Presentation held at the Autumn Conference

Check against delivery.

Ladies and gentlemen. It is indeed a pleasure to be here at “Det Norske Teatret” for this year’s Autumn Conference. The conference is hosted by Statoil and jointly organised together with the IEA – the International Energy Agency – and the Ministry of Petroleum and Energy.

The main feature here today will be the new findings in the World Energy Outlook that was published last week. The IEA’s Deputy Executive Director Richard Jones will present this to us in just a few minutes.

But before giving the floor to Ambassador Jones, I would like to share with you some of my thoughts on the challenges we are facing.

A couple of weeks ago, the world population reached 7 billion people. In 2050 we will be 9 billion people. The world needs to handle both the climate challenge and the justified demands for economic growth and development from a large part of the global population.

It is not a question of either-or. We need to do both, and we must address these twin challenges in parallel.

We need to make some hard choices, but these must be based on facts and realities. Because, as the IEA says in the introduction to this year’s Outlook: If we don’t change direction soon, we’ll end up where we’re heading!

Climate change is for many of us also a question of ethics and moral. We need to pass the earth on as a better place for the generations that follow. Access for energy is also a question of ethics and moral. Everyone deserves the opportunity to have a good life.

We are two weeks away from the UN Climate change negotiations in Durban. It seems to me that we are moving further away from the idea of a global price on greenhouse gas emissions. This worries me deeply.

A global price on emissions is necessary to give the right incentives for cuts of emissions. In the long run, a global carbon price is the most potent instrument we have. It will create business opportunities and a private sector investment.

We therefore need to set a ‘real price’ both on energy and pollution. We also need to remove inefficient subsidies of fossil fuels. According to the IEA, 409 billion US dollars was spent on fossil fuels consumption subsidies in 2010. This was more than seven times more than subsidies for renewable energy production the same year.

I am a strong believer in a price on emissions and I have seen it work. The CO2 tax on the Norwegian Continental Shelf, introduced in 1991, resulted in the Sleipner CO2 storage project. The CO2 removed at Sleipner equals almost 2 per cent of Norwegian emissions.

I have also seen the effect of other climate change mitigation measures in the Norwegian petroleum and energy sector. One example is the implementation of strict environmental standards on flaring. During the last 13 years, these policies have saved the environment 40 million tons of CO2 from the Norwegian petroleum sector, half of them resulting from energy efficiency and reduced flaring.

The implementation of strict policies has the potential to scare us, in terms of the effects they might have on energy and costs, electricity prices and thus employment rates. However, our experience tells another story. By implementing a price on emissions – together with and strict environmental and technological policies – industry will try hard to find solutions to reduce emissions.

To limit global temperature change to below two degrees, increased deployment of new and innovative energy technologies will be necessary. And we need to make Carbon Capture and Storage – CCS – work. This year’s World Energy Outlook shows that coal has met almost half of the increase in global energy demand the last decade. This illustrates how important the need for CCS is.

In September, I participated at the Carbon Sequestration Leadership Forum in China. This is an important forum where the main actors meet to jointly move the CCS technology forward. International collaboration and concerted action is absolutely crucial if we are to succeed with our ambitions within climate change and CCS.

Many CCS projects now face difficulties. I would say mostly because of the lack of incentives and lack of faith in a global price on carbon. This is a striking example of what we don’t achieve when we are not able to move forward on this crucial issue.

For Norwegian efforts on CCS, a milestone will be the opening of Technology Centre Mongstad. The construction of the centre is now about 80 per cent finished, with testing of capture technologies scheduled to start next year.

Despite these good efforts, there is no quick fix when it comes to making the global energy picture more sustainable. Faced with an increasing world population, economic growth is vital. Growth is necessary to reduce poverty and provide prosperity and social welfare – especially in the developing part of the world. Such a process is fuelled by energy.

The IEA tells us that 1.3 billion people lack access to electricity. 2.7 billion people – more than a third of the world’s population – rely on traditional use of inefficient and harmful fuel for cooking. In today’s world this is an intolerable situation.

Widespread energy poverty illustrates how different the energy world looks outside Norway. We have been blessed with energy riches hard to imagine for an outsider. Most countries are not like Norway. A hundred years ago countries in Europe developed their industry based on coal, while in Norway we developed our hydropower.

Coal has high energy intensity, it is cheap and it is universally available. Therefore coal has accounted for nearly half of the increase in global energy use over the past decade. But coal has high carbon content and without CCS it is far from sustainable in a climate perspective.

The carbon footprint of natural gas however, is much smaller than coal. In power production, natural gas emits up to 70 per cent less CO2 than coal. In the EU, oil and coal account for 29 per cent of the fuel input in power generation, while gas accounts for only 23 per cent.

There is hence a large potential for coal substitution and increased use of gas in Europe. Indeed, substituting gas for coal would in itself be sufficient to achieve the European goal of a 20 % reduction of greenhouse gas emissions by 2020. 

For most countries, natural gas is seen as a bridge from their present coal based economy to a low-emission future. Yet, it is more than that. Being the cleanest of the fossil fuels, natural gas should be considered as a fuel for generations to come. Furthermore, as the share of renewable must rise, gas has important qualities as a reliable and stable back-up for intermittent renewable energy. The sun is not always shining, nor is the wind always blowing. With an increasing share of renewable energy, more gas power will be needed for such periods without wind and sunshine.

If we can make CCS on gas fired power plants commercially viable, I believe the argument for natural gas will be even further strengthened. Gas will have a long-term role to play, also in a low-emission future. The World Energy Outlook’s analysis shows that the use of natural gas will increase in all three scenarios – also the one achieving the 2 degree target.

Also, there is a considerable remaining resource potential on the Norwegian Continental Shelf. Only 25 per cent of the total recoverable gas resources have been produced. Large parts of our Shelf have not yet been explored for oil and gas, and as we have seen this year, substantial findings can still be made. Hence, Norway has both the resources and the infrastructure to be a significant gas exporter for a very long time. We also have the skills and ability.

The way I see the future, the world needs more energy, it needs cleaner energy and it needs reliable energy supplies. Natural gas meets all these criteria and is also a key measure to mitigate climate change in countries relying on coal.

Before closing, let me add a few remarks on two other important elements of the Norwegian energy policy, namely renewable energy and energy efficiency.

2011 has been a crucial year for future renewable energy production in Norway. We have reached an agreement with Sweden on a green certificate scheme. This scheme paves the way for a common Norwegian-Swedish certificate market from 1 January 2012. With this system, an additional 26,4 TWh renewable energy will be produced in Norway and Sweden.

From 2012 onwards, the green certificate market will be the main instrument for promoting renewable energy production in Norway. On energy efficiency, Enova will be the main instrument. In the time ahead, Enova will focus on reduced energy consumption in buildings and in industry. Enova will also promote the use of heat from renewable energy sources as well as full scale demonstration projects.

This summer, we also reached an agreement with the European Commission on the Renewables Directive. In 2020, Norway will have a renewables share on 67.5 percent, the highest figure in Europe.

This means that we have established a robust framework for future renewable energy production in Norway for the next decade. In the coming years, we will see the results – there will be more hydropower and more wind mills. A better grid is also required.

To sum up and conclude: Securing energy supply and speeding up the transition to a low-emission energy system calls for radical action by governments. There is no easy fix, and the task gets more demanding for each passing year. Every country will have to make hard choices.

Depending on national circumstances cost effective solutions should be sought that combines the realities of available or achievable technologies, capital constraints and public acceptance.  Reversing climate change will be hard and take a lot of time –that is why nobody can afford to hesitate much longer.

The tasks ahead are challenging. But let us try to be constructive. As Churchill once said: Let our advance worrying become advance thinking and planning.

Thank you for your attention!