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Remarks as Prepared for Secretary Bodman

Thank you.  It's a pleasure to be here with this distinguished group of panelists.  I want to thank Minister Bersani for convening this event and for inviting me to be a part of it.

I'm known for being direct, so let me get to the point and submit that the challenges are quite clear to us all.  The bottom line is this: the world needs a safe, reliable, clean, affordable, and diverse energy supply.  This is a global challenge, perhaps one of the most significant of our time.  And, as if we needed more evidence of its scope, the International Energy Agency's (IEA) World Energy Outlook, released just last week, provides it.  It estimates that the world's primary energy needs will grow by 55% by 2030, with fossil fuels remaining the dominant source of energy.  Among other things, it predicts a remarkable 73% increase in global demand for coal, driven largely by China and India.

We know that addressing this challenge in a timely way will require literally billions of dollars annually over many years and the IEA estimates that $22 trillion of investment will be needed between now and 2030 to meet expected demand.  We also know that this investment must occur around the world in developed and developing nations alike and at all stages of the energy cycle.  At the same time, we must recognize the realities of global climate change and develop cleaner sources of energy that at the very least do not worsen and hopefully can improve the health of our earth's environment.  And finally, we must continue to look for ways to enhance energy efficiency throughout our economies.

This set of global challenge demands responsible action both from consuming nations and producing nations.  I don't want to sound too alarmist, but in some ways, what we are really talking about is reducing the world's energy insecurity.

For conventional fuels, the principal challenges facing us are, will the necessary investments be made to bring sufficient hydrocarbons to market?  Is the investment climate in producing countries conducive to inviting such capital flows?  Are large consuming nations having the right type of discussions with producing nations?  If not, why not?  And are we adequately investing in ways to produce fossil energy more cleanly and efficiently?

The world also needs new energy options in the form of alternative fuels and advanced energy technologies.  Governments certainly have a tremendously important role to play here.  But, governments cannot do this job alone.  We need a new way of thinking about how we work with the private sector.  It is no longer sufficient or wise for government to direct the solutions alone.  Even our research priorities the R&D agenda itself must be developed with substantial input from corporations, utilities, and universities.  And, research needs to be conducted in a coordinated way.

I would also challenge governments around the world to make a public commitment to increase your investment in the R&D necessary to achieve the technical breakthroughs we need, as well as the right balance between energy security and environmental stewardship.  The United States and Japan still fund the vast majority of all global R&D.  And while that is, in some ways, appropriate given the size of our economies, it is not a sufficient or efficient solution going forward.  The size of the problem we face requires massive global investment in the public and private spheres.  Not incidentally, increased investment in R&D would also help to alleviate another challenge that we share the shortage of qualified engineers and technical staff needed to meet the demand for rapid innovation.  We need to invest in the next generation of leaders to steer us through the energy challenge.  This is not receiving enough attention or concerted action.

I believe we also must find innovative approaches to getting beneficial technologies out into the marketplace and to share the risk that the capital markets and private sector are not yet ready to take on.  In the U.S. we are employing a range of collaborative models to do this including cost-sharing partnerships and loan guarantees covering a variety of technical areas, such as solar technologies, nuclear power, clean-coal and carbon sequestration and advanced biofuels, a favorite topic of mine.  For example, we are making cost-shared investments in three cutting edge bioenergy Research Centers (on the order of $375 million over five years) as well as a series of small and large-scale biorefinery projects focused on producing ethanol from a wide variety of non-food plant materials.  These types of projects will advance President Bush's plan to reduce projected U.S. gasoline consumption by 20% by 2017, which would include the production of up to 35 billion gallons of alternative fuels.

I would also add that any global energy strategy must include efforts to expand access to emissions-free nuclear power in a way that responsibly manages waste and dramatically reduces proliferation risks.  To this end, last year President Bush introduced the Global Nuclear Energy Partnership (GNEP), which aims to facilitate the worldwide expansion of nuclear energy for peaceful purposes in a safe and secure manner.  And I'm quite pleased that earlier today, Italy became the 17th country to formally join this partnership, and in accordance with all members, signed the GNEP Statement of Principals.  This cornerstone document establishes, among other things, the common goal of creating reliable fuel services that will provide a viable and economic alternative to the spread of sensitive nuclear technologies.  The partnership seeks to take advantage of the best available fuel cycle approaches to recycle spent nuclear fuel to reduce the amount of waste and tap its unused energy.

In all these areas, the key to unlocking our energy future is ensuring that the innovation cycle continues at a rapid pace.  We must leverage the tremendous power of private equity, while also making smart public funding and regulatory decisions, to unleash the world's best scientists and engineers on this problem.  Without sustained global investment, without a new global commitment that will support, not discourage new sources of energy and breakthrough technologies, we will not solve this problem.

And we must solve it.  We cannot let energy become a variable, a risk, a question mark in the world's economic and security equation.  The world has united around issues of common cause before.  And I would argue that there are few more compelling global concerns today than the need for a safe, affordable and clean energy supply.

Thank you.

Location: Rome, Italy

Media contact(s): Andy Beck, (202) 586-4940