Speech to Offshore Northern Seas Conference

In a digital world where it is increasingly easy to communicate electronically, it is still important to have meeting places like this where various parties can meet in person to discuss common challenges and opportunities. Therefore I am glad to be here and share my thoughts with you, - today about energy as a value creator.

As we all know, energy is important in all aspects of life. All countries and all persons use energy in one source or another. Energy is one of the most important input factors in the global economy. The industrialised countries' economic development and prosperity have been made possible due to access to cheap energy. Norway is a good example in this respect. Our plentiful water and oil recourses have been an important contributor to our developed economy and high living standards.

Access to energy is crucial for future development in the least developed countries. The UN has established eight Millennium Development Goals in order to conquer poverty and improve the standard of living for the poorest people in the world. None of the Development Goals are related to energy. However, sufficient access to energy is a prerequisite and a means to reach the Millennium Goals. It is not possible to improve living standard in the poorest countries unless an increased supply of energy is ensured.

An example is that hundreds of millions of people spend a significant part of the day gathering water and energy sources such as wood. This work is normally carried out by women and children. It limits their access to education and other income-generating opportunities.

Global consumption of energy is increasing. The International Energy Agency (IEA) estimates that global consumption of energy will double over the next 20 years. Much of this anticipated growth will take place in the developing countries. Today the consumption of energy is very unfairly distributed. The population of high-income countries, which represent 15 per cent of the world's population, consume half of all the energy in the world.

This increase in energy consumption, challenges the global energy situation. As we all are aware of, China has undergone great economic development in the preceding decades. This has consequently led to a considerable increase in energy consumption. If we imagine that every second Chinese owned a car – the US average – this would represent 600 million cars. A leading environmentalist in China was quoted in the Financial Times that if the Chinese wanted to live like Americans, we would need the resources of four worlds to do so.

How can the world handle the increase in energy demand? Today fossil fuels represent almost 90 per cent of the world's energy consumption. In the short and medium term there are enough fossil fuels and other conventional energy sources to cover the increasing demand.

BPs statistical review this year showed that there are petroleum reserves enough for 41 years of production. That is to say, if production remains at current levels. They will last even longer if we include resources that are yet to discover. This is a long period, but we need to look beyond that. We need to secure access to energy for our future generations. Fossil fuels are non-renewable energy sources. No new major petroleum province has been discovered since the North Sea was revealed in the late 1960s. Now this area's total oil and gas production has reached its peak. We are increasingly aware that fossil fuels really are a limited resource.

We have had a considerable increase in the oil and gas prices over the past years. Given the global energy supply situation combined with rapid economic development and higher energy consumption, I believe we have to accept higher prices in the long-term.

Some may believe that for Norway it is only a great advantage with the extremely high prices we have nowadays. That is not the case. It may have an effect on the value of our currency, which is not good for us. And note, with an open economy Norway depends on a stable world economy. What we want is more stable prices.

High energy prices pose a threat to the development of the global economy and they hit the least developed countries hard. However, high prices for fossil fuels will support the increased focus on developing renewable energy sources. Some renewables can compete with conventional energy sources, for instance hydropower or in areas were location makes conventional energy sources difficult to employ. But in most cases, renewables are still not economically competitive. Higher energy prices combined with an increased focus on the security of energy supply and environmental protection will assist the future development of alternative renewable energy sources.

Even though petroleum prices are high, it is not enough to ensure a rapid development of renewable energies. I believe there is a growing acknowledgment that the market alone is not capable of solving all the challenges related to developing renewable energy sources.

There is a need for intervention from political authorities.

The environmental side effects of use of fossil fuels make intervention necessary in order to facilitate the evolvement of economically efficient technologies. The International Energy Agency (IEA) states that supportive policies are required in order to achieve further development within the field of renewable energy sources. Governments, industry and consumers must take responsibility for developing our resources in a sustainable manner.

In order to reach these goals, we need international cooperation and common solutions. On an initiative from the German Chancellor Gerhard Schroeder, an International Conference for Renewable Energies was held in Bonn in June this year. The intention was to prepare the ground for a global expansion of renewable energies. The conference shows a growing political will for renewable energies, including capital, competency and policy instruments. It further shows an increasingly involvement and cooperation between private and public actors and between third world and industrialized countries. The proclamation from the Bonn conference will lead the way towards the next sessions in the UN's Commission on Sustainable Development (CSD) in 2006-2007, where energy will be a main topic.

On our home ground we also see important developments. Earlier this year an official report - Hydrogen the future energy carrier - was presented to the government. In recent years hydrogen and fuel cells have been subject to an increasingly international emphasis, and many countries view hydrogen as a future solution for the challenges in the energy and transport sector. Norway has long hydrogen traditions, and has high competency in technologies related to production, storage and use of hydrogen. The writers of the hydrogen report suggest ambitious targets for a Norwegian hydrogen scheme. My Government finds these targets both exciting and realistic and have high ambitions to play an important role internationally in the development of hydrogen as a future energy solution.

Much of the emphasis on Hydrogen is related to the global environmental challenges. However, as you all know, hydrogen is an energy carrier, not an energy source. The hydrogen's environmental characteristics are no better than its producing energy source. Around 90 per cent of the current production of hydrogen comes from natural gas, and as I touched upon earlier in this speech, fossil fuels will be the major global energy supplier for a long time. Therefore CO ₂-capture and handling will be a basic condition for future environmental production and use of hydrogen.

Researchers around the world are beginning to identify potential and challenges related to the capture and long-term storage of green house gases. Norway is a member of the international forum "Carbon Sequestration Leadership Forum", CSLF, which provides a practical framework for the needed international collaboration. It was established in June 2003, and it is a new and unique international initiative. Its purpose is to facilitate the development of improved cost-effective technologies for the separation and capture of carbon dioxide and long-term safe storage. The aim is to make these technologies available internationally, and to identify and address wider issues relating to carbon capture and storage.

To conclude my speech: - Much of the industrialised countries' economic development and prosperity have been made possible due to access to energy as a key value creator. The richer countries in the world therefore have a responsibility to assist the development of the poorer. A crucial aspect is to give these countries access to more efficient energy. Much of this energy must come from alternative, renewable energy sources.

This requires large technological developments and it is my opinion that the industrialised countries have a responsibility to undertake the major effort in this respect. It is further my opinion that Norway, as an energy rich nation, has a particular responsibility in this respect. Today, we all face two major global challenges that renewable energies can help reduce: greenhouse gases and poverty.

I trust that most of the participants here at ONS share these visions.

Finally, I wish you luck with our common future challenges, and I am sure you will spend valuable days here at this ONS conference in Stavanger.

Thank you for your attention.