EU Commissioner for Energy
Speech at World Economic Forum Annual Meeting
World Economic Forum/Davos
25 January 2013
When I became responsible for energy in the European Commission, I have made it my business to place energy policy where it belongs, at the heart of economic policy. Sustainable, secure and competitive energy is my mantra. Europe's energy goals, our targets of renewable energy, energy efficiency and greenhouse gas emissions, are firmly embedded in our economic policy. No sustainable economic growth without sustainable energy!
But Europe is not the world. And the way we are going is quite a different direction from most of the world.
A better way.
Today, in China, some citizens cannot leave their homes because of pollution. In Nigeria, people fear their water is poisoned by oil drilling. In Africa, oil and gas are fuelling political instability. The IEA warns us that carbon dioxide emissions are rising to dangerous levels. America is re-industrialising itself thanks to a fossil fuel windfall. Is this really the way to go? Are we, as Oxford academic Dieter Helm suggested recently1 prepared to threaten "the very idea of economic growth" itself. And expose mankind to unforeseen "havoc"?
We need to bridge the gap between our energy rhetoric – "green and clean" – and economic reality. If we stick to our traditional economic creed, we can forget "green and clean". The economic future looks bleak to many people – the unemployed in Spain, the poor in India, the underprivileged in China, the homeless in America. But to power our growth, we need to look beyond the energy model we have relied on to date.
If we promote economic growth on the energy systems of the last century, we will need the resources of at least two planets to power the world by 20302. This is simply not possible. As Obama put it, earlier this week in his inauguration speech, to do nothing to change this would mean "betraying future generations".
The EU has set out an alternative vision. We have nearly doubled our use of renewable energy in 10 years3. We have reduced our energy use, partly due to the crisis, but also because of strict rules on energy efficiency. We have cut both oil and coal use significantly in the last decade. We still have a long way to go, and we will present proposals for new goals for 2030 later this year. 2030 is around the corner, in energy terms. But if we don't do something fast, the world will need over one third more energy by then. This is what we have to avoid.
Driving the EU energy strategy forward has not been plain-sailing. I am worried about the international competitiveness of European companies, while our competitors have subsidised fossil fuel, and lower environmental standards. We need to do more to convince our citizens – energy saving is still a difficult commodity to sell! Perhaps, in fact, we put the cart before the horse, building up renewables before we had the infrastructure, back-up and storage capacities.
But these are lessons we have learned and I want to share them with our international partners. Because it is no longer enough for Europe to go alone down this path. This needs to be a global path.
Think about it. Europe has less than 9% of world population. We use around 14% of world energy. In the US, 5% of world population uses over 20% of world energy. But if we take developing countries, we have the inverse. China has 20% of world population. It uses 10% of world energy. In the future, we need growth which combines security and welfare for citizens, with clean, sustainable, safe and efficient energy across the globe.
I would like to say, the EU has the solution. But we don’t. Not on our own. We have to find a solution at the global level.
But we have at least made a good start in the EU.
Our Achilles heel is energy prices. Our prices are higher now than anywhere else, apart perhaps from Japan. But we are not going to lower our prices overnight. We must find other ways to reduce our bills – more energy efficiency, more indigenous energy, more intelligent networks, more informed consumers.
After all, artificially lowering energy prices today sows the seeds of the next energy crisis. Energy is not a free resource. If we do not pay the price of the clean energy model, we will pay it in other ways – as the citizens of Louisiana, New Jersey, Beijing, even the ski resorts of Switzerland, have found out.
We all want growth. But what do we mean by that? We cannot have growth without the energy policies to match. We cannot have growth if we are bleeding our economies with energy subsidies. We cannot have growth without energy market transparency and fair competition. We cannot have growth if our citizens cannot feel secure in their homes, breath safely in the streets, drink water from their taps!
Europe cannot depend on growth from a growing population pushing up consumption. We cannot depend on growth from new oil fields, shale gas or foreign adventure.
We also have limited influence on energy prices. European prices reflect not just world markets, but also our high safety demands, high social norms, high efficiency norms and high environmental protection. As I have said, we are not going to change these.
No. In Europe we do things differently.
Our economic and energy strategies are based on the quality production of goods, high skills levels and professional services, secure and adequate infrastructure, high standards of Research and Development, high levels of energy efficiency, increased production of indigenous renewable energy and partnership both within Europe and externally, such as with Russia, North Africa, Central Asia, Brazil, China or the US.
In 2011, for the first time, European investments in renewable energies were higher than for conventional fuels. Europe already produces over 3.8 GW from wind power alone! Compare that to the rapid growth of coal in the rest of the world: Three times faster even than gas [in 2011].
Our energy companies have to accept rules on transparent markets. Any company operating in Europe has clear and common rules. This includes companies owned by foreign entities! We defend fair competition, to allow new entrants, small companies, or advanced technology, the same chances of success as everyone else. We enforce clear rules on subsidies, state aids and mergers, preventing corruption, conflict of interest or wasted public money.
Rather different from half a trillion dollars spent of subsiding fossil fuels4 in the world!
Our economic growth will be powered by clean, safe and sustainable energy supply. Low-carbon, efficient energy. More indigenous resources, better interconnections and intelligent grids. New ways of designing electricity markets, better harmonisation among state support schemes. More investment in energy research and infrastructure.
And more jobs in renewable energy, on top of the million we have already created!
Yes, we do it differently.
But we are not really so different at all.
Europe has a market of 500 million consumers. We are a key driver in the world economy. Slower growth in Europe sets off alarm bells in Beijing, Brasilia and Moscow. Making our energy more secure and sustainable, while getting our economy back on an upward curve, is the right way - not just for Europe, but for the whole world economy.
Take energy efficiency. If globally applied, the EU approach could reduce global oil demand by 2035. This is the equivalent of today's crude oil production of Russia and Norway combined5. Without more efficiency, global oil demand could double.
It is now almost 20 years since the world first agreed to reduce greenhouse gas emissions. Yet our emissions just rise and rise. Economies and energy models, outside Europe, have hardly changed. Let's not pretend the old formulae will work. If we are serious about sustainable economic growth, we need a different energy policy. We need it quick. And we need it at the global level.
Dieter Helm, The Carbon Crunch 2012
WWF report May 2012
2011 figures, IEA