.  So not only one can encourage it, but one actually can highlight for every proposal what the CO2 reductions would be.  Because that’s one of the cushion really concerns of the world.  There is in addition, of course, energy security.  There is no reason why energy security would not also be a measure of these pledges.  So let me close by recounting the three major energy challenges that I began my remarks with.  That is energy security, energy access and climate change.  I truly believe that in renewable energy, we have the knowledge, the technology and the finance to address all three, if we can muster the political will.  Thank you very much.
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