The Multilaw European Conference, Marker Hotel, Dublin – 6 June 2014
Address by Dr. Eddie O’Connor, CEO Mainstream Renewable Power
Mr. Chairman and Delegates to the Multilaw Conference,
I am most honoured at being asked to address this afternoon’s opening session on “Key Issues That Are Shaping Our Future”. I have been given the task of looking at Europe’s energy security challenges and coming up with a solution.
My approach to this issue is that of a businessman who has spent all his working life in the electricity sector and who for the past two decades has been an entrepreneur in the renewable energy field, encompassing on-shore and offshore wind, as well as Solar PV.
I first set up Airtricity as a wind energy company in 1997 and then six years ago founded Mainstream Renewable Power, which is now the world’s largest private developer of renewables with a pipeline of over 8000 MW in North and South America, South Africa, the Middle East and Europe.
That’s the perspective from which I address Europe’s energy security challenge.
The solution to Europe’s energy challenge is actually quite simple. Go green! Replace fossil fuels with renewable energy.
Europe’s energy problem can be simply expressed. We import:
- 88% of our crude oil
- 66% of our natural gas, and
- 42% of out solid fuels.
All in all, 53% of EU energy consumption is linked to imports.
Everyday, the EU spends more than €1bn on importing energy. That’s almost a fifth of the EU’s total import bill.
The threat to our energy security becomes more obvious when it is realised that the bulk of our gas imports come from Russia and Algeria, neither of which is politically stable, and neither can be classed as a reliable ally of Europe.
Forty years ago the Arab states used oil exports as a political weapon which led to wholesale shortages in Europe and caused a global economic recession.
Over the past few weeks Europe has been reminded how dependent it is on Russian gas and coal. Chancellor Merkel has called on the Russian President to stop playing politics with energy. He won’t, of course.
It was the vulnerability to outside threats that led President Hollande to call for the creation of a European Energy Community and to Prime Minister Donald Tusk of Poland reacting in such alarm to Russian threats that he went on a personal tour around Europe to drum up support for the French President.
As things now stand, we Europeans are in a very dangerous position on energy security. Clearly, we need a short to mid term solution that will ensure the continued import of petroleum products and gas but it is also clear we need a longer term strategy to liberate ourselves entirely from the dangers of dependency on imported energy.
The solution is at hand. Mr Chairman.
Europe has two great sources of indigenous energy which not only remove the security threat but also provide us with an inexhaustible supply of energy that is both clean and cheap. Those sources are, of course, wind and solar power.
Europe has abundant wind resources both onshore and offshore and they are sufficient to supply virtually of our energy needs. We also have abundant supplies of solar power, especially in the Mediterranean region.
In addition, we have hydropower, biomass and other forms of green energy. But the great bulk of indigenous energy will come from wind and from the sun.
If we accelerate the development of renewable energy then Europe could be energy sufficient within three decades. We have the resources and we have the technologies. What we need to do now is to build the infrastructure.
In that regard, I have been proposing the creation of a Supergrid to capture the wind power generated offshore in the seas around the coasts of Europe and, indeed, the solar power generated from the sun in the Mediterranean basin.
Most of the technology for the Supergrid already exists, such as High Voltage Direct Current cables. But one piece is missing, a device to collect the electricity, convert it from AC to DC and to distribute the power to where it is in demand.
That missing component is the SuperNode, which my company is developing here in association with the Dublin Institute of Technology. The research work is well advanced and I have great pleasure in unveiling a model of the SuperNode both as an example of the ingenuity of our engineers and as proof of their capacity to crack the technical problems in effecting the great transition from fossils fuels to renewables.
If the right political decisions are made, that task could be completed by the deadline of 2050, a deadline set by the world community to keep the rise in global temperature below 2 degrees celsius.
If all goes well then by mid century our economies would have been transformed from high to low carbon societies and electricity will be the main form of energy.
That is the future. If you want an example of how the future can be created at speed then go no further than Denmark, which will have completed the energy transition well before 2050. And which, at the same time, is one of the most competitive countries in the world.
There is no contradiction between going green and being competitive. Quite the opposite in fact
The Energy “Trilemma”
But security is not the only challenge to be confronted because when the future of energy is being debated the security question is normally linked with that of maintaining economic competitiveness and reducing carbon emissions.
This has become known as the “energy trilemma”.
This trilemma is based on the belief that security, competitiveness and emissions can’t be solved together and that we must choose as to which is to be given priority.
In the face of accumulating evidence from science and from weather patterns it seems to me that the primary emphasis has to be placed on reducing carbon emissions.
If we don’t succeed, then there will be catastrophic environmental damage to the planet.
Since this is not scare mongering, but science, carbon emissions have to be reduced drastically so as to keep the atmospheric concentration of CO2 below 450 ppm.
And since carbon emissions are caused by burning coal, oil and gas to produce energy that objective can be simply expressed as putting an end to the burning of coal, oil and gas for energy purposes over the next thirty-five years, and replacing fossil fuels with clean energy sources, mainly in the form of renewables.
That is the world towards which we are heading – for the good reason that there is no alternative.
In short, power generation, transportation, heating and cooling will all have to be based on low carbon energy. A great transformation will have to take place within the next three and a half decades.
The good news is that, using wind and solar power, it can be done.
The further good news is that in opting for renewables as the way forward we simultaneously tackle the questions of competitiveness and security.
There is no “trilemma”. On the contrary, we have a win-win situation.
For example, renewables are becoming cheaper as a source of energy, while fossil fuels are becoming dearer.
Everybody in the electricity sector knows that the cost of wind and solar power is now on par with that of coal and will soon be cheaper than gas.
That has been the trend over the last two decades and one which will be accelerated when the costs of the pollution, the environmental degradation and global warming associated with burning fossil fuels are fully included in the market price for coal, oil or gas.
When that happens, then what economists call externalities will have been internalised and incorporated in to the price of fossils. What business people call “a level playing field” will have been created.
I hope this trend towards a level playing pitch will be strengthened at the Conference of the Parties taking place next year under the auspices of the United Nations Framework Convention on Climate Change.
COP21, as it is known, will be held in Paris and I have proposed elsewhere that Europe and China should adopt a complementary approach on setting an economic price for carbon and that they should jointly adopt a leadership role in pursuit of a global agreement on reducing emissions.
Without such cooperation there is little chance that COP21 will be any better than the disaster of COP15 in Copenhagen.
The omens for such cooperation are favourable because both Europe and China are taking the same policy approach to controlling emissions by opting for Cap and Trade Schemes.
The European scheme is already in place and while it is not yet working satisfactorily because of design flaws, the Commission is intent on correcting them in the near future.
The logic behind a functioning system is so powerful that it can be anticipated the scheme will be functioning as originally intended by the opening of the COP.
For their part, the Chinese have been preparing Cap and Trade Schemes for quite some time and recently introduced them on an experimental basis in five major cities and two regions.
The expectation is that these regional schemes will be extended to the whole country by 2016 when the next Five Year Plan comes into force.
China and Europe Working Together
The importance of this development is twofold. It means that Europe and China are on the same track in dealing with carbon emissions and that both will come to the COP with developed clear views on how a Cap and Trade Scheme should work.
Were they to combine together then over 50% of global carbon emissions would be covered by a system that puts a physical limit on the amount of emissions to be permitted in any one year and creates a market in emission allowances, which results in a price for carbon.
If Europe and China were to cooperate along these lines it would create unstoppable momentum in favour of a global agreement on carbon pricing.
All this leads one to believe that carbon pricing is a megatrend that will have to be factored into all corporate long range planning.
US developments earlier this week confirm this belief because, despite much bitter domestic opposition, President Obama introduced a cap on the carbon emissions from coal-fired power stations.
Many commentators described this as the most significant initiative ever in US policy on climate change and it is hardly to be wondered at in view of the extreme weather events that have battered the US this past year and the most recent Climate Assessment Report from the government itself.
So the climate change world is taking shape before our eyes. If Europe, China and the US are in tandem, the rest will follow.
Let me summarise by saying that the solution to Europe’s energy security challenge is to “Go Green”.
The solution is to replace imported fossil fuels with indigenous renewable sources of clean energy.
If we do that then three problems will have been solved at a stroke, those of
– energy security;
– economic competitiveness and,
– emissions reduction.
I repeat for the sake of emphasis that the transition to renewables will have solved the challenge of energy security.
Going green is my vision of the world that awaits us. I hope that my presentation has given you an insight into the key energy issues that are determining our future.
Above all, I hope these insights will enable you to survive and thrive in a challenging world.