Engaging the Private Sector

Key Note Speech at the Energy + seminar in Washington D.C. 8 November – Engaging the Private Sector.

• Ladies and gentlemen, good morning!

• I am pleased to be here at the Energy + seminar. The Norwegian Government has high hopes for the initiative Energy +, which was launched by the Norwegian Prime Minister Stoltenberg and UN Secretary General Ban Ki-Moon on 10 October 2011, at the High Level Conference “Energy for All” in Oslo.

• Energy poverty and climate change are two of the most important challenges of our time.

• In my address today I will:
1. share my reflections on global energy realities with you and;
2. discuss the Energy + initiative, with particular emphasis on the importance of private sector involvement.

• Since I took office this spring, I have used a lot of time to educate the Norwegian opinion on energy realities.

• My message should not be controversial – the world needs more, cleaner and secure energy.

More energy

• We need more energy because more than 1.3 billion people live without modern energy. 3 billion people live for less than USD 2.50 per day, and the global population will increase by 2 billion people to 2050.  Just recently the world population reached 7 billion.

• Access to and use of modern energy is necessary for the people of the world to get a better life, and for their local communities to prosper.

•  My Deputy Minister stayed with a family in the rural part of Ghana last year. During the first two days of the stay, they had no electricity. It did not affect their daily life. Daily life was not built on availability of modern energy:
1. The children carried home water from the source in the village on their heads. 
2. The food was bought on the market every day. Refrigerator was not needed.
3. Cooking was done on an open fire place.
4. Clothes was washed by hand in cold water
5. The day started at 5 am at sunrise, and ended 7 pm at sunset.

• Access to affordable, modern energy services would have made a big difference. It would allowed for;
1. Better hygiene through availability of hot water
2. Improved health through better air quality, and
3. Better education through less work for children and access to electric light

• I think this example show how better access to modern, affordable energy is needed to improve quality of life for billions of people.

• Consequently, the World’s need for energy continue to grow, and this increased demand will have to be met by a variety of measures and sources, in particular by:

o Producing and consuming fossil fuels in a more sustainable manner;
o Finding more gas to substitute oil and coal;
o Substantially enhancing efforts to increase energy efficiency;
o Substantially enhance efforts  to increase the use of renewable energy;

Cleaner Energy

• We need cleaner energy to solve health problems from local pollution – and to tackle global warming.

• The change to a less emission intensive energy system is not done overnight. It’s a massive task, and even within the International Energy Agency’s scenario of a 2 degree Celsius world, use of fossil energy will in 2035 be very significant and almost the same as in 2008.

• We can do a lot to address climate change by replacing coal with natural gas. But we need to increase energy efficiency, the use of renewable energy sources and develop technologies like carbon capture and storage as well. Without such measures, it will be very difficult to curb global warming to 2 degrees Celsius above pre-industrial level,  as we all agree should be done.

• Furthermore, we need to assist developing countries in embarking on an energy development which is less emission intensive and in line with our common goal of curbing climate change. I will come back to this issue.

Energy security

• We need to secure energy supply. Energy is the blood of the global economy. Without energy supply an economy would stop. Therefore, security of supply is an important issue for all countries.

• Different countries have different concerns when it comes to energy security. Importing countries are focused on availability and cost of future supply. Exporting countries are focused on security of future demand to pay for expensive new projects and infrastructure.

• I am a strong believer in open and transparent markets as a key element to increase energy security for both exporters and importers of energy.  Price signals are the most efficient way to allocate resources.

• Developing countries need to develop their energy system in a way that secures the availability of energy services at all times. With the intermittent nature of wind and solar energy, base load capacity must be secured. For some countries, development of Hydro power could be a very good solution. Other countries would have to rely on fossil fuels to ensure security of supply.

• Consequently, the overall challenges are interdependent. They need to be solved together. We need to solve the energy, the climate change and the energy security challenge simultaneously. We need to take all these issues into consideration into our policy making.

Energy +

• The international climate and energy initiative – Energy + is an ambitious initiative. It aims to significantly speed up access to energy services in developing countries, while at the same time ensure that developments are in line with the 2 degree target.

• The focus of Energy + is on renewable energy. This is where support is needed the most, but it has to be undertaken in coherence within an overall energy security framework. The idea is to use public development aid money to make investments in renewable energy projects economically attractive.

• Norway cannot possibly make much difference on its own. Therefore the initiative is building an international partnership with both donor and developing countries. Furthermore, it is crucially important that the private sector is involved. The task is so massive that development aid funding is much too insufficient.

• The public-private partnership we propose can be described in very simple terms. We – the public sector – can take more risk and shape the enabling framework. Key words here are political stability and reasonable returns on investments.

• Under these circumstances, you – the private sector; investors and entrepreneurs – can engage in long-term business activity on commercial terms.

• With the Energy+ partnership, the donor community is going “results-based” and more targeted in our use of development aid. Results-based finance is to be applied – meaning “cash on delivery”. This will encourage responsibility and accountability on the part of the recipient, or the government of the partner developing country – and make it more interesting for investors to engage.

• Private sector must be engaged in the initiative. Profit motive is necessary also in the business of development aid and CO2-emission reduction.

• Well-designed and stable policy, regulatory frameworks and support schemes are critical for facilitating business participation in the expansion of energy access. Public funds will be used to support development of enabling environments for commercial investments.

• Funds will be channelled through existing mechanisms as appropriate. Next year Norway will allocate 300 to 350 million USD to renewable energy and energy efficiency measures in developing countries.

Conclusion

• The Energy+ Partnership has been launched. If successful, it will change the lives of thousands of people, and create a more sustainable energy system in many developing countries.

• Finance is key; public-private cooperation is the instrument. Do we need new thinking, or to give old thoughts a new start? How do we proceed to engage the private sector successfully?

• I look forward to having a fruitful exchange of ideas and thoughts about these important questions.

• Thank you for your attention!