Remarks Prepared For Secretary Bodman
Good morning and thank you all for coming.
First, let me say that I appreciate the opportunity this trip provides me to visit Saudi Arabia once again. Our 2 countries have a special relationship of global importance that I hope my time here will only help improve. And, on a personal note, I want to thank Minister Al Naimi for his generosity in hosting our visit.
There is considerable debate about what the world's energy future might look like. The world is not now running out of hydrocarbons -- but we face a new energy reality nonetheless.
We must address growing global energy demand and the difficulties inherent in getting access to and investment in new supplies of hydrocarbon energy. And we must address the environmental impact of our energy use.
During this trip, which has already taken me to Jordan and will take me to the United Arab Emirates, Qatar, Egypt, and to the World Economic Forum in Davos, Switzerland, it is my hope that I will be able to discuss the importance of a cooperative global approach to energy security. So I welcome this opportunity to share a few thoughts with you today.
The International Energy Agency's (IEA) most recent World Energy Outlook estimates the world's primary energy needs will grow by 55 percent by 2030.
This alone creates for the world a set of energy challenges that require the active involvement of energy producer and consumer countries. And no one nation or sector can meet them alone.
As I have a reputation for being fairly direct, I want to get right to the heart of things. In my judgment, the new energy reality means the world must develop safe, reliable, clean, affordable, and diverse energy supplies. And the world needs a more diverse group of energy suppliers and a more diverse network of energy supply routes.
These 3 elements -- diversity of supplies, diversity of suppliers, and diversity of supply routes - are the key to enhancing global energy 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. According to the IEA, $22 trillion of investment is required between now and 2030 if the world is to meet the expected demand for energy.
This investment must be global, in developed and developing nations alike, and at all stages of the energy cycle.
Added to that is the need to recognize the requirement for greater environmental responsibility in every part of that same cycle.
This means we must harness our scientific and technological resources, as the Kingdom is doing at the 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.
That's not even the whole picture. We must also consider the impact energy prices have on our economies, our families and the health of our businesses. 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 economies.
In my judgment, it is not an overstatement to say that high oil prices can hurt a country's economic health. They can restrict development in ways that prevent business growth, inhibit enhancements in critical areas like health care, and generally keep living requirements from rising.
To encourage economic growth around the world, to raise global living standards, and to enhance environmental health, we must have responsible action from consuming nations and producing nations alike. That is the crux of the issue. And now comes the hard part: what do we do about it?
That answer is complex and multifaceted. If you will allow me, let me walk you through some of the components. 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?
On this front, it is time to stop doing the things we know won't help. Purposeful market distortions - rationing supply, cutting production, creating price floors and ceilings - don't work.
I can't stress this enough: the global oil market must be allowed to function in a predictable and transparent way.
Beyond hydrocarbons, the world requires new energy options. Everyone, governments included, has an important role to play in the development of alternative fuels and advanced energy technologies. But the public sector cannot do it alone. We need a new way of thinking about how we 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.
To that end, I have challenged governments around the world to make a public commitment to increase investment in the research and development necessary to achieve the technical breakthroughs in alternative fuels, the clean technologies and the greater energy efficiency we need, as well as the right balance between energy security and environmental stewardship.
This requires significant public and private global investments. But it's worth it.
Consider that increased investment in research and development would also help to alleviate another shared global challenge: the shortage of qualified engineers and technical staff needed to meet the demand for rapid innovation.
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.
This means sharing the risk that capital markets and the private sector are not yet ready to take on. As one example of this idea in practice, the D.O.E. is developing a new Technology Commercialization and Deployment Fund at several of DOE's countrywide laboratories.
This fund will allow the labs to move clean energy technologies that have advanced beyond the research stage toward commercial viability though prototype development, demonstration projects, market research, and other deployment activities.
I believe this plan will help bring critical technologies to market faster at a time when we are in serious need of them. The key to unlocking our energy future is, in my judgment, innovation.
We must leverage the power of private equity, as we are doing in the example I just cited.
We must make smart public backing and regulatory decisions and unleash the world's best scientists and engineers on the problem of developing cost-effective, market-ready advanced energy technologies.
To that end, I applaud King Abdullah's vision for the creation of a world class co-educational university for graduate research in new technologies that will help to develop a new generation of knowledgeable leaders who can address these challenges.
But without sustained global investment, without a new global commitment to investing 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.
And, as you are all businessmen, let me add that I think this is sound investment advice as well as good public policy. Before joining the government, I held leadership positions in several prominent U.S. firms and was a venture capitalist before anyone had ever heard of the term.
At one of these firms, when I started its venture capital plan many years ago, we initially budgeted about $1 million per year for the whole enterprise. Today, venture capital firms are investing an average of $11 million per deal, a figure I think reflects how big the opportunity in the energy arena is.
The global demand for energy is going to grow. And that's a good thing because that demand is fueling economic growth around the world. But, because of a whole host of reasons -- economic, environmental and security-related -- we cannot depend on hydrocarbons alone.
So we must expand the availability of and access to clean, affordable, diverse sources of energy around the world. To do that, we need a global response from every nation, including the oil producers.
Moving toward increased use of alternative energy is not a threat to any oil-producing nation. The introduction of alternatives will actually prolong the life of earth's fossil fuel supply. It is a question of balance.
And the pursuit of new energy sources will allow developing nations to supplant a heavy reliance on older technologies with cleaner, more efficient approaches and -- in the process -- enhance public health and the environment.
We can't afford to have anyone sitting on the sidelines here. I believe we all should get into this game. Right now and into the future, I believe that if we work together we can expand our world's energy supply in a way that is cleaner, more diverse, more secure, and more affordable to all people of all nations.
I thank you very much for your time.
