WEC SG speech in the Cancun Ministerial Session

Posted on 31 March 2010

Christoph Frei and Georgina Kessel, Secretary of Energy for MexicoSpeech delivered by Christoph Frei at the 12th International Energy Forum, held in Cancun, Mexico, on 30-31 of March, in conjunction with the 4th International Energy Business Forum. Both events were hosted by the Mexican government.

What Maslow would say post-COP15 and in the context of high global energy insecurity

We shall strive for global policies that reconcile environmental sustainability and economic growth. This makes energy security, climate change and inequality critical concerns indeed. The economic crisis or the outcomes from COP15 underscore how the three challenges are intertwined. We cannot resolve one without addressing all three. Yet, it is still part of a broad perception that delivering solutions to fighting energy poverty or even mitigating climate change are noble objectives for idealists.

The point I am about to make in the following lines is that energy poverty is not a noble secondary objective but that there will be no energy security unless we have real progress on this issue.

When debating energy security we like to refer to oil price volatility and the role of speculation as a threat, shale gas as a game-changer, energy efficiency and renewables as an opportunity, nuclear, CCS or large hydro as opinion dividers, and the global financial and economic crisis as an investment killer.

Looking at the broader picture the 2009 UN key priorities were a success at COP15, this year’s are the progress report on MDGs. We came out of COP15 with little sentiment of success. The world still has no succession to the Kyoto protocol that ends in 2012 and there are no legally binding commitments that take us closer to mitigating the global climate threat. The MDGs were originally defined to be delivered by 2015 and the assessment is just as dire. What is the link to energy security?

Without delivering on the MDGs and on solutions that bring energy to the 1.5 billion people without access to commercial forms of energy, which enables these MDGs, we will achieve no progress on energy security. Let me make four points to illustrate this:

First, we can easily agree that investment uncertainties oppose energy security as they delay investments and/or lead to wrong choices, which directly affect the capital price of our energy infrastructure. Consumers eventually pay for it as a risk premium and producers generate overall fewer revenues.

With WEC’s global issues mapping process (with over 3000 organisations in over 90 countries we represent the world’s deepest and most inclusive public private energy network) we identify critical uncertainties for the energy sector. The 2009 survey identifies the climate framework and lack thereof as the most critical long-term uncertainty.

Second, both, climate change and energy security are global problems that require global solutions that rely on international collaboration and frameworks. There are no effective solutions within national boundaries and there will be no effective framework without the involvement of all countries, including developing countries. The effective deployment of clean technologies within countries and via international support mechanisms is critical to reduce global CO2 emissions and can only happen if we have effective international agreements and frameworks. Thanks to Sir David King we know that an effective climate policy is affordable if we implement it now rather than later. However, our solutions must be global and built on solidarity between nations. It is such solidarity that will be the key to success in a post Copenhagen context.

However, and this is the third point, we can see from our activities in over 90 countries that priorities across countries are very different and cover the full range of energy policy domains: many of the Sub-Saharan African or South-Asian countries look at access and energy security as a first priority; South Africa or China are among the countries with a strong focus on security of supply; OPEC countries prioritize security of demand; the US economics; and some of the Northern European countries put environmental and social issues on the top of their agendas.

The famous American psychologist Abraham Maslow argued in the 1940ies that needs can be structured in a pyramid in which higher order needs will only become a priority once more immediate “bottom-of-the-pyramid” needs have been satisfied. Poets do exists and Maslow is proven wrong. However, when looking at social pattern, the concept applies and we can easily translate its meaning to energy policy. There, we state that access to energy certainly is a more immediate need than access tomorrow – energy security; energy security in turn will outrank energy prices: we first want to have it and then would like to have it cheaply. Lastly, in the sometimes un-poetical real world the environmental and social issues are on the political agenda when affordable – only, when affordable. We may call it political realism, which is not about how we would like it to be, but how things turn out to be, after all. Including in COP15.

This leads me to the fourth and last point. The energy Maslow hierarchy implies that we cannot get political support from all countries for higher order needs before proposing solutions for more immediate policy needs. It simply does not work along the lines: “help us solve the climate issue and we look at energy access in the next round”. Combating inequalities is a way to minimize tensions that barricade the way to common solutions foster economic recovery. Political realism affirms that viable solutions need advancing the various priorities (energy access, energy security, climate change) at least simultaneously. In other words: if we want a global solution on climate change, we need developing countries at the table, which will only happen if we co-deliver solutions to the MDGs and to energy poverty. And only a global collaboration on a climate framework will eventually reduce investment uncertainty and enable effective investment decisions.

In conclusion: solutions to energy poverty are not a noble secondary objective to be left in the hand of idealists and poets, but the very basis to enhance global energy security. Delivering energy access has to become part of our bottom line if we want to drive long-term sustainable energy security.

This is not just about making energy yet another MDG and leave it for others to look after. This is about understanding that solutions for energy poverty are critical foundation for our future energy security and hence part of all our core agenda.