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Peter Voser article: Burning issue for leadership

Updated: 2011-11-09

By Peter Voser (China Daily)

Coordinated global response is needed to meet challenge of providing more energy for more people and cutting CO2

Our world reached a significant milestone on Oct 31 when a mother gave birth to the Earth’s 7 billionth inhabitant. At this rate, the Earth will be home to more than 9 billion people by 2050 a number with an enormous potential impact on the global demand for energy, water and food.

Planning wisely for the future energy needs of this huge population is one of the most important challenges our generation faces, in part because it is far more than just an energy issue. Our future energy challenge is also a global security issue, an environmental issue, an economic issue and a jobs issue.

The global energy system is already in the early stages of a fundamental transformation. The future will see expanded use of renewable energy and cleaner fossil fuels. We will have more energy choices, but those choices will be more costly, so we will all have to become smarter about using energy efficiently.

Despite the scale of the challenge, I’m confident human ingenuity and technological innovation can make it happen. But what is lacking today is the common will to act. Getting where we need to go will require a new level of leadership and global collaboration on multiple fronts.

But the leadership triangle of government, business and society is increasingly ineffective. We need to rekindle the spirit of global cooperation and leadership that helped us deal with past challenges.

Simply put, our challenge is to produce far more energy for a world with far more people. At the same time, we need to reduce CO2 emissions and get smarter about how we extract and use our resources. And we will need to do this against a backdrop of almost constant volatility and change.

A big part of a broader global energy mix will be the rapidly expanding contribution of renewable energy resources. Up to 30 percent of the world’s energy mix could come from renewables by 2050. But that target assumes a very rapid growth rate that will require significant effort and sustained investment.

Even if the world achieves this target, all forms of energy will need to be developed to meet the future demand.

Among fossil fuels, natural gas will play an increasingly important role. It is the cleanest burning and the best ally of wind and solar power, which need a highly flexible backup.

Natural gas is also an ideal alternative to coal-fired power plants, emitting 50 to 70 percent less CO2. Replacing coal with gas to produce electricity is, by far, the fastest and least expensive way for the world to reduce CO2 emissions in the energy sector. Gas is affordable, its resource base is vast and widely dispersed, and it can help diversify energy supplies all of which enhance energy security.

It is also important that we focus on the ways in which water, energy and food are interconnected. Water is used to produce nearly all forms of energy energy is used to move and treat water, and energy and water are used to produce food. There is a growing awareness that the path to a more sustainable energy future will require society to balance the needs of these systems, while at the same time, keeping sight of carbon emissions and other resource stresses.

At Shell we have brought together specialists from various fields to map the links and better understand the trade-offs. Our early findings have identified two important factors that could help avoid a future water-energy-food crisis: smart urban development and greenhouse gas regulation and pricing.

Cities today hold half of the world’s population and generate up to 80 percent of its CO2 emissions. The global urban proportion is expected to grow to 75 percent by 2050. So the way in which our cities develop will greatly affect energy and water demand.

Through more efficient public transport, energy-efficient buildings and designs that utilize waste heat as an efficient energy source, and through investing heavily to upgrade our infrastructure, we can offset some of the growth in energy demand while creating new jobs.

But what is still urgently needed is a global consensus on greenhouse gas regulation and pricing. Widespread adoption of the most cost-effective CO2 reduction measures will only occur when governments promote frameworks to price CO2.

It brings us back to the need for leadership and global collaboration.

The absence of coherent energy policies among some of our largest energy-consuming nations and regions is a direct result of the lack of leadership and, more broadly, a troubling lack of basic trust between business, government and society.

Rather than choosing winners and losers, governments should set the goals and then provide appropriate incentives that let the market determine the most effective solutions.

I’m optimistic we will meet this challenge, as there are past examples of global leadership that offer hope. The coordinated response to the 2008 financial crisis is one. The international agreement to ban substances blamed for depleting the ozone layer is another.

Today we have a major opportunity to address the energy challenge in a way that avoids unnecessary pain in the future. Let’s not waste it.

The author is chief executive officer of Royal Dutch Shell. The article is based on a speech he delivered on Oct 31 to the Singapore Energy Summit.

(China Daily 11/09/2011 page8)

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