--- Det talte ord gælder ---
Thank you.
It’s great to be back here at the LSE.
I spent one of my best years here doing a Master in European Studies
It was in 92 – a year full of turmoil for Denmark.
First a majority of the Danish voters for the first time ever rejected an EU treaty in a national referendum – and then a couple of weeks afterwards Denmark won the European championship in football – after beating Germany 2-0.
Our foreign minister at that time managed to combine the two events in one sentence, when he told the European press:
“Well, If you can’t join them, beat them”.
Whilst preparing for this speech, I obviously thought about “the Three Tuns”, the Beaver and so forth,
but I couldn’t help spending a few minutes on one of the LSE’s most famous alumni – the Right honourable Jim Hacker.
Actually, when I obtained a cabinet post last year, a friend of mine, who also studied here by the way, immediately sent me the DVD-box of the series, where the LSE-educated Jim Hacker is constantly teased on account of his education by his permanent secretary Sir Humphrey, who obviously graduated from Oxford.
Well, he who laughs last, laughs longest.
Just take the recent showdown in the labour party between the two Milibands.
Who won?
The brother who went to the LSE.
So, hang in there with your studies;
you definitely chose the right school.
Well, enough of my trip down the memory lane;
let’s start this lecture far away from London; let’s go to Stanford, where the former secretary of state Condoleeza Rice is back in the so-called ivory tower.
Immediately after she left the state department she said the following:
“I can tell you - nothing has surprised me more as Secretary of State than energy politics distorts world politics.
It has given extraordinary power to states that tend to use it in an inappropriate way”
And this is indeed the topic of today’s lecture:
- What impact does energy have on world politics;
- why has energy politics moved from so-called low to high politics.
- and how should Europe respond to this new situation?
I’ll start by presenting three arguments why energy policy is now high politics; then I’ll focus upon the policy response – for Europe- and obviously also for my own country, Denmark.
The first reason, why energy is now high politics, is very simple:
In 2050, the world’s population is projected to increase to 9 billion.
That is an extra China, US, Russia and Europe within the next 40 years.
And with a growing, global middle class, for instance in India, more people will demand cars, fridges, city breaks, Ipads and all the other commodities of a modern life.
As Gandhi once put it:
“If an entire nation of 300 millions took to similar economic exploitation [like the West], it would strip of the world bare like locusts”.
Well, today the Indian population has exceeded 1 billion, with a growing need for energy.
And with a growth rate like China’s, India’s energy consumption is exploding.
Of course, research and innovation will eventually produce new kinds of energy and also new energy efficient products,
but there is no doubt that the increased global consumption is bound to put an increased pressure on practically every natural resource on the globe – including those that power our current “black” economy like oil, gas and coal.
This leads me to my second argument – because at the same time as the demand for energy is going up, the supply of energy is going down.
Here we are obviously entering a dangerous territory – with theories of peak of oil and lots of
debate on when oil will eventually run out.
But let’s be frank,
researchers may disagree on when oil, gas and coal will run out; but they don’t disagree on the fact that it will eventually happen.
Depending upon who you trust, the world will have oil for the next 40 years, and gas for the next 60 year.
This will obviously have a major impact upon the prize of fossil fuel, which is bound to go up.
And what is more: since the days of easy oil are definitely over, we’ll see companies taking more and more risks to extract remaining oil.
I guess here it is sufficient just to refer to Deepwater Horizon.
But just as importantly: due to the shortage of fossil fuels, we are in for a completely new situation, where the world’s previous arms race will be replaced by a race for energy.
Many countries, including the new big powers, will try to secure as many of the world’s remaining resources.
Indeed, where the leaders of the world used to mark their geographical conquests with small flags on each side of the iron curtain, they are now marking their access to oil fields and gas pipes.
Just take the Arctic.
In October 2007, two Russian submarines planted their white-blue-red flags right there at the bottom.
At the same time, China build gigantic icebreakers to collect data on oil reserves and metals in the areas. And countries like Canada and Denmark are also hoping to put their hands on some of the reserves.
Or take another region, Africa, which is believed to posses around 10% of the oil resources of the world.
In the last couple of years, especially the US, China, India but also Europe have competed to get a hold of these resources- and indeed, it is impossible to understand African policy, if you do not keep a close eye on energy.
Just like any other race, the energy race will have winners and looser.
And since energy is so vital to our economy (and military for that matter), the winners of the race will have a much bigger say in world politics.
Or to push the point even further:
During the cold war, the world was divided between two superpowers;
Today, we’re facing a new kind of bipolarity – not between the US and the Soviet Union – but between those that have energy – and those who haven’t;
Between those who import energy and those who have a surplus for export.
The exporting nations are bound to raise their voice at the international level; whereas the one’s on the receiving end of energy, will become rather tongue-tied, when they discuss with countries which will determine, whether their citizens have electricity and heat at home.
But this is still not the entire story.
And this is my third and important point.
We need to consider the implications of depending on the distribution of the world’s remaining oil and gas reserves and the fact that reserves are placed in very few countries.
And once we do that, it becomes clear that many of these do not share the values of the so-called West.
Already back in 2006, Thomas Friedman, the New York Times columnist, coined a term; the first law of petro politics.
And it’s a very simple law: every time the price of oil and gas go up, the incentive of the energy producing countries to embark upon political reforms go the exact other way.
This has been common knowledge in the US for the years.
Just take one of Condeeleza Rice’s predecessors, Dr. Henry Kissinger, who argued that the US’s import of oil from the Middle East was the biggest transfer of wealth from one region to the other in human history.
Indeed, in 2008 the 13 OPEC members alone have earned more than 1000 billion US dollars from oil sales and the US spends 1 billion a day on foreign oil.
This obviously has a tremendous impact upon the American economy and security policy.
Richard Lugar, a republican senator, has put it like this:
“without revolutionary changes in our energy policy at home, we risk a multitude of catastrophes, that will limit our way of life, our foreign policy goals and leave us open to the intrigues of rogue states.”
It is, however, one thing to realize that energy policy is now high politics; it is quite another to act upon this new fact of international relations.
So, what is the policy response for us in the European Union, but obviously also as individual member states?
Well, in my mind the policy response can be summed up as follows:
We simply need to limit our over-reliance on fossil fuels and eventually become independent of coal, oil and gas.
Let me just give you some very simple but thought provoking figures.
In 2030, Europe is expected to import:
66% of our coal
80% of our gas
And 90% of our oil
This will make us extremely vulnerable in the new world of limited energy – and it’s not science fiction.
Just think back to January 2009, when Russia suddenly turned off the gas to Ukraine – and hence also Europe; leaving thousands of Europeans to freeze in their homes.
In reality, and in more general terms what is at stake here is our common energy security, as was also stated yesterday in the new British National Security Strategy. But it is also our economy which is at stake.
If we don’t transform ourselves, we’ll be spending more and more of our GDP on fossil fuels;
at the same time as we’ll not get access to the many new jobs that make up the clean tech industry- one of the most promising new industries!
Or let me phrase it differently:
instead of transferring billions of pounds to energy producing regimes, for instance in the Middle East, we shall embark upon a paradigm shift at home and invest massively in European green jobs and technology.
In practice, this means that we should transform Europe into a low-carbon society with renewable energy and a strong emphasis on energy efficiency.
To be sure, this will also be beneficial to the overall combat against climate change.
Denmark – if you allow me to put on my national hat for a moment – is an excellent case study that the green way is definitely not a dead end.
To illustrate this, let’s take a short detour to Washington DC.
More than 30 years ago the American president Jimmy Carter, during the first major oil crisis, tried to address the exact same issue by placing large blue sun panels on top of the white house - as he announced that America was going green.
In front of sixteen hundred Pennsylvania Avenue he predicted:
"A generation from now, this solar heater can either be a curiosity,
a museum piece,
an example of a road not taken
or it can be just a small part of one of the greatest and most exciting adventures ever undertaken by the American people."
But what happened?
Well, Jimmy Carter lost the election to Ronald Reagan – and what did he do?
Well, he not only told “Mr. Gorbachev, to tear down this wall”;
He also told his staff to tear down the solar panels – and well, quite ironically, the solar panels did end up in a museum, but in China – which is now the biggest producer of sun panels world wide.
And what did we do at the same time in Denmark?
Well, when the oil crisis struck in the 70-ties,
we chose the road less travelled by.
We chose to prioritise energy savings and renewable energy.
So instead of tearing down solar panels, we started putting up wind turbines and invested massively in combined heat and power production.
And we didn’t stop, when oil started to flow again in the 80-ties.
And what is more: through out these years we have shown that investing in renewables goes hand in hand with economic growth.
As a matter of fact, since 1980, the Danish economy has grown by almost 80%, while our energy consumption has remained more or less constant, and co2-emissions have been reduced.
The share of oil in the total Danish energy consumption has fallen dramatically over the years.
At the same time renewable energy is now covering almost 1/5 of our energy’s consumption.
Today, almost 12% of our exports comes from clean tech – and it is now part of the Danish brand on the global scene.
Indeed, we were just made fun off in the American cartoon, the Simpsons.
Here Homer is persuaded by his daughter Lisa to buy a windturbine – from the Danish wind industry. And quite correctly, wind is introduced as “the new energy that powers Denmark”.
But we should not rest on our (green) laurels.
That’s why the Danish government in 2008 set up a national commission to help us to become completely independent of fossil fuels.
The commission just presented its report last month and its core conclusion is that independence is not a pipedream;
it can be done – and exactly because the prices on fossil fuels are bound to go up, it can be done at only a very limited extra cost.
Indeed, you can say that the slightly higher bill for green energy is an insurance premium that we pay for not having to participate in the global energy race – and hence deposit our room for manoeuvre among a limited number of energy producing countries!
Our official goal is now to become independent in 2050 – but Denmark is obviously not an “energy island”;
we are part of the European Union, so we’ll pursue our energy transformation together with the rest of Europe.
Just to give you two examples.
1) As the only country together with the UK, we just decided to support that the EU should raise its own reduction target from 20% to 30% co2-emissions in 2020 – disregarding what happens in Cancun at the COP-16.
This will not only boost our clean tech industry; it will also breath new life into our common trading scheme of co2-credits, the so-called ETS-system.
2) But just as importantly, we are also strongly in favour of developing a common European energy infrastructure, the so-called super-grid system.
To be very concrete, such a system would enable us in Denmark to export our extra wind energy to Germany when their solar panels are not producing any energy.
Similarly, we could import solar energy from Spain, Portugal and Germany when our wind is not blowing.
As a result, the price on renewable energy would come down and we would be able to adapt large volumes of renewable energy into our grid.
To be sure, because of the importance of energy policy to all of us, there is no doubt – and I can guess I can say that with some credibility as a former student and EU specialist– that energy policy will soon make up a large part of the curriculum also in the European Studies programme here.
Just to give you one indication, the EU is scheduled to hold its first ever Special Summit on energy in February.
And well, eventually the EU will also have to speak with one voice.
After all, if we all go to for instance Russia individually to negotiate gas contracts, we are bound to get a worse deal than if we negotiate as a union.
Ladies and Gentlemen;
Dear students;
I started this lecture with Jim Hacker – so
let me also end this lecture with him.
In one of my favourite episodes, “The Official Visit”, Jim Hacker is scheduled to meet with the President of Burundi – a country, which he first calls " a tin pot little African country" –untill Sir Humphry tells him that it may have oil.
As always things go terribly wrong. First, the president plans on writing a speech urging the Scots and the Irish to fight against “British colonialism”.
Then Hacker realises that the President is actually a former fellow student at the LSE.
So what to do, he desperately asks Sir Humphrey?
1. “If we do nothing, that means, we implicitly agree with the speech.
2. If we lodge a protest, it'll be ignored.
3. If we break off diplomatic relations, then we can't negotiate the oil rig contracts”.
Well, the sketch may be funny – and from the ‘80’s – but it actually sums up one my points of this lecture brilliantly:
Either we transform ourselves into low carbon economy or we become heavily dependent on the oil producing countries of the world.
So, let’s, to quote Jimmy Carter, make this “the greatest and most exciting adventure ever”.
Let it not be the “road not taken”
And let’s act now – and become a region for a blossoming green economy.
Thank you