Let me start off by making a few points about the global energy situation.  First, demand for energy is rising rapidly and will continue to do so.  Just this week, the Energy Information Administration released its outlook for international energy usage.  The analysis estimates that, by 2030, global energy consumption will grow by over 70 percent.  Not surprisingly, the strongest growth is expected in developing economies in Asia – including China and India – with growth projected to triple in that region over the next 25 years.

Second point: most national economies around the world, including the United States, are fundamentally hydrocarbon-based.  And they will remain so in the near-term and likely for years into future.  Though, we estimate that oil’s share of total energy use will fall slightly in the coming decades (from 38 percent in 2003 to 33 percent in 2030), oil consumption is still expected to grow strongly, reaching 118 million barrels per day by 2030.  The United States, China, and India together will account for half of the projected growth in world oil use. 

As I see it, it’s fair to say that the American economy, and many other economies around the world, are overly dependent on fossil fuels.  And, we will only become more so unless we make critical investments now to truly diversify our supply options for the longer term.  The current path is unsustainable.  However, to talk of achieving true “energy independence” – if that means a 100% domestically produced energy supply – is, quite frankly, an unrealistic and unproductive goal for this nation, and for many others.  We should focus instead on how to become less dependent – and, thus, more secure – but not expect or promise complete independence from global energy markets.  We can’t have that, and we shouldn’t pine for it.

Third point: the fact that much of the world’s fossil fuel supply exists in unstable areas of the world further complicates not only our energy supply challenges, but also the global security situation.  This instability manifests not only in terms of our safety and security, but also in terms of inefficient commercial activity.  In order for any market to function well and fairly, all nations must ensure stable regulatory environments, transparency, adequate protections for physical and intellectual property, and systems for rooting out corruption.  The world must diversify its sources of reliable energy, to be sure . . . but it also must demand positive investment climates around the globe.

Finally, we must look for ways to develop cleaner sources of energy that at the very least do not worsen – and hopefully can improve – the health of our earth’s environment.  This is as necessary for industrialized economies as it is for developing ones. 

The take-away from all this is that we have a global challenge, and it demands a global solution. So, what, if anything, can we all do about it?  Well, in my view, we only know the half of it.  In the short-term, we can conserve energy and, thereby, slightly lessen demand.  And, in the medium-term, there are technologies on the verge of breaking through that will provide cleaner, more efficient sources of energy.  And then there is what we don’t know: what new sources of energy and production methods will be available to our grandchildren?  That half of the answer will be revealed through basic scientific research and international collaboration.

I can assure you that President Bush understands this equation.  He has recently unveiled a series of initiatives that recognize the need for a global outlook and a substantial investment in science and technology.  First, the American Competitiveness Initiative proposes a doubling – over 10 years – of federal funding for basic research in the physical sciences.  The focus of these dollars will be on long-term research in areas like supercomputing, nanotechnology, high-intensity light sources, producing energy from biomass, and nuclear fusion.

In the nearer-term, the President’s Advanced Energy Initiative proposes to increase funding for clean energy technologies – including by 22% in the upcoming fiscal year.  Over the past decade or so, a tremendous amount of work has been done on possible new energy sources.  This initiative essentially proposes to pick some winners.  That may not be the usual role for government, but we must do it if we are to meet the demands of the future.  We will aggressively go after those technologies with the greatest potential to impact the market in the next few decades.  In my view, the three technologies at the top of the list are: commercially competitive cellulosic ethanol; solar energy, including an acceleration of the development of solar photovoltaics; and new technologies to burn coal with near-zero emissions. 

In all of this, the United States government fully expects collaboration with the private sector, with academia, and with governments and corporate laboratories around the world.  Future breakthroughs in energy research will not be confined to our shores . . . and their results will benefit all citizens of the world.  I would note, as a prime example of precisely this type of international collaboration, the announcement this week by DuPont and BP that they will work together to develop and produce biobutanol.  They expect to bring biobutanol to market in the UK, as a gasoline bio-component, in 2007.

In addition, if we are to succeed in significantly diversifying our energy portfolio, we must expand the use of nuclear power . . . and do so in a way that fosters economic development, improves our environment, responsibly manages nuclear waste, and reduces the threat of nuclear proliferation and terrorism.  And so, as part of the Advanced Energy Initiative, the President proposed a new Global Nuclear Energy Partnership . . . referred to as “G-NEP.” 

Through this international initiative, we will work with our partners to demonstrate an advanced recycling technology that does not separate plutonium like the current reprocessing technologies.  Rather, GNEP envisions the development of “fast neutron” reactors designed to consume plutonium and other transuranic elements in spent fuel through repeated cycles, greatly reducing the radiotoxicity of the waste – by at least three orders of magnitude – and producing additional electricity as a by-product. 

We will complement this work with an innovative international fuel services program.  Under this arrangement, fuel supplier nations would provide fresh fuel for conventional nuclear power plants located in user nations that agree to refrain from enrichment and reprocessing.  Then, used fuel would be returned to the fuel supplier nations and recycled using a process that does not result in separated plutonium.  In addition to reducing proliferation concerns, such a program could also allow poorer nations to “leap-frog” over some of the dirtiest (but most rudimentary and prevalent) fossil-fuel-based technologies. 

All of this will take years and will cost billions of dollars.  But, the time to start is now, and the way to do this successfully is through collaboration and cost-sharing.  Similarly, fusion energy must be another critical component of the world’s long-term energy plans.  Fusion offers the potential for abundant, safe and environmentally benign energy.  In 2003, President Bush announced that the United States would join a major international magnetic fusion project, known as ITER (Latin for “the way”).  Working with our six partners – China, the EU, India, Japan, Russia, and South Korea – we will build an international fusion reactor, located in Cadarache, France, to demonstrate the technical feasibility of large-scale fusion energy production.

The bottom line is: the challenges that we face are complex and did not develop overnight.  And the solution is necessarily multi-faceted and international in nature.  What we have now is a global economy that needs oil to grow.  What we need are options to achieve that growth while, at the same time lessening, our dependence on fossil fuels and increasing our use of cleaner, more secure sources of energy.   In short, we need to diversify.  Doing so will not be cheap and will not be easy.  But it is, most certainly, necessary.  In fact, everything depends on it.  So let’s get to it.