Dräger Foundation

XVI Malente Symposium

Energy, Climate, and Future Welfare –Changing Global Dynamics

October 08 - 10, 2006Music and Congress Centre Lübeck

2006

for the World Economy

3

XVI Malente SymposiumEnergy, Climate, and Future Welfare – Changing Global Dynamics

The Malente Symposia, organized bythe Dräger Foundation at two-year inter-vals since 1981, are the Foundation’smost comprehensive and best-knowninternational recurrent events. They arenamed after a small town in Germanywhich was the first conference venue in1981, and provide a forum for innovativedebate at the crossroads where econ-omic and sociopolitical issues meet.

The XVI Malente Symposium, entitled‘Energy, Climate, and Future Welfare –Changing Global Dynamics’, took place from October 8 – 10, 2006, andwas organized by the Dräger Foun-dation in cooperation with the KielInstitute for the World Economy. The aim of the conference was toexamine in depth the dual challenges of the 21st century – energy insecurityand global warming.

The industrial revolution and today'sincome levels in the developed countriesare to a major extent the result of easyaccess to different energy sources.Coal was the first main driver of indus-trial expansion, and was later supple-

mented by oil and gas. Nowadays,renewable energy sources and nuclearenergy also meet some of the worldeconomy's energy needs. The avail-ability of energy is closely connected to economic growth and social welfare.Mobility in a globalized world, the pro-duction of goods and services, and the fulfillment of basic needs such asheating, lighting and cooking, all requiresubstantial energy inputs, and thedemand for energy is growing rapidly.

However, such freely available energy is not sustainable, and the next decadeswill see the world facing new challenges.The way in which energy needs weresatisfied in the post World War II era is now endangered by several factors,thus threatening the prospects of sus-tained economic growth – so essentialif living standards in the industrializedcountries are to be maintained andthose in the developing world raised.

With regard to energy, the known oil and gas reserves are shrinking, and are located in politically somewhatinsecure regions. With regard to

climate, there seems to be widespreadagreement that we are experiencing achange in climate and that the world'sincreasing consumption of energy – inparticular the consumption of fossilfuels – is accelerating global warming.The Symposium therefore sought toexplore the kind of policy changes whichcould be implemented to slow down theprocess of global warming, while at thesame time securing the energy needsof industrialized countries, rapidlygrowing emerging markets like Chinaand India, and developing countries.

Climate change is a truly global phenom-enon affecting people all over the world.One of the important questions of theSymposium therefore concerned globalaction. How can a global accord forclimate protection be reached that goes significantly beyond the KyotoProtocol? What are the costs of thesestrategies, how efficient are they, howsustainable, and how can politics andbusiness be alerted to the economicand societal consequences if no actionis taken, or if action is not taken earlyenough?

XVI4

The XVI Malente Symposium broughttogether experts and stakeholders fromall parts of the world and from all fieldsof society who were keen to discussthese challenges in a comprehensiveway and to identify practical solutions to these problems.

For their active and valuable support inthe preparation of this conference, theDräger Foundation wishes to thank itsco-operation partner, the Kiel Institutefor the World Economy, and the membersof the steering committee for the pre-paration of the XVI Malente Symposium

Professor Rudolf DolzerDirector, Institute for International Law,University of Bonn

Professor emeritus Hartmut GrasslMax Planck Institute for Meteorology,Hamburg

Professor Gernot KlepperKiel Institute for the World Economy

Rainer LaufsMember of the Supervisory Board,LANXESS AG; former Chairman,Deutsche Shell AG

Furthermore, the Dräger Foundationwants to thank the Kittner Group inLübeck for generously providing thecars for the limousine service, and OCÉDeutschland Business Services for theirtechnical support and for reproducingthe photographs exhibited in the con-ference center. The photographs are byZurich film-maker and photographerBasil Gelpke, taken during the shootingof his film 'Oil Crash Movie', and by

photographer Gerda Sökeland, whophotographs coal dumps in Dortmund.

Last but not least, the Foundation thanksthe Hamburg artists Beatrice Dettmannand Karin Ohlsen, who once again exhibited their work at a MalenteSymposium, this time on the subject of 'The Forest' – providing a nicecontrast, we feel, to the oil fields and waste dumps depicted in thephotographs.

Responsible for the preparation andorganization of the Symposium:

Petra PissullaDirector, Dräger Foundation, Lübeck

5

Sunday, October 8, 2006Media Docks – European Campus for Digital Media, Stair Case 4,‘Balkensaal’

Reception and Dinner

Opening SpeechEnergy, Climate and Security Concerns of the Future

Professor John Deutch,former Director, CIA; Massachusetts Institute of Technology (MIT), Cambridge, MA,USA

After DinnerParticipants Play Jazz!Professor Eckhard Maronn, bassDr. Uwe Petersen, bassArno Engelhardt, drumsProfessor Peter Eigen, tenor saxGebhard Ohnesorge, clarinet and baritone saxProfessor Dieter Feddersen, pianoCraig Morris, Vocals

Monday, October 9, 2006Music and Congress Centre Lübeck

Plenary Session

Chair:Professor Dieter H. Feddersen,Member of the Board, Dräger Foundation, Lübeck, Germany

Welcome

Professor Dieter FeddersenProfessor Dennis Snower, President, The Kiel Institute for theWorld Economy, Kiel, Germany

KeynotesEnergy and Climate – GlobalChallenges of the 21st Century

Topics and Questions:– What are the energy policy and climate

challenges of the coming decades?– Interdependencies and security issues;– Options and economic costs; risk po-

tentials, consequences and strategies;– Why do we need an international

energy policy?

Dr. Uwe Franke, CEO, Deutsche BP AG, Berlin, GermanyProfessor emeritus Hartmut Grassl,Max Planck Institute for Meteorology,Hamburg; Meteorological Institute,University of Hamburg, GermanyLuc Werring, Principal Adviser to the DG Transportand Energy, European Commission,Brussels, Belgium

Panel DiscussionAre We Running out of Gas?

Chair:Rainer Laufs, former Chairman of Deutsche Shell AG;Member of the Supervisory Board,Lanxess AG, Kronberg, Germany

Topics and Questions: – What is the situation today –

energy policy facts and framework conditions?

– Access to energy sources: the politics; future energy supply and demand;

– Efficiency of energy use;– Technological deficits; technologies

of the future; risk management and investment decisions;

– Reshaping the world of energy: options and actions; inconsistencies, conflicts, costs and deficits of currentenergy policies.

Speakers:Professor Gernot Klepper, Director, The Kiel Institute for the World Economy, Kiel, GermanyProfessor Klaus S. Lackner, Director, Gerry Lenfest Center ofSustainable Energy; Chair, Dept. of Earthand Environmental Engineering Center,Columbia University, New York, NY, USAVijay V. Vaitheeswaran, Author and Global Correspondent, The Economist, New York, NY, USA

Parallel Working Groups 1 - 4

Working Group 1Future Energy Systems

Chair:Dr. Fridtjof Unander, Vice President, Enova SF, Trondheim,Norway; Former Acting Head, EnergyTechnology Policy Division, InternationalEnergy Agency, Paris, France

XVI Malente Symposium, Lübeck, October 8 – 10, 2006 – The Progam

The Program

6

Topics and Questions:– How do we achieve a post-fossil

energy supply?– The future role of alternative energies

(security and supplies,cost efficiency, climate change);

– Can nuclear energy solve the problem?

– How to make use of energy potentials;– The cost of energy.

Speakers:Professor emeritus Joachim Luther,former Director, Fraunhofer Institute for Solar Energy Systems, Freiburg,GermanyDr. Gregor CzischResearcher, Institute for ElectricalEnergy Technology/Rational EnergyConversion, University of Kassel,Kassel, GermanyAndreas Wagner, Manager, TechnologyExternal Programs Europe, GE Energy,Salzbergen, GermanyDr. Bob van der Zwaan, SeniorScientist, Energy Research Centre ofthe Netherlands (ECN), Amsterdam,The Netherlands

Working Group 2 Energy Policies: Implications forGlobal Climate and Future Wealth

Chair:Dr. Johannes Linn, Executive Director, The WolfensohnCenter, The Brookings Institution,Washington, D.C., USA

Topics and Questions:– What is the state of the global

climate?– To what extent is energy consumption

responsible for global warming?

– Where are scientific debate and political negotiations currently going?

– Economic efficiency of alternative energies;

– Emissions trading – what can it contribute?

– Will climate change lead to cultural change? Effects on work attitudes and behavior.

Speakers:Professor Anders Levermann, Junior Professor for climate modelingon long timescales, Potsdam Institutefor Climate Impact Research, Potsdam,GermanyProfessor Peter Höppe, Head of Geo Risks Research, MunichRe Group, Munich, GermanyProfessor Claudia Kemfert, Director, Department of Energy,Transport and Environment, GermanInstitute for Economic Research (DIW),Berlin, GermanyDr. Alexander Golub, Senior Economist, EnvironmentalDefense, Washington, D.C., USA

Working Group 3 Technological Challenges andOptions for Future Energy Supply

Chair:Dr. Udo Brockmeier, Chairman of the Board, EnBWKraftwerke AG, Stuttgart, Germany

Topics and Questions:– How to optimize existing technologies;– Potential of different technologies; – Near term options and long term trends;– How to improve technology transfers.

Speakers:Lord Ronald Oxburgh, House of Lords, Westminster; formerChairman of Shell Transport andTrading plc, London, United KingdomDr. Wolfgang Eichhammer, Deputy Head, Department of EnergyTechniques and Energy Policies,Fraunhofer Institute for Systems andInnovation Research, Karlsruhe, GermanyGary V. Litman, Vice President, Europe & Eurasia, U.S.Chamber of Commerce, Washington,D.C., USADr. V. Sumantran, former Executive Director and Head ofR&D, Tata Motors Ltd; StrategicConsultant, Mumbai, IndiaDr. Hans Jürgen Wernicke, Member of the Executive Board andChief Operating Officer, Süd-ChemieGroup, Munich, Germany

Working Group 4 The North-South Conflict – EnergyConsumption and SustainableDevelopment

Chair:Dr. Robert Watson, Chief Scientist, ESSD, The WorldBank; former Chairman of the Inter-governmental Panel on Climate Change(IPCC), Washington, D.C., USA

Topics and Questions:– Energy and climate protection

policies in emerging markets;– Costs and benefits of sustainable

energy policy;– Trade-offs in climate and related

policies (adjustment vs. rejection);– Distribution problems and energy

security for developing countries.

7

Speakers:Professor Gerhard Berz, Professor for Meteorology, University ofMunich; Member of the Council, MunichRe Foundation, Munich, GermanyProfessor Graciela Chichilnisky,Director, Center for Risk Management,Columbia University, New York, NY, USAProfessor Nazli Choucri, Professor of Political Science andDirector, Global System for SustainableDevelopment (GSSD), MassachusettsInstitute of Technology (MIT),Cambridge, MA, USAProfessor Peter Eigen, Chairman of the Advisory Council,Transparency International; Chairman,Extractive Industries TransparencyInitiative Berlin, Germany

Dinner at the SchiffergesellschaftRestaurant

Dinner Speech:Climate Change: Consequences for Oceans and People

Frank Schweikert, Biologist and Journalist; ALDEBARANMarine Research & Broadcast,Hamburg, Germany

Tuesday, October 10, 2006Music and Congress Center

Plenary Session

Chair:Professor Dennis Snower

Reports from the Working Groups and Panel Discussion on WorkingGroup results

Professor Emeritus Joachim Luther,Working Group 1Dr. Johannes Linn, Working Group 2Dr. Udo Brockmeier, Working Group 3Dr. Robert Watson, Working Group 4

Closing Speeches

How to Reach Global Accords onEnergy, Climate and DevelopmentPolicies

The Chinese Perspective:Professor Bo Qiang Lin, Director, Center of China EnergyEconomic Research, University ofXiamen, PR China

The Psychology of Denial or Why Do We Find it So Hard to Act AgainstClimate Change?

George Marshall, Executive Director, The ClimateOutreach and Information Network(COIN), Oxford, United Kingdom

FarewellProfessor Dieter FeddersenProfessor Dennis Snower

Lunch buffet and end of conference

Sunday, October 8, 2007 – Dinner SpeechProfessor John M. DeutchMassachusetts Institute of Technology (MIT), Cambridge, Mass., USA

Energy, Climate and SecurityConcerns of the FutureI want this evening to have a discussionwith you about the connections betweenenergy and national security. I think Ishould begin by saying that there is anintimate connection between the two –domestic energy policies and programsundertaken entirely in the interests ofone country have international impli-cations. Let me give you two examples:

– China's expanded use of coal-fired electricity generation has major implications for global warming.

– Iran's decision to enrich uranium, allegedly to produce fuel for nuclear power plants, is viewed by the UnitedStates and by many European countries as an unacceptable proliferation risk, because it moves Iran closer to a bomb.

The United States has not beensuccessful, and I believe that many

European and OECD countries havebeen equally unsuccessful, in integratingthese issues of domestic energy policyand the foreign policy implications ofenergy issues. The fact that we have notbeen successful, or have not been doinga good job at integrating these domesticand international aspects of energy,means that there are consequences forthe future, for future generations. Futuregenerations in our countries will facehigher costs and greater difficultiesbecause we have failed to take actionstoday that we should have taken.

I would like this evening, as a basis fora discussion, to raise four securityissues very briefly, and then make somesuggestions about different ways ofgoing forward in order to provide abetter future by dealing with theseenergy insecurity problems. The fourissues that I want to touch on are:

– the need to achieve an international consensus and manage the risks of global warming;

– the importance of reducing our dependence on imported oil and natural gas;

– protecting the energy infrastructure from natural disasters and terrorist attacks; and

– ways of minimizing the proliferation risks of nuclear power.

Each of these are energy issues which I think have tremendous foreign policyand security implications. I want to

begin by mentioning two realities thatshould draw our attention to the issuesof energy and security. The first is thatthe only way to avoid oil and gas depend-ence would be to begin today a gradualtransition away from a petroleum-basedeconomy. The second reality is that theonly way to avoid the adverse effects ofglobal warming is to reduce greenhousegas emissions or to adopt elaboratemeasures of geo-engineering or adap-tation that will also be costly to oursociety. Progress on both of theseissues will be quite slow – it will takedecades rather than years. Why?Because programs for both require thedevelopment and deployment of newtechnologies and the design andadoption of new regulatory, political andeconomic incentive measures, and thiswill take a great deal of time. During theintervening period – the decades, notjust the years – we need to manage thesecurity aspects of these issues, so thisis a matter of importance for us all.

ProfessorJohn M. Deutch

8

China’s Energy Security ChallengesLet me begin by talking about oil andgas dependence. I choose to do so bydiscussing China with you, and I selectChina not because I want to pick onChina or blame China, but rather be-cause I think it illustrates quite poignant-ly the kinds of stresses and strains thereare in the international system as a resultof oil and gas dependence. I also shouldremind you and myself that energy isjust one of the issues between thedeveloped countries and China. Thereare other foreign policy issues that arevery important and loom large: Taiwan,North Korea, human rights, trade, intel-lectual property rights – all of these arematters that are also on our agenda indealing with our relationships with China,and none of them can be consideredwholly independently of the others.

But the fact is that China's remarkableeconomic growth over the past two de-cades has enabled it to achieve socialprogress and a greatly strengthenedgeopolitical position in the world. Forthe foreseeable future, the leaders ofChina will continue to make economicgrowth their top priority. We should assume therefore that the country's eco-nomic expansion will be accompanied

by a corresponding surge in energyconsumption. China, which only becamea net importer of oil in the early 1990s,is today the third largest importer of oiland the second-largest oil consumer inthe world. China has so far been able tomeet this increase in demand and pre-vent the economic slowdown that anenergy shortage would precipitate. Butthe supply challenge is going to becomegreater for China in the years to come.We should anticipate that over the nextfew decades China’s energy demandwill grow at a rate between three andfour times that of the OECD countries.

The Implications for Oil and GasChina will need access to internationalmarkets for ever more significant quan-tities of oil and natural gas. To date,China receives about 11 percent of itsoil supply from Iran (which amounts toapproximately a quarter of its totalsupply from the Middle East) and fivepercent from Sudan.

China has so far sought to avoid doingbusiness with international oil companies,companies like Exxon, Total and Chevron.Instead, the Chinese have entered into

state-to-state agreements with othercountries. In making such arrangementswith producer countries, China, as aconsumer country, is willing to payhigher prices and offer political con-cessions in order to lock up supply. Forexample, in 2001 China entered into twosuch arrangements with Indonesia andVenezuela. In 2005, China entered intonine separate state-to-state arrangementswith such countries as Iran, Algeria,Ecuador, Syria and Russia. These dealswould be unobjectionable if China wererelying on transparent arrangementsarrived at on market terms – if Chinachooses to overpay in the market, totake exceptional financial risk, so be it.US international oil companies wouldlove to be able to do the same thing.The problem, however, is that China'sincreased use of state-to-state arrange-ments implies a move away from trans-parent world oil markets and invites otherlarge consumer countries, for exampleIndia, to follow their example of makingspecial deals with certain countries.

These state-to-state arrangements withmajor resource holders include signifi-cant non-market aspects. I could go onand give you examples for each of thecountries I have mentioned, but let mejust make a few remarks about thearrangements that China has in Africa,notably in Angola, but also with theSudan, and which are especially trouble-some. For example, it is reported thatChina has supported local warlords inthe Sudan with military equipment inexchange for gaining preferentialaccess to oil properties and protectionfrom attacks or terrorist events. The netresult of all of these non-market trans-actions is the following: China is build-ing economic relationships that constrainthe ability of the United States and

„China will continue to make economic growth their top priority.

We should anticipate that over the next few decades China’s energy

demand will grow at a rate between three and four times that of the

OECD Countries”.

10

11

other countries to pursue their interestswith major resource holders.

We should also pay special attention tothe growing relationship between Russia(a major resource holder that usesenergy to gain political leverage) andChina (a major oil and gas importerinterested in locking up supply). Bothare acting aggressively to try and tie upthe oil and natural gas assets in CentralAsia, and direct them to places whichwill fulfill their political objectives. As theirenergy ties form, so too will their politi-cal relations, and it is patently not in theinterest of the United States for thesecountries to become closely aligned.For instance, their joint membership inthe Shanghai Cooperation Organization(SCO) – a regional security group thatalso includes Kazakhstan, Uzbekistan,Tajikistan, and Kyrgyzstan – has already

allowed Russia and China to increasetheir influence in Central Asia at theexpense of other consuming countries.

Of course, China is not the only Asiancountry which seeks oil and gas – allthe other countries in Asia which aregrowing, like Japan, South Korea, andTaiwan, are concerned about this com-petition for oil and gas resources, whichcould lead to very distressing politicalrealignments in the region.

China’s Electricity SectorFollowing on from my example of Chinaand its oil and gas situation, let me saya word about the electricity sector.China's electricity production, and itscoal use, are projected to grow at twoor three times the rate of Europe or theUnited States. At present, coal com-prises about 65 percent of China's pri-

mary energy consumption, and is goingto figure prominently in China's energymix for years to come. The reason forthis is simple: China has vast coal re-serves, and coal is cheap, about a dollarper million British Thermal Units, com-pared to imported natural gas whichcosts about seven dollars for a similaramount of energy. Last year, China built75 large coal power plants, each ofwhich emits about 15,000 metric tons of CO2 per day. The United States builtzero such coal reactors over the pastthree years.

Yes, China will also make greater use ofnuclear power, but even under the mostoptimistic scenario, nuclear power willbe providing less than ten percent ofChina's electricity by the year 2030 –the remainder coming from coal. It istrue that China's government is de-monstrating a much greater awarenessof the environmental burdens thataccompany the current and projectedpattern of energy use. However, evenassuming that the Chinese achieve theirtremendously ambitious goals of im-proving energy efficiency, they aregoing to be using a lot more coal thanthe United States by the year 2030, andalso emitting a great deal more CO2

than the United States. It is very unlikelythat China will choose to pay for thehigher capital costs of electric poweralternatives associated with carboncapture and sequestration. Why?

– First, China, like other developing economies, does not believe it

should bear the costs of carbon emission measures because the pastemissions that are responsible for the high concentrations in the atmosphere today come from our olddeveloped economies.

– Second, despite its great balances of dollar assets today, China has enormous requirements for internal investments, especially as regards public infrastructure, i.e. in the areas of water quality, healthcare, and old-age assistance. They are very unlikelyto be willing to set aside the money for the investments that would be required for more costly yet lower-producing electricity generating technologies.

– Finally and most importantly, decision-making in China in the energy sector is extremely regional rather than central. Local authorities are dele-gated the responsibility for maintainingeconomic growth and managing energy supply in their areas. Even if the central government in Beijing were willing to undertake to limit carbon and other greenhouse gas emissions, it would take an enormous

length of time before the local authorities would adopt such policiesand practices, given the fact that economic growth is the central govern-ment's principal target imposed on them, and it would take a very long time before inspection and enforce-ment of these regulations would be put into place.

However, the picture that I am paintingwith respect to electricity generation inChina is again not because I want tosingle them out as behaving any diffe-rently to the other large emerging eco-

nomies, like India, Indonesia, Brazil andMexico. My point is that if we do notfind a way forward with these largeemerging economies like China in thearea of greenhouse gas emissions, it is not clear what the point is of thewestern policies that we are discussing.What then is the purpose of Kyoto?What is the purpose of the UnitedStates adopting a cap-and-trade systemif we don't see some way clear toincluding the large developingeconomies in our efforts to reduce the

emissions of greenhouse gases, andespecially CO2?

Let me briefly turn to two other matters.These have to do with the vulnerabilityof the international energy infrastructureto terrorist attack and also natural disas-ter, and with the proliferation risks ofthe expanding use of nuclear weapons

International Energy InfrastructureProtectionI don't know how many of you in theaudience here this evening noticed thatin February of this year a terrorist attackon one of the major Saudi oil processingfacilities was thwarted by the internalsecurity service of Saudi Arabia. This oilprocessing facility in Saudi Arabia pro-duces 650,000 barrels of oil per day forexport. On September 15, 2006, terroristsalleged to be connected with Al Qaedasimultaneously attacked two different oilfacilities in Yemen, an oil storage facilityand a refinery.

There are some important lessons here.As energy use and trade in energy grows,the enormous infrastructure that supportsthe production, transportation, process-ing and distribution of energy expandsand becomes increasingly vulnerable toterrorist attack. Energy facilities are anenormously attractive target for terrorists,particularly because they can be attackedand enormous economic damage andhuge inconvenience caused to theoperation of the economy without killingmany people. The other lesson to belearnt from these two recent attacks isthat energy facilities can be success-fully protected and defended againstterrorist attack if sufficient effort is made– it is by no means a hopeless task.

More attention needs to be given byEuropean countries and by the UnitedStates to protecting our energy infra-structure. That attention needs to begiven by both governments and corpo-rations. It is almost certain that govern-ments around the world will adopt newregulations for the protection of energyinfrastructure and the transportation ofenergy. I'm including here gas process-ing facilities, production platforms, pipe-lines, tankers, electricity grids, powerplants – especially nuclear power plants– and of course hydrocarbon storagefacilities. And as I mentioned, if we do a better job of protecting this infra-structure we will have a better chance ofsurviving and defending against naturaldisasters such as the hurricanes Katrina

12

13

and Rita which in 2005 created suchdevastation in the Gulf of Mexico andcaused such damage to energy pro-duction facilities in the United States.

Reducing Proliferation Risks fromNuclear PowerMy last comment on the connectionbetween energy and security has to do

with nuclear power. As we look aroundand think about what we are going todo over the long term to reduce theemissions of greenhouse gases, andespecially CO2, from power plants,many people have naturally started towonder whether nuclear power couldbe expanded to take up some – thoughcertainly not all – or even a majority ofthe required reductions in CO2 that areneeded. In other words, we have had acall for a reevaluation of nuclear power. There are many challenges to havingnuclear power serve our economies –let me just mention the principle ones.First of all, it's too expensive today, evengiven the higher prices of natural gasand the high costs of environmentalabatement for coal-fired power plants.We need to be sure that improvedsafety is possible. There has to be someprogress on radioactive waste manage-

ment, on which there has been littleprogress in the past two decades any-where in the world. And most important-ly, in my point of view, for our discussionof security here this evening is that wehave to ensure that commercial nuclearpower does not become a source oftechnology for bomb-usable material forweapons. The proliferation challenge isparticularly important because most ofthe projected expansion of nuclearpower is likely to occur in those parts ofthe world – obviously the ones that aregrowing the most rapidly – that are themost unstable and the most dangerousfrom the point of view of proliferationrisks.

In 2003, MIT did a study of the future ofnuclear power and concluded that thegreatest growth and possible deploy-ment of nuclear power would take place

14

in the following countries: Indonesia,Brazil, Mexico, Egypt, Turkey, SouthKorea, Taiwan, Thailand and Vietnam.These are not countries that are gen-erally thought to be as stable as – tochoose a random example – Germanyor the United States. The question is,how do we manage this nuclear powerin a way that will not allow the danger-ous parts of the fuel cycle – enrichmentand reprocessing – to spread aroundthe globe? In 2004, the G8 took thefirst steps towards a solution to thisproblem at its meeting in Savannah,Georgia. The G8 endorsed a proposalunder which nuclear supplier states,notably Russia and France, but also inprinciple the United States, would offerenrichment services and take back thespent fuel from the nuclear reactors atvery attractive financial terms. Thuscountries who wanted to use nuclearpower, in exchange for foregoing earlydeployment of fuel cycle technologiesof proliferation concern, would gainadvantageous access to fuel cycleservices of enrichment and wastemanagement.

A perfect example of this is the conten-tious case of the two nuclear powerstations Russia is building in Iran. Herethe idea would be to offer the Iraniansthe possibility of having these reactorsas long as the fuel was supplied on,basically, a leased basis by the Russians– they would supply enriched fuel, thentake the spent fuel back from the re-actor at the end of its useful life andbring it back to Russia for waste man-agement, reprocessing or disposal asthe Russians see fit. Now, I don't thinkthis arrangement is likely to provesuccessful, because in my judgment theIranians are not just looking to buildcommercial nuclear power plants, butare also trying to move closer to accessto a bomb. The principle, nevertheless,is important. If we are going to have theadvantage of using nuclear power, soimportant in a carbon-constrained world,we must be sure from the security pointof view that it is not accompanied by aproliferation risk. The G8 initiative is very important and deserves all of oursupport.

Guiding Principles for Energy SecurityPolicyAre there some guiding principles forgoing forward? I conclude by mention-ing to you six principles that I believeshould guide our attention towards thisenergy security issue over the next

years – again, these are not problemsthat will be dealt with swiftly, they areproblems that are far from being widelyagreed, but I draw them to your atten-tion as important guideposts for dealingwith the security problems as we moveforward.

The first is that the International Energy Agency should be broadened to include the rapidly developing economies that are so important as consumers of energy. Currently the IEA is limited in its membership to OECD countries, while China, India, Indonesia and Mexico are not mem-bers. It seems foolish to me that this should be the case; we urgently need

to find a mechanism to include these large importing countries that have common interests in managing the international oil and natural gas marketplace in one place, which is precisely what the IEA was created to do. Second, in my judgment inadequate progress is being made on building an international consensus on carbon emission policies. If we do not reach some agreement with the developing economies about carbon emissions and control, it is going to be imposs-ible to prevent the global warming phenomena from placing enormous costs on our future generations of citizens. If we do not work to mitigate

15

emissions today, we are going to be faced with the problems of dealing with adaptation and geo-engineering in the future.

Emerging economies will be unwillingto pay these additional costs associatedwith carbon emission controls, whichposes the question as to what industrialeconomies will be willing to do to paythe difference. Of course, no progresson this subject can be expected so longas the United States has no carbon con-trol policy itself, and let me tell you, wedo not have this now. If we are going tomake progress, in other words, the inter-national community must come togetherwith new ways of reaching agreement

on carbon emission controls which willinclude both the developed and thedeveloping economies.My third point is that our countries must make a much greater level of effort on the research, development and demonstration of future energy technologies. Technology is needed for many purposes, for example to improve end-use efficiency, in the area of carbon capture and sequest-ration, to encourage alternative liquid fuels, or to increase the use of bio-mass feedstocks.

Development and deployment of thesetechnologies will require adoption ofnew mechanisms to internalize the social

costs of oil dependence and globalwarming. This means higher energyprices. It means an energy tax or someequivalent measure. Higher energyprices are of course very unpopularwith both the consumer and their politi-cal representatives. But I must say thatwithout this kind of long-term technologydevelopment effort, I really fear that wewill be not prepared to make the neces-sary transition away from oil and gasand will not be prepared to deal withthe global greenhouse gas threat.

Let me give you just one example of anR&D incentive which is lacking. Weknow that carbon capture and sequest-ration is an important potential way of

managing greenhouse gas emissionreductions. Today there is not a singleexample of a CO2 capture and sequest-ration project in the world that startswith the CO2 produced at a coal-firedpower plant, captures that CO2, trans-ports it by pipeline, and places it into anaquifer, a deep aquifer, which has beenauthorized by some independent regu-latory authority for storage over a longperiod of time. Nor is there any exampleof a CO2 sequestration project wherethere is sophisticated instrumentationavailable to allow independent peopleto measure, monitor and verify the location and safe storage of that CO2

underground. It seems to me that theworld urgently needs to have three orfour such carbon capture and sequest-ration projects up and running and thatthese are projects that can be success-fully mounted on an international basisand should not and need not be doneby individual countries.

My fourth point, as I've already mentioned to you, is that this transition from a petroleum-based economy will take decades. In other words, in the near term we are all going to be dependent on oil from the Persian Gulf, notably from the following four countries: Saudi Arabia,Iran, Iraq and Kuwait. All of these are the major oil-producing countries in the Persian Gulf region. This means that we have to deal with these coun-tries and must deal with them in a manner which takes their own socie-ties into account and encourages them to continue and indeed expand their production.

Fifth, a condition for expanded deployment of nuclear power around the globe should be that there must be no expansion of the proliferation risk, which means making operational and effective means of managing the

dangerous parts of the fuel cycle, i.e. enrichment and reprocessing, so they do not spread around the world.

Sixth, more attention needs to be given to international cooperation on energy infrastructure protection. A great deal could be done here in joint projects, joint planning, transfer of knowledge about how best to manage our energy infrastructure and exercises for protection of key energy infrastructure facilities, such as liquefied natural gas (LNG) terminals and electricity grids; joint naval operations to protect sea lanes of communication for all the tankers that travel from one country to the other; and information security for Super-visory Control and Data Acquisition (SCADA) systems that control key elements of the energy infrastructure.

Your conference is going to be dealingwith global climate change and thefuture welfare of the world. This is aworthy and important subject – it may infact be one of the key subjects that wehave in front of us. The fact that we arenot doing enough today around theworld means that future generations aregoing to find themselves in much worsecircumstances than they otherwise would.An essential aspect of this project is tomake sure that we realize that it's goingto take a long time, to be sure to payattention to these security matters whichare so vital to the proper functioning ofour energy economy during this inter-vening period, and to be sure that wekeep on reminding both the public andpublic officials that we need to moveaway from our dependence on oil andneed to take the global climate changethreats seriously. Thank you so muchfor your attention.

16

17

18

Monday, October 9, 2006 – WelcomeProfessor Dieter Feddersen Member of the Board, Dräger Foundation, Lübeck

Ladies and Gentlemen,

I would like to welcome you, also onbehalf of Dr. Christian Dräger, mycolleague on the board of the DrägerFoundation, to this year's MalenteSymposium. We are delighted to bestaging this XVI Malente Symposium incooperation with the Kiel Institute forthe World Economy.

For over 30 years, the Dräger Foundationhas been supporting and organizinginternational conferences and symposia.

The Malente Symposia represents oneof the Foundation's most important andbest-known series of conferences. Thesymposia provide a forum for innovativediscussions of national and internationalpolitical, economic and social issues,and were named for the first confer-ence location in the German state ofSchleswig-Holstein at which ourfounding father, Dr. Heinrich Dräger,

established this series of events.Although for reasons of transport linksit makes more sense to hold the con-ferences, as we have been doing fortwelve years now, in Lübeck, whereDräger and the Dräger Foundation arebased, we still like to use the nameMalente as a reminder of those success-ful early years.

Previous conferences have dealt withmany topics, among them issues of thelabor market and employment policy, of global trade and technology transfer,of globalization and the integration intothe world economy of the East Europeantransition countries, of strategies fortackling poverty in newly industrializedcountries, of the reform of our health-care system, of the state of Germansmall and medium-sized enterprises,and of the involvement of young peoplein the social process.

This year we will be focusing on prob-lems which cannot be solved by onecountry alone; we will be talking aboutenergy and climate policy, and aboutthe effects on the future wellbeing ofthe world which changing developmentsin energy and climate policy may have.

Energy experts from the fields of science,politics and economics have beendevoting their time for many years, if notdecades, to the problems which human-kind and the world economy may face if there is a future shortage of energyresources, especially oil and gas.

Climate experts have been warning usfor equally long of the consequences ofadvancing global warming. Yet it is onlynow that people seem to have developedan awareness of the extent of the po-tential consequences, having until nowconsumed energy with little or no thoughtfor the future. This is because in thepast – at least in our developedindustrialized countries – we havealways appeared to have a plentiful andinexpensive supply at our disposal. Only now do the consequences of ourunchecked consumption of fossil-basedenergy feedstock on the climate seemto be being taken seriously, now thatmore and more reports are appearing inthe press about the melting of the polarice caps, the disappearance of glaciersand the rise in sea levels. The publicperception of energy consumption andclimate change has likewise changed inthe USA in the wake of HurricaneKatrina. Since we started preparing forthis XVI Malente Symposium on thesubject of energy and climate over ayear ago, it is more than anything elsethe scale of reporting on these two"global challenges of the 21st century"that has increased enormously, reachinga wide audience – including non-experts – through the daily media.

There is no doubt that some of thesereports and articles, portraying as theydo catastrophic scenarios, can bewritten off as alarmist. Nonetheless,there appears to be widespread con-sensus in the scientific community that

ProfessorDieter Feddersen

19

we are indeed caught up in the middleof a process of global warming which at least to some extent is of our ownmaking and which will have fatal con-sequences for life on our planet if wedo nothing to stop it. We thus need todevelop innovative ways to ensure asustainable, safe, efficient – and, pre-ferably, affordable – supply of energycapable of both maintaining the level ofprosperity enjoyed in the industrializedworld and improving living conditions inthe poorer regions of the world, while at the same time being clean andhaving zero impact on our climate.

Global consumption of energy today isalready twice as high as it was at thebeginning of the 1970s, and is set torise by an additional 33 percent by2020 unless counteraction is taken; thisis the conclusion drawn by the Germangovernment's status report on energysupply, published in April of this year.Of today's total global energy consump-tion, oil accounts for 34 percent, coal24 percent, gas 21 percent, renewableenergies 14 percent and nuclear power 7 percent. Many of the leading indus-trialized nations are almost completelydependent on the import of energy rawmaterials. Germany's import dependencehas risen constantly over the years too:the country's dependence on uranium is100 percent, on mineral oil close to 97percent, on gas 83 percent and on hardcoal 61 percent. It is only in the case oflignite – which is an extremely dirty fuel– and renewable energies, whichaccount for only an eight percent shareof the country's total energy production,that Germany is entirely self-sufficient.

Much remains to be done therefore, notonly in Germany, to achieve a sustain-able and secure source of energysupply. We are doubtless facing adifficult, yet hopefully not unsolvablechallenge. A lot can be done if only wewant to! However, this requires globalstrategies and international agreementswhich go significantly beyond the tar-gets set down in the Kyoto Protocol.This is one of the issues we intend todiscuss today and tomorrow.

We are pleased that energy and climateexperts from many parts of the worldhave come to share their knowledgeand ideas with us and to attempt to findsolutions to the problems. I thank youfor your attention and wish us two daysof stimulating discussions and a fruitfulexchange of ideas.

20

Let me please first of all join DieterFeddersen in welcoming you all to thisXVI Malente Symposium on energy andclimate. We are pleased and honoredthat the Kiel Institute for the WorldEconomy is the organizing partner ofthe Dräger Foundation for this confe-rence that tackles two of the most im-portant topics of our time.

I think this symposium should be aboutone really important question that con-fronts the world nowadays, and that isthe conflict between our growth strategyand our need to preserve the world’sclimate. The global dynamics of so-cieties is presenting us with challengesthat are all mentioned in the title of thisconference.

Economic growth and our current pros-perity in the industrialized world de-pended and still depend to a large de-gree on the availability of large amountsof inexpensive energy. But while in themiddle of the 19th century each humanbeing lived with an energy consumptionof roughly 150 watt hours, this con-sumption has increased to about 2000Wh today, and with a very unequaldistribution between the industrializedand the developing world.This energy consumption has changedthe global dynamics of the carbon cyclewith consequences that are currentlyunder investigation. Climate change, asfar as we know today, will affect terrestrialas well as marine systems. Temperatureincreases, changing precipitation

patterns with an increasing threat ofwater scarcity in many parts of the world,and threats to biodiversity are expected.Worst of all, the latest findings indicatethat previous predictions about the ne-gative impacts have been too low. Thepossibility of irreversible changes suchas the melting of the Greenland icesheet or the freeing of methane storedin the permafrost imply climate changesthat surely nobody wants their childrenand grandchildren to experience.

Today, about 25,000 people die everyday from insufficient nutrition, and 6,000– mostly children – die every day fromwater-related diseases. These are urgent

needs that can only be met if economicgrowth supported by better managementalso benefits the people living in thepoor parts of the world. The challengeis therefore clear: to promote economicgrowth for the world's poorest peoplewhilst protecting the climate system fromchanges that will endanger future gene-rations. Translated into energy terms,this means more energy consumption inthe Third World whilst at the same timereducing emissions from fossil fuels,the major source of energy today.

Let me, finally, present to you somefacts and figures about energy andclimate:

Welcome and IntroductionProfessor Dennis SnowerPresident, The Kiel Institute for the World Economy, Kiel

ProfessorDennis Snower

7 000

6 000

5 000

4 000

3 000

2 000

1 000

0

Production

1971 – 2000

Increase in World Energy Production and Consumption

2001 – 2030

Consumption ConsumptionProduction

Mto

e

Developingcountries

Transitioneconomies

OECD

Energy:– Energy consumption is steadily rising.

Business as usual would lead to a further increase by at least 50 percent.

– The additional energy will predomi-nantly come from fossil sources (coal, gas, oil)

– The dependency on oil will increase most in Asia. China's import share of about 35 percent in 2000 will rise to over 80 percent in 2030. Europe’s share from 50 percent in 2000 will also rise to over 80 percent in 2030.

– About 1 percent of world GDP needsto be invested in energy infrastructureover the next 25 years. This small number means 550 billon dollars per year.

– Security concerns: future oil supplieswill predominantly come from the Middle East, gas from Russia and theMiddle East.

– Only coal in ample supply is more evenly distributed across the earth, yet it is the major contributor to CO2

emissions.– Up to now, improvements in energy

efficiency have just compensated for population increases, as is evident from the constant per capita energy consumption over the last 30 years.

At the same time, energy consumptionoverall has increased by 80 percent. Today a dollar of GDP is produced with 30 percent less energy than in 1970.

The challenge in terms of welfare and energy is to supply safe energy in sufficient amounts to provide for thebasic needs of a sizable proportion ofthe world's population that still lives onless than a dollar per day.

21

22

23

Climate:– The increase in energy consumption

has been accompanied by increasingCO2 emissions.

– The CO2 has a long half life in the atmosphere, hence the CO2 concen-tration in the atmosphere increases for as long as we continue to emit one or, at most, two gigatons of carbon. Today emissions are roughly seven gigatons per year!

– CO2 concentrations have varied over the last 500 thousand to one million years between 200 and 280 ppm CO2

equivalents. For the last 10,000 or so years, homo sapiens has enjoyed a more or less constant temperature.

– Now CO2 concentrations are at 380 ppm and are expected to rise to 700 or, in the worst case scenario, to 1,000 ppm CO2 -eq. No such experi-ment with the earth has been observedin millions of years. Its outcome is open, though the signs emerging already today are alarming.

– Recent research indicates potentially irreversible processes like the melting

of the Greenland Ice Sheet, possibly resulting in several meters of sea level rise – not in our generation, however, but several hundred years into the future.

– The oceans take up about 40 percentof our CO2 emissions and are also showing the first signs of reaction. The thermohaline circulation (i.e. the Gulf Stream) is changing, the acidity in our oceans is increasing and their temperature is also rising. Given a reaction time of several thousand years, such processes have long term consequences and can most likely only be slowed down but not stopped.

The ultimate question to answer, there-fore, is how can our energy demand besatisfied while at the same time meetingour obligation of ‘preventing dangerousclimate change’ (UNFCCC, Art.2)? In order to meet this challenge to ourenergy and climate policies we haveseveral options: we can use energymore efficiently, we can consume lessenergy, we can develop ‘clean energysources’, we can capture CO2, and wecan sequester CO2 from the atmosphereinto safe deposits.Let us discuss these options during thenext two days with regard to sustainability,efficiency, and practicability, and let uslook for the best possible solutions.

TPES*

TPES Per Capita

TPES/GDPTFC**/GDP

* TPES = Total Primary Energy Supply

** TFC = Total Fuel Consumption

1971

1971

= 1

00

60

80

100

120

140

160

180

200

1974 1980 1983 1986 1989 1992 1995 1998 2001

Total Primary Energy Supply (1971 = 100)

It is a particular honor for me to havethe chance to talk to you about thistopic today, for the title of this conference"Energy and Climate – Global Challengesof the 21st Century" neatly sums up thekey problems of the 21st century.Energy and climate are two sides of thesame coin: to put it simply, we mustmeet the growing demand for energy,while at the same time taking climateprotection very seriously. We are in-deed facing great challenges, so it isimperative that we put all our options onthe table. The conventional energyindustry, providers of alternative energysources and conservationists must allpull together to tackle the task whichlies ahead of them. There is no roomhere for antagonism or ill feeling; this isthe only chance for us to rise up to thismajor challenge.

Our future energy situation is deter-mined by a number of key factors: growthin many respects, supply, resourcemanagement, environmental and climateprotection, and innovation. Many of ourenergy and climate scenarios nowadaysare pessimistic, with everyone fearing

the worst. However, this can at leasthave the beneficial effect that some-thing is done and that steps are takentowards implementing the necessarystructural changes. In this respect weare still right at the beginning, and canno longer afford to stand still. Structuralchange will open up new opportunitiesand new prospects, in which I of coursecan see some very positive elements.The core factors influencing our futureenergy situation can be summed upfrom our society's standpoint in threemain questions which I will attempt toanswer during the next half an hour.

1. How will we be able to meet the growing demand for energy, and what action will this involve?

2. Which climate protection measures are available to us?

3. In which areas of activity can big business like our company, BP, play a part?

Nobody will be able to ignore the globalenergy trends over the next 25 to 30years. The world's population is pro-jected to grow to eight billion people bythe year 2030, and energy consumptionwill increase by 50 percent during thesame period – in China and India de-mand will grow by even twice thisamount. Fossil fuel sources will con-tinue to meet this demand, with oil andgas contributing more than 60 percent.The proportion of renewable energysources will remain moderate – some-what higher in Europe, and somewhat

Keynotes Energy and Climate – Global Challenges of the 21st CenturyDr. Uwe FrankeCEO, Deutsche BP AG, Berlin, Germany

Dr.Uwe Franke

24

lower in the rest of the world. The reallybig era of renewable energies will onlybegin after this point, somewhere aroundthe middle of the century. Nonetheless,it is of course right to already startpushing forward these renewableenergies today.

The central role of the fossil energysuppliers always throws up the sameold question of resources. Allow me todispense with a few misconceptionshere. Oil, it is often claimed, will lastroughly another 40 years, while gasreserves will last fewer than 70 years.This is correct and incorrect at the sametime, because these figures refer merelyto the lifetime of the current reserveswhich can be extracted under today'seconomic conditions and using today'stechnologies. On top of this, however,we have the suspected reserves, whichrepresent a good two thirds of today'sknown reserves. Coupled with the ad-vances in production technology and

the large stocks of non-conventionalenergies like tar pits and heavy oil, thismeans that we won't have to worry aboutour supplies of oil and gas any timeduring this century. In other words, thediscussion about oil peaks and a short-age of resources does more to confusepeople than it does to shed light on thesubject. After all, the physical presenceof the reserves is not the issue – it is aquestion of access to these reservesand climate protection.

Less than 20 percent of what can bedescribed in the broadest sense as oilhas been extracted so far. Developingand exploiting the remaining reserves isprimarily a cost issue and a matter offurther developing the production tech-nology. The effects of advances in ex-traction technology can be seen clearlyin the example of the North Sea reser-ves. The extraction technologies whichwere available in the mid 1980s pointedto North Sea production reaching its

peak as early as 1986. Improvements intechnology, however, allowed this pointin time to be shifted forward by about20 years. If similar advances are madeworldwide – I'm thinking here aboutcountries like Russia – the 40 yearfigure for oil reserves which is frequent-ly cited these days would increase byover 50 percent purely on the strengthof this. The figures for the non-conven-tional oil reserves like the Canadian tar

25

26

pits are even more impressive, with re-sources of 1,400 billion barrels antici-pated. This is more than the conventionalreserves which are currently being ex-ploited, and approximately five times asmuch as the reserves in Saudi Arabia.

However, the costs of exploiting the tarsands are considerable, both financiallyand ecologically speaking: an averageproduction cost of 35 US dollars perbarrel, significant CO2 emissions andimpacts on the countryside and naturalenvironment are extremely unappealingsymptoms of the exploitation of uncon-ventional energies. In other words, heretoo our real challenges lie in the area ofenvironmental and climate protection.For the sake of completeness, what Isaid about the extent of the oil reservesis equally true of gas, where less than20 percent of the resources have beenexploited to date, though as with oil it isnot only a question of environmentalissues but also of access to the remain-ing stocks.

This brings us to another fact whichmany people in Germany are not particu-larly conscious of. 80 percent of theworld's oil and gas reserves come fromthree regions and are controlled bystate-owned companies. These are theformer Soviet Union, i.e. Russia in par-ticular, the Near and Middle East, andWest Africa – these constitute the back-bone of our future supply of oil and gas.All of these are states and regions whichare highly interested in expanding theirown economic capacities, and theirwealth of natural resources representsa cornerstone of their developmentpotential. In the past, it may be that theconsumer states have paid too littleattention to the psychological aspectswhich are associated with this. Today,however, we have a much better under-standing of this situation. We cannotdemand that private foreign companiesbe granted unhindered access to oil and

gas reserves if this will not support thelong-term economic development ofthese states and regions. This is whyforming mutually beneficial partnershipsis the way forward, i.e. securing salesmarkets for the resource states andkick-starting the local economy withbenefits for the population, while at thesame time securing sources of supplyfor ourselves.

If we take a look through a magnifyingglass, we can see that 70 percent of theglobal oil reserves and 40 percent ofthe global gas reserves are to be foundin the Persian Gulf and Caspian regions.These regions are, as it were, right onEurope's doorstep, so we should not beindifferent to any developments there. I very much welcome the fact that theGerman Federal Government and the

European Union acknowledged thissituation some time ago and take it intoaccount in their foreign policy. We haveto get used to the fact that these regionswill increasingly become the world'sfilling station, because the dependenceof all major consumer states and regionson oil imports will reach 70 to 100percent within the next 20 to 25 years,

and the situation is much the same forgas. For Europe, this means specificallythat our reserves – especially those inthe North Sea – will decline, while newreserves outside Europe will be put intooperation. Will perhaps the CaspianRegion, for example, become somethingof a second North Sea? It certainly hasthe potential to do so. Although it issituated not in Europe but at the conti-nent's edge, the supply of energy isbringing the states of Azerbaijan,Kazakhstan and Turkmenistan closerand closer to Europe, as pipelines cre-ate links on a political, economic andcultural level. These changes in our oiland gas supply require business andpolitical management. New pipelinesneed to be built, for instance. The oilpipeline from Baku via Tbilisi to Ceyhanon the Turkish Mediterranean coastwhich was recently taken into service by BP is one such important project.Together with our partners, we haveinvested over three billion dollars in thisnew supply line. Next year, we will beadding the South Caucasus Pipeline forthe transport of gas, which along someof its length runs parallel to the oilpipeline. In total, 20 billion dollars arebeing invested in the Caspian reservesof oil and gas. However, this is only asmall part of the total sum which willneed to be invested over the comingdecades to secure our oil and gassupply. Access to oil and gas has to be guaranteed on four different levels.First, financially, i.e. through investmentby business; second, politically, i.e. bycreating the right political frameworkconditions; third, ecologically, i.e. byminimizing the impact on the environ-ment, and fourth, economically, i.e.companies need to be able to earnmoney and remain competitive withclean energy.

As regards the first aspect, the financialone: the oil and gas industry is well awareof its major responsibility as a supplier.Between the years 2000 and 2030,6,200 billion dollars need to be investedin securing the supply of oil and gas.That's a good 200 billion dollars peryear, with oil and gas accounting forroughly 100 billion dollars each. Lastyear alone our company spent 15 billiondollars, and Shell always invests be-tween 15 and 20 billion dollars too.

As far as the second aspect, the politi-cal framework conditions, is concerned:to make these investments possible it iscrucial that we correctly define the roleof politics. The strategic considerationsand investment decisions, i.e. the com-mercial side of things, must remain thebusiness and the risk of the companies

themselves. This is an area in whichpolitics cannot and must not intervene.The responsibility of politicians, on theother hand, is to establish the sort offramework conditions which will be con-ducive to these investments. Withinthese framework conditions, we mustbe able to place our trust in the func-tioning of the marketplace. This is whyclose coordination is necessary be-tween business and politics, thoughwithout this involving any blurring ofresponsibilities.

Let me say a word on the subject of"international energy policy" before Icome to the next aspect. We haveglobal organizations to deal with worldtrade, global finance, development cooperation, food and health, yet in theenergy sector there is just one producer

and one consumer cartel in the form ofOPEC and the IEA respectively, plus ahandful of powerful individual players. Is that enough? Is that enough to copewith the challenges of the future? Wedon't think so. It is time to establish aworld energy organization or somethingsimilar, or at least make initial steps inthis direction. It is worth thinking aboutthis and taking this idea further.Now for the third aspect, the cleansupply and utilization of oil and gas. We must minimize pollution of theenvironment during the production andconsumption processes. This brings meto the topic of climate protection, and Iwould like to repeat some facts of whichyou are already aware. At the presenttime, annual global CO2 emissions arein the order of 25 billion tons, of which50-60 percent can be absorbed by our

27

28

planet while the rest remains in theatmosphere and fuels global warming. If we sit back and do nothing, theseCO2 emissions will double by the year2050, to approx. 50 billion tons per year.There is broad consensus that we canprevent the worst effects of the con-tinuing climate warming if we succeedin limiting the rise in the share of green-house gases in the atmosphere – cur-rently at 380 ppm – to a maximum of500 ppm of CO2 equivalents. Thiswould correspond to an average globaltemperature increase of two degrees.But to achieve this, according to thelatest IPCC Report, we need to reach a CO2 emissions level by the year 2050that is equivalent to about half of today'slevel, and this against the backdrop ofthe growth in population and energydemand, particularly in the emergingeconomies of India and China.

With our support, Princeton Universityhas worked out which dramaticmeasures alone would be necessary tostabilize CO2 emissions, not at half oftoday’s level – as is demanded by theIPCC – but merely at today's level, until2050. Princeton grouped all of the 18potential measures into theme-based

"wedges". Each of these wedges on itsown would represent an annual savingof 3.5 billion tons of CO2. In other words,we would need seven wedges to achievethe targeted 25 billion saving. Ladies and gentlemen, not one of thesemeasures is 100 percent achievable inpolitical, economic or resource terms.Because of this, and because of thescale of the problem, we need as manymeasures as possible, and the bestpossible measures. The good news isthat the technologies to do this alreadyexist, so we don't need to invent theseas well as everything else. But bewarned – the challenge is so over-whelming that we cannot afford anymore "hobby horses", as the money can only be spent once.

I'd like to give you some concrete examples of these wedges. One wedge,for instance, involves cutting in half thefuel consumption of the two billionvehicles that are expected to be in usearound the world by 2050. Today wehave 700 million vehicles, and by 2050this figure will grow to two billion. Tosave 3.5 billion tons of CO2, you have to half the fuel consumption of all thesevehicles – once this has been achieved,you will still have solved only a seventhof the problem. Another wedge involvesreplacing 1,400 coal-fired power plantswith gas-fired power plants. Or thecapture and sequestration of carbon in 800 coal-fired power plants. Anotherparticularly nice example involves dis-cussing the possibility of doubling thecurrent capacity of nuclear power plants.Another wedge would be to increasetoday's wind power capacity by 50 timesto save 3.5 billion tons of CO2, solving aseventh of the problem – but thisentails achieving 50 times today's windpower capacity, which is a pretty inter-

esting example from the point of view ofenergy efficiency. If, starting today, allnew buildings around the world couldbe completed with 25 percent lessenergy consumption, this would repre-sent exactly one wedge of 3.5 billiontons of CO2. As you can see, the taskwe face is huge, and I always like to usethe following image to illustrate it – atsunami is coming our way, and we areawaiting it with sandbags in our arms,and are still fighting over who has thebiggest sandbag.

Let me now turn to the fourth aspect:competitiveness and the need to makeprofits with clean energy. The measuresI have just outlined are both highly am-bitious and controversial in terms oftheir detail. At the same time, however,this is a dream come true for entrepre-neurs. Just look at all the new fields ofbusiness this creates, and the potentialfor jobs and profit! It goes without sayingthat a company like BP is also keen toprofit from this new business potential,which is why we have geared our oper-ations to the packages of measuresand, last November, established a newfield of business which we call "Alter-native Energy". Our intention is not onlyto expand the use of solar power – inwhich field we are already one of theworld's leading companies – but to playa key role in the provision of CO2-freeenergy production like hydrogen power,renewable energies and natural gas.One of the reasons for this is that weare anticipating that CO2 will have aprice in ten years, all over the world.Not just at the regional level, in otherwords, but in those areas which viewclimate protection and emissions tradingin a rather different way to the way wedo. We need a global price for CO2

because when CO2 becomes a global

30

cost factor it will make sense to investin energy production technologieswhich emit as little CO2 as possible.We will then also have solved the prob-lem of competition and can view morecalmly those German companies whichare going it alone.

We have already taken the first steps inthis direction with EU emissions trading,but that is of course still not enough.There are major business opportunitiesat stake here – let me give you anexample. 40 to 50 percent of the energyproduction capacity projected for 2020has yet to be built. We expect a globalmarket of 230 gigawatts of alternativepower production capacity, and weestimate this market potential to be asmuch as 600 billion dollars worldwide.Our company plans to invest eightbillion dollars in this area by 2015, yetthis is only the beginning. If the busi-ness develops well, this sum will be

significantly higher. In 2015, this "Alter-native Energy" business unit is expectedto bring an annual turnover of six billiondollars, with an expected global CO2

saving in the region of 25 million tons of CO2.

One particular focus in this context isthe generation of carbon-free electricityfrom hydrogen, in conjunction with CO2

sequestration. To this end, we are plan-ning two large-scale projects, one inScotland and one in the US. Theseinvolve extracting natural gas and con-verting it into hydrogen and CO2. TheCO2 is then pumped back into theunderground reserve, which increasesnot only the pump pressure but also theamount which can be extracted. TheCO2 then remains underground. Thehydrogen is used as fuel in a powerplant in a carbon-free combustion pro-cess. In total, this will achieve an across-the-board CO2 saving of 90 percent.

This project is just getting underway inPeterhead in Scotland. This will not bea small test-level hydrogen power stationbut will have a capacity of 500 mega-watts. Investments will total a billiondollars, and the power plant will be able to supply 320,000 households with carbon-free electricity.

In Parson in the USA we will be apply-ing much the same principle, but thistime using feedstock, i.e. not naturalgas but petroleum coke. In our tradi-tional line of business, which is oil andfuels, we are also developing strategiesto cut CO2 emissions long-term. Afterall, as I have already said, we projectthat the number of vehicles around theworld will increase three-fold by theyear 2050, so sustainable mobility natur-ally has to be placed right at the top ofthe agenda. Everyone involved mustplay their part in this: the auto manu-facturers by producing far more effi-

31

cient vehicle technology, the petroleumindustry by making available more effi-cient and lower-emission fuels and, lastbut not least, the state in the areas ofinfrastructure and traffic management.

I do not intend to deal here with thetechnologies needed to increase theefficiency of conventional engines,hybrid vehicles or, in the longer term,the fuel cell, but would rather touchbriefly on biofuels which we estimatecould be used to meet as much asroughly 30 percent of our fuel needs by2050. However, we will only be able tomake this substitution, and achieve thedesired long-term CO2 saving, underone condition: we must focus ourdevelopment quite specifically on thenext – the second – generation ofbiofuels. We will not achieve our goalswith the so-called first generation ofbiofuels like biodiesel and bioethanol.Their significance will be that they can

help pave the way for the next gene-ration of biofuels, and the faster weadvance in this direction – with thesupport of politicians – the better. Themore we insist on conserving currentcapacities of biodiesel and bioethanol,or even on generating additional capa-cities, the worse the effect will be onour 2050 CO2 targets. Naturally, thebiofuels are just as close to our heartsas the alternative energy sources, whichis why we created another field of busi-ness in June of this year, "BP BiofuelsBusiness". First, we intend to invest 500million dollars over the course of tenyears in a new Energy Bio-SciencesInstitute, which will focus on research-ing and further developing biofuels.Second, we have signed a partnershipdeal with the US chemicals companyDupont to develop the next generationof biofuels. Here too we plan to invest500 million dollars, making a total of abillion dollars altogether.

To sum up, I hope that I have been ableto highlight a few areas which we needto tackle as regards the dual issue ofenergy and climate protection. This is avery necessary and ambitious program,but one which is also associated withmany new opportunities. Essentially, it isa matter of ensuring the following: thegrowing demand for energy worldwidecan and must continue to be met mainlyby fossil fuels in the next two to threedecades, primarily oil and gas. Thereare sufficient stocks available, thoughthey are concentrated in the three re-gions of the former Soviet Union, theNear and Middle East, and West Africa,countries where state-owned oil andgas companies run the show. We needto secure our access to these reserveson a basis of partnership and mutualbenefit. It is a good thing that energypolicy has now become an integral partof foreign policy. The question as to theinstitutionalization of the energy sector,right up to the idea of a world energyorganization, is one which is likely tobecome highly relevant in the nearfuture. Climate protection is the otherside of the coin. By 2050, despite agrowing demand for energy, we need to maintain CO2 emissions at today'slevels. The energy production and trans-port industries are key sectors in thiscontext. It is a matter of finding ways togenerate electricity with the lowestpossible CO2 emissions, and achievinglong-term mobility. Renewable energies,hydrogen, natural gas and biofuels areessential areas which present a varietyof business opportunities and in whichour company is highly active. A globalCO2 price is necessary for competitiveand economic reasons, and as a cata-lyst for technology development andmarketing.

Allow me to make one closing state-ment. The challenge is not – as is sooften claimed – for us to move awayfrom oil, away from gas, away from coal,but to move away from having CO2 inthe air, and away from putting CO2 intothe air. I would like to remind you thatthe greatest reservoir of bioenergy onthis earth is to be found in natural oiland natural gas. It has just one smalldisadvantage – the renewal processtakes slightly longer. Thank you for your attention.

32

IntroductionLet us talk about the two key challengesfor this century: the first being to ensurethe development of developing nations,something that has not been particularlystressed until now. Last year, the globaleconomic product grew by about fivepercent. This is one of the highest – ifnot the highest – figure ever achieved.All our climate scenario calculations todate have assumed an average annualper capita growth in economic productof 2.5 percent until the end of this cen-tury. Assuming that the world populationwill grow by 1.2 percent annually in thesame period, this 2.5 percent growthper year/capita would result in an up to25-fold increase in global economicproduct by the end of the 21st century,accompanied by a correspondinglyrising energy demand. But at presentwe are most likely going beyond this 2.5percent average growth per year/capita,since I can't imagine that China or Indiawill drop to a 2 or 3 percent growth rateper year/capita in the near future. Andthis will also mean an even higher thananticipated increase in global energyinput.

The second challenge was succinctlydescribed: our increasing energy con-sumption must go hand in hand with areduced emission of greenhouse gases.It was once put to me by a journalist ata press conference in Berlin that what Iwas arguing for was to "square thecircle", and I agreed, explaining thatmathematicians had in fact managed to

solve this recently, and that we wouldachieve it as well.

Climate Research ResultsNo doubt you are expecting some newsfrom the field of climate research fromme, and I am happy to oblige. AlthoughI will be drawing on recent publications,I will not be quoting from the IPCC FourthAssessment Report as this is still confi-dential, despite the fact that it has leaked,as you will have seen, onto the front pagesof German newspapers. I was asked tocomment on this but refused, pointingout to journalists that they were citing a confidential document. Instead, I willrely on what I know from my colleagues.

Number one: the recent warming, andby this I mean about the last 40 years, ispredominantly anthropogenic. This wasnot so well known about ten years ago– we still had problems expressing thisin such strong terms. The sun has hadno significant influence since 1978, sincewe directly measured the output fromsatellites. In other words, the sun isfairly stable – between an active periodwith a high number of sun spots and theinactive part with nearly no sun spots inthe eleven-year period the average ampli-tude is only one per mille. That's all, andit has been stable for the last 28 years.

Next comes something much newer –namely sea level rise. Sea level rise isnow estimated - using satellite datawhich has been continuously availablesince 1992 – as being 3.2 mm per year.

This is the conclusion drawn by severalgroups. About two-thirds of it is merelydue to the expansion of sea water, whilethe remainder is attributable to meltingland ice, mainly from glaciers in moun-tainous areas, and to a lesser extentfrom the big ice sheets.

Number three: global dimming as seenfrom the 1950s to the 1980s has defi-nitely ended, and has turned into a recent

brightening. What does this mean?More solar radiation is again penetratingto the surface because air pollutionacross large parts of our globe hasbeen reduced since, mainly, the collapseof the Soviet Union, and since the im-plementation of a number of clean air

Climate Change and Energy SupplyProfessor Hartmut Grassl Max Planck Institute for Meteorology, Hamburg; Meteorological Institute, University of Hamburg

ProfessorHartmut Grassl

33

acts in certain OECD countries. Onlyover India and parts of China is a re-gional dimming still ongoing, with lesssolar radiation penetrating to the sur-face because of high levels of airpollution.

Let us now turn to the sinks for anthro-pogenic carbon. It has become increas-ingly clear over the years that only abouttwo of the total 8.5 billion tons of carbonemitted by fossil fuel use and defore-station each year end up in the ocean –about 3.5 billion tons of carbon eachyear remain in the atmosphere, increas-ing the CO2 level. Where does the restgo? This is no small amount – we aretalking about some three billion tons ofcarbon per year. At present it is goinginto the terrestrial biosphere, i.e. forestsand soils. We do not know whether thiswill continue at this rate – this is a keyresearch question.

Emerging earth system models haveproduced some new findings concern-ing the duration of global warming.When various scenarios are run in acoupled ocean, atmosphere, land, vege-tation, ice sheet model over about fourthousand years, we find that coastalcities and marshlands disappear even-tually in all scenarios without climateprotection. This will not happen in the21st century, nor in the 22nd century,but will start to become a very serious

problem in 2500. The mean global warm-ing will continue not only for 200 years,but for millennia. And it is even specu-lated – and speculation is after allallowed in science, as there can be noprogress without speculation – thatunder scenario A2 (i.e. massive popu-

lation growth to 11 billion people, nosignificant development of developingnations but major use of coal across theplanet), the global conveyor belt in theoceans, the Gulf Stream or, in scientificterms, the North Atlantic Drift, willcollapse.

This is the conclusion drawn by all thegroups who have examined this scenario:the collapse of the Gulf Stream will leadto a lower rise in sea level than that whichwould be seen in a moderate scenario,because in the moderate scenario theGreenland Ice Sheet would completelydisappear. In hundreds of years fromnow it will start to melt at a high rate,but the reason for the collapse of theconveyor belt will not be fresh waterfrom Greenland, but more precipitationfalling or discharged by rivers into theAtlantic Ocean. This differs significantlyfrom what climate history teaches us,where we have generally seen a majoradditional freshwater flux from ice sheets.If we take this seriously, the next fewdecades will determine whether Hamburgwill still be a big city in 2800. Up to now,climate scientists have shied away frommaking such statements as the comput-ing power and the modeling capabilitywere not sufficiently advanced.

Political Reactions?The sensitivity of the climate systemseems to be comparatively high, so that

even the European Commission's toler-able climate window of plus two degreescentigrade warming by the end of 2100would not prevent parts of the Green-land Ice Sheet from melting, which iswhy we on the German government'sGlobal Change Advisory Council urged

that we try to aim for a very, very lowstable concentration of carbon dioxidein the atmosphere. If knowledge isgained later which permits goals to berelaxed this can be done easily, but theopposite is very difficult.

What follows from the findings of climateresearchers? It is interesting to notethat nearly 20 years ago a warning wasissued by the Meteorological and Physi-cal Society in Germany, addressed tothe public and the government, claimingthat we would see global climate changecaused by mankind and we should reactpolitically now. It has taken 20 years for asmall minority of scientists to promptthe Dräger Foundation to hold such aconference. Very first high-rank state-ments were issued in 1985 by a smallgroup of scientists who had been askedby the World Meteorological Organi-zation (WMO) and the United NationsEnvironment Programme (UNEP) toassess the potential threat of globalclimate change caused by humankind.The Villach Conference – named for thetown of Villach in Austria where it washeld – resulted in a very clear final state-ment which still holds true today. Theysaid that within a few decades all oursecurity-related infrastructure would nolonger be adapted to the frequencydistributions of climate parameters(which also contain the rare weatherextremes in their tails). This statement,

issued 21 years ago, was a very wiseone. Nonetheless, it took 20 years toachieve a global international law (theKyoto Protocol of the Framework Con-vention on Climate Change of the UnitedNations) to serve as an umbrella andpersuade major companies to acknow-

34

ledge the signs we have been hearingabout today.

An Energy Supply System to ProtectClimateWe can now ask ourselves what sort ofenergy supply system might be conceiv-able that would no longer be a threat toglobal development. All the scenarioswe have discussed up to now have nodirect coupling between the socio-eco-nomic system and anthropogenic emis-sions. It is simply assumed that we willcontinue to burn fossil fuels. But thereis no assumption that conferences likethis can change people's minds andlead to a style of policy-making that ismore focused on climate protection.There is not sufficient understanding ofthis socio-economic feedback to allowanyone to forecast with any degree ofcertainty what will happen.

That is why the Global Change AdvisoryCouncil to the German government saidthat any scenario which assumes thatour personal behavior must change willmean that we will lose immediately, be-cause next day Frankfurter AllgemeineZeitung, an opinion-maker in our coun-try, would run a headline talking about"The good people of the GCAC/WBGU",i.e. those illusionists who are trying tochange the character of humankind.That is why we recommended assuminga high economic growth scenario withtechnology-friendliness, namely A1T.The A stands for high economic growth, 1 for multilateralism (we hope,for example, that the United States ofAmerica will come back on board), whileT stands for technology to be used onceit is available. Under such conditions,

you could aim to remain below twodegrees of warming in the 21st century,mainly by relying on renewables. For acertain period of time, however, asdescribed in Dr. Franke’s presentation,namely from about 2020 to 2050, wewould need intermittent carbonsequestration under this scenario.

Before I presented this report to ourgovernment, Joachim Luther and I hadto persuade the Minister for theEnvironment, who was Jürgen Trittin atthe time, that carbon sequestration isnot a sin. Because at the time there wasno way that many of the environmentalistgroups would accept an interim periodof sequestration if economic growthwere high and new technologies werenot yet available. For example, we didnot count on nuclear fusion. Why?Well, this has not been proven yet. Solarphotovoltaics, on the other hand, is aproven technology; it functions, but isvery costly and will only come to thefore at a later date, and then has to showvery steep learning curves. At the sametime, however, learning curves, as hasbeen shown today already, also apply tofossil fuels. We will use them more in-telligently than has been the case up tonow. And where do the learning curvesmeet that make solar energy more eco-nomical than coal burning in a globalemissions trading scheme? This wasone of the key questions for the globaleconomy model which was run by keyscientists in the field rather than by usin the Council.

Let me end by saying that it will not onlybe possible with renewables but alsocheaper. This will involve an interim

period of partial sequestration, but whathas not been said up until now is thatthis will have major consequences forthe distribution of power on our planet.Who will have the basic fuel – the sun –in a society which uses mainly renew-ables? These will be countries likeSomalia, Burkina Faso, i.e. those coun-tries where most solar energy per squaremeter and time unit is offered. Andmost of us in the areas of climate andenergy research, believing as we do ina bright future for renewables, wouldcall this a peace dividend.

If we switch to renewables, we won'tneed to struggle for our fuel because itwill be available for everybody. NorthGermans may believe that there is nosun in Northern Germany – yet if youask how much energy is provided bythe sun in Hamburg versus Somalia, the answer is that the difference is onlyslightly higher than a factor of two. Ifyou then consider how well CentralEuropeans and Scandinavians typicallyhandle technology, shouldn't we expectnearly the same harvest despite a lowernet input in our latitudes? If you want toknow more about this – for exampleabout contraction and convergence,which I did not talk about – then go tothe website www.wgbu.de and you willfind all the reports, including a recentone about the threatening changes inthe oceans. Then you can judge foryourself what the German governmenthas learned from scientists and howmuch has been implemented or disre-garded.

“In the 21st Century it is global climate

protection that will decide on the survival

of coastal cities in marsh lowlands”.

Why Do We Need a CommonEuropean Approach Towards Energyand Climate? (Excerpt from the speech)Luc Werring made it very clear that theEuropean Commission has to be involvedin shaping future energy and climatepolicy in Europe. After all, the EuropeanUnion of today started out as the resultof a 1951 agreement on energy issueswithin the framework of the EuropeanCoal and Steel Community (ECSC).

Nonetheless, even after the first oil crisisin 1973, in took another 20 years beforean article outlining a common energypolicy was included in the draft EU con-stitutional treaty in 2003. Following the2005 G8 Summit in Gleneagles, therewere calls for the European Union toadopt an integrated approach to energy.

Among the instruments for climate pro-tection developed by the European Unionis the European Emissions Trading

System which, however, encompassesonly 15 EU countries and has not yetintegrated the new members. The EU-15has a Kyoto target to cut greenhousegas emissions by 8 percent of 1990levels by 2012. Within this overall target,each EU-15 member state has a differentemissions target which can be achievedby a variety of means. However, eventhese rather modest cuts are not likelyto be reached, according to Werring.What is more, the EU emits only 14

Why Do We Need a Common European Approach Towards Energy and Climate?Luc WerringPrinciple Advisor to the DG Transport and Energy, European Commission, Brussels

Luc Werring

36

37

percent of the world's total emissions,meaning that a global approach beyondthe borders of the European Union is ofparamount importance.

Given the fact that fossil fuels – primarilyoil and gas, but also coal – will remainthe major source of energy over the nextdecades, another reason besides climateprotection for the call for an integratedEuropean energy policy is the concernabout energy supply security. The EU-25's dependency on energy imports will rise, which means that energy im-ports as a share of the total primaryenergy supply will increase from 47percent in the year 2000 to almost 70percent by 2030. For oil and gas thisshare will reach almost 90 percent.Even for solid fuels the EU’s importdependency will increase to over 65percent by 2030.

Coal, in contrast to oil and gas, will re-main abundant in the world and relative-ly cheap. Coal will therefore remain themost important source of energy for manycountries, in particular for countries likeChina with a dramatically rising energydemand. If we do not want to ignore theeffects on the global climate of CO2

emissions generated by burning coal,we need carbon sequestration – notonly in Europe, but worldwide. We needto develop policies and find mechanismsto convince all the countries concernedthat without carbon sequestration ourattempts to reduce CO2 emissions inthe atmosphere will fail, says Werring.This means that the efforts to develop

the technical foundations for carbonsequestration need to be intensified.

There are five reasons for the EU to develop a common approach to energy:– to equip the EU to play a full role in

global markets– to improve sustainability in the EU

and globally– to improve the functioning of internal

markets– to improve stability in the EU and

neighboring markets– to reflect the strategic role of energy

in achieving other political objectives.

Three overlapping and equally importantcommon energy policy goals have to beaddressed by the EU: competitiveness,environmental sustainability and securityof supply. Our competitiveness will in-crease if we have functioning internalgas and electricity markets with a com-mon regulatory framework and structures,if we establish a European electricitygrid, and through research and inno-vations with regard to clean coal, alter-native fuels, nuclear fuels, and energyefficiency. The environment will be pro-tected by the promotion of renewableenergy and nuclear energy, by increas-ing energy efficiency, by innovation andresearch, and by emissions trading.And, finally, security of supply will bereached through international dialogue,European stock management (oil andgas), refining capacity and storage ofenergy, protection against terroristattacks, and – once again – improve-ments in energy efficiency.

The EU will establish a strategic reviewof the EU energy mix including, amongother things, a blueprint for Europe tooffer a long-term vision towards an effi-cient and integrated energy policy, aroadmap for renewable energy, a com-mon vision to establish a coherent frame-work for better coordination of energyactions within Europe, and a strategicenergy technology plan that gives theEU a horizon for 2030 and 2050 re-spectively.

The external energy policy issues on theEU's agenda are a new energy partner-ship with Russia, a coordinated reactionto disruptions in supply, strengthenedenergy relations with major producersand consumers, an international agree-ment on energy efficiency, commonsecurity standards to protect essentialenergy infrastructure, and new mechanis-ms to ensure solidarity and assistancein the event of damage to this infra-structure.

“Coal will remain the most important

source of energy for many countries.

We need to develop policies and find

mechanisms to convince all the countries

concerned that without carbon seques-

tration our attempts to reduce CO2

emissions in the atmosphere will fail”.

Gernot Klepper, Director of The KielInstitute for the World Economy, startedby answering the question “Are we run-ning out of gas?” with a quote from theformer Oil Minister of Saudi Arabia,Sheikh Yamani, who in response to thesame question had replied that theStone Age did not end because theworld ran out of stones.

To give a fuller answer to this question,Klepper first of all pointed to the factthat energy specialists are by no meanscertain about the future availability of oiland gas. Many of them admit that theydo not have any precise informationabout the quantities of fossil fuels re-maining in the world. If price is a measureof scarcity, it can be observed that realprices for oil have remained constantover a long period. Price rises occurred

only twice – the first time during the oilcrisis in 1973, when prices increasednot because of an actual scarcity of oiland gas but because of the Yom Kippurwar, i.e. for political reasons. The secondprice increase occurred during the lastcouple of years in the wake of the U.S.invasion of Iraq – on political groundsonce again, in other words. Thus the oilprice so far has not reflected anygenuine scarcity. Furthermore, the much-discussed reserves-to-production ratiosare not very meaningful from an eco-nomist’s perspective if you want toknow when reserves will be depleted,says Klepper. When scarcity increasesand prices rise, consumption goesdown, making known resources lastlonger. Overall, you get a very diversepicture if you look at the predictions ofenergy specialists. The peak oil com-

munity, for example, claims that oil pro-duction will decline and oil resourceswill be depleted within the next 40-50years. Extreme optimists, in contrast,forecast rising oil production until 2060,while the majority believes that we willhave production increases until 2020 or2030 and a slow downward trend fromthen on.

The key factor in these predictions isthat they all – with the exception of thepeak oil community – include not onlythe known reserves of oil and gas, butalso those reserves that are not yeteconomically usable but may be usableat higher prices in the future – the so-called resources. What we do alreadyknow is that roughly 300 gigatons ofcarbon were consumed worldwide from1860 to 1998, of which 50 percent wascoal, 35 percent was oil, and the restwas gas. Relative to known reservesplus resources, this equals approximately35 percent in the case of oil, 15 percent

Panel Discussion – Are We Running out of Gas?Professor Gernot KlepperDirector, The Kiel Institute for the World Economy, Kiel, Germany

ProfessorGernot Klepper

38

39

in the case of gas, and only 3 percent inthe case of coal. Total known fossilenergy reserves, on the other hand,amount to 1,000 gigatons, with resourcesto almost 6,000 gigatons. If we thenadd unconventional energy resourceslike methane hydrates, we are talkingabout a total of something between9,000 and 17,000 gigatons of carbon. If this number is compared with anannual consumption of about 6.5 giga-tons today, we can conclude that thereis plenty of fossil energy left, evenconsidering that worldwide energyconsumption will increase significantlydue to rising demand from countries likeChina and India in particular.

However, taking into consideration CO2

emissions from burning fossil fuels, theabundance of oil, gas and coal cannotbe the decisive criterion in planning ourfuture energy consumption. Even if there appears to be enoughenergy available, we cannot continue to

use it as in the past. We may not runout of gas at gas stations, but will havetoo much gas in the air and risk losingsome of the earth's life supportsystems.

Looking at CO2 emissions per unit ofGDP as an indicator of how efficientlyfossil fuels are turned into energy ser-vices, it can be observed that China has been making tremendous progresssince the 1970s, though it started out at a very inefficient level. Compared toEuropean standards, for example, thereare still huge improvements possible.Similarly, the USA has made only littleprogress in terms of energy efficiencyand could improve significantly. Russiais also still quite inefficient, so there is a huge amount of potential for increas-ing energy efficiency worldwide andpreventing CO2 emissions goingbeyond the 500 ppm CO2 equivalent –which is the rather optimistic aim for2050.

Maintaining this level of greenhouse gasconcentrations in the atmosphere wouldin turn limit CO2 emissions drastically.Depending on the growth of emissionsover the next decade, emissions in 2050must not exceed 50 percent of today’semissions. And if the projected emissiongrowth in the next 5-10 years continues,the reduction will need to be even moresignificant.

For charts refer to www.draeger-stiftung.de.

40

Klaus Lackner, Director of the GerryLenfest Center of Sustainable Energy at the Columbia University in New Yorkstarted by pointing out that the worldwill need a lot more energy in the futurethan it did in the past. Even though heclaimed that predictions are nearly im-possible in this business, some normativescenarios can be calculated.

First of all it is essential to figure outwhether we will be able over the next100 years to afford to maintain thestandard of living worldwide that wetake for granted in the developed worldtoday. If we take U.S. or Canadianaverage energy consumption as a basis,this could mean an increase in globalenergy consumption by a factor of ten.On the other hand, we have to take con-ventional wisdom into consideration,which suggests that growth in energyconsumption will in fact be lower thanksto the improved energy efficiency of oureconomies. Typically, we have a trackrecord of GDP outpacing energy con-sumption by between one and two per-centage points a year. If this track recordis maintained – and the predictions arebased on these figures – we are talkingabout a factor four rather than a factorten increase in energy consumption.The uncertainty as to whether the diffe-rence between GDP growth and energyconsumption growth amounts to one ortwo percentage points is, of course, avery significant factor, meaning thatprecise predictions are hard to make.

With regard to future carbon emissionsand climate change Lackner stressedthat it is not so much a problem ofkeeping emission flows constant, but amatter of stocks. It is a question of howmuch carbon we can afford to releaseinto the environment. Unfortunately,when we talk about stopping climatechange, we are ultimately saying that wewill have to stop CO2 emissions com-pletely, he said. Once the level set forfuture CO2 emissions is reached, nomatter what level that may be, the oceanuptake at a constant level of CO2 in theair will drop very rapidly, and it will notbe long before we are forced to set 30percent of current emissions worldwideas the maximum limit in order to main-tain the CO2 concentration in the air ata constant level. Once the world hasreached 30 percent of today’s emissionsand the per capita allowance applies toeverybody on earth, we will end up withthree percent of the United States’ percapita emissions today. This dramaticreduction of CO2 emissions cannot beachieved by switching from coal tonatural gas; it is a question of how tostop CO2 emissions almost completely.

However, Lackner argued, the worlddoes have options, making the pointthat scales matter! If you have ten billionpeople consuming energy at the ratewe do today, you are talking about re-quiring an energy production amountingto tens or even hundreds of terawatts inthe future – compared to 13-14 tera-watts today. There are at this point only

three major ‘players’ in the game (fossilfuels, nuclear energy and solar energy)capable of producing energy on thatscale, plus myriads of smaller playerswho can add to this but most likely willnever be more than niche players. Ofcourse, there will be efficiency gainswhich will greatly help though they willnot solve the problem on their own.

Since 85 percent of all the commercialenergy is generated using fossil fuels, it seems impossible in the short term to do without oil, gas and coal.Nonetheless a decision has to be madeas to what to do about this problem.Even if we do not know precisely howmuch oil and gas we will have left in thefuture, it is a fact that we have so muchcoal, tar and shale oil that we do notneed to worry much about actual quan-

Panel Discussion – Are We Running out of Gas?Professor Klaus S. LacknerDirector, Gerry Lenfest Center of Sustainable Energy; Chair, Dept. of Earth and EnvironmentalEngineering Center, Columbia University, New York, NY, USA

ProfessorKlaus S. Lackner

tities of oil and gas, Lackner said.Technically, the different forms of hydro-carbons are fungible. Coal, oil and gascan all be converted into liquid fuels.The costs of this liquefaction are com-petitive when a barrel of oil costs US$45 or more. If the world increased fromthree converter plants to 3,000 so as tocover the entire global energy demand,prices would come down by at leastanother factor of two. After all, there isplenty of fossil energy available. It maywell be that the fossil era runs out longbefore we run out of fossil fuels, Lackneragreed, but added that today’s worldconsumes a lot more stones than thestone age ever did. In other words, eventhough the world may well not consideritself a fossil energy economy in thefuture, far more fossil energy than is con-sumed today may be used tomorrow.Carbon capture therefore seems to beone of the options we should keep inmind.

The second big option is nuclear energy,but there are four problems to deal withhere. First, the costs right now are toohigh, so nuclear power is not competitive.Carbon capture and storage is cheaper.Second, safety is an issue. There havebeen two very serious incidents in theworld over the last 30 years, and if wehad one hundred times as many nuclearreactors, we better not have one hund-red times as many accidents. The thirdissue is waste – something that can andneeds to be resolved. And finally, thereis the proliferation challenge which isthe most severe problem of all, andultimately needs global political agree-ment and understanding. This problemis made particularly difficult by the factthat uranium supplies may not besufficient to meet future demands,which means that over the one hundred

year time scale nuclear energy pro-ducers will very likely start usingbreeding technologies in order to keeptheir reactors working; if this happens,the danger of proliferation becomeseven greater.

The third big player is solar energy.However, Lackner argues, solar energytoday is far too expensive, and beingprimary electricity is intermittent. Itcannot be stored yet and has to betransformed into a form of energy thatcan actually be used. In order to be areal competitor, the costs of solarenergy have fall below a penny perkilowatt hour. In other words, priceshave to come down by a factor of 30 –considering what mass manufacturinghas done in the computer sciences,however, a price cut of this scale cancertainly be achieved.

Lackner concluded by saying that allthree options look plausible. All threeare possible, yet none of the three hasreally been developed to work on thenecessary scale. On the other hand, hesaid, if anyone of the three doessucceed, there will not be an energy

crisis in the 21st century. If none of thethree succeeds, we will have an energycrisis regardless of how successful weare with wind or biomass becausethese players will never be largeenough to actually solve the problem.

According to Klaus Lackner the focushas to be on these three options. Hepersonally is working on carbon captureand storage. Carbon can be injectedunderground. It is already possible tocollect CO2 from power plants and itwill be possible in the foreseeablefuture to extract CO2 from the atmos-phere – he together with colleagues isworking on this technology. It will bepossible to make fossil fuels carbon-neutral, though this requires politicalwill and new technologies. State of theart technology – if applied systematically– would satisfy the world’s need forwater and food, but it would faildramatically in the energy sector,because it would create an environ-mental catastrophe. To produce sustain-able, environmentally safe and eco-nomically efficient energy we needscience and technology and innovativeengineering to make it work.

“The oil age may end long before we run out of oil. Fossil

energy may well last for further 100 to 200 years, but with

today’s fuel technology we will not be able to sustain a future

world population of 10 billion”.

41

Vijay Vaitheeswaran, Author and GlobalCorrespondent of The Economist, dis-cussed options and actions for reshapingthe world of energy, starting with aquestion asked 60 years ago by MahatmaGandhi: "How many planets will it take?".Gandhi was referring at the time to aparticular dilemma of that age whenBritain was the dominant economicpower and India the potential risinggiant. How many planets will it take, heasked, if India follows the path of in-dustrialism that Britain has taken andthat has consumed half the planet’sresources? And how many planets willit take if China follows the Americanmodel of development? If every Chinesein the aspiring middle classes, of whichthere are hundreds of millions, buys a“gas guzzler” and sets off on the samepath of urbanization, motorization andindustrialization as North America. Howmany planets' worth of resources willthis take?

The world is indeed not constrained interms of energy per se, agreed Vaithees-waran, but it is the consequences ofour energy use that are worrying. Thefundamental principles of our currentenergy system are unsustainable, andthey are unsustainable for three reasons:

First, we of course talk about the linkagebetween energy and the environmentand the needlessly inefficient and dirtyways that we use energy today, therebyalso contributing to local pollution prob-lems. This is particularly true of manydeveloping cities, and China has manyof the world’s dirtiest cities. However, itis not just the air pollution that we arefamiliar with, or the climate question.There are environmental problems thatdo not even appear to be related toenergy and can be obliterated by shift-ing to a more sustainable energy para-digm. Water, for example: Many peopletalk about water being the next worldcrisis, and people sometimes even arguethat the next world war will break outbecause of water. Yet 70 percent of theearth is covered in water. Although it isnot what we want it to be – it is saltwater – we know how to desalinate andmove water. Fundamentally, this is aquestion of political will, and that is adifferent nature of problem. However,desalination is very energy-intensive,and if the energy used is dirty energythen all we are doing is shoveling prob-lems from one side of the ledger toanother. Similarly, other environmentalproblems that appear to have nothing

to do with energy, like recycling, for example, or dealing with chemical waste,would become much more manageableif we were to gain access to cheap andclean energy. In other words, getting

energy right is the essential enabler ofsustainability, Vaitheeswaran argued onthe environmental front – to put it theother way around, unless we get it rightwe have no hope of having a sustain-able future.

The second link is energy and poverty.According to the estimates of the Inter-national Energy Agency, 1.6 billionpeople do not have access to modernforms of energy, be they electricity orother forms of clean-burning energy.Most of these unfortunates live in sub-Saharan Africa, southern Asia, or partsof Latin America. They are usually womenand girls, and they typically walk miles aday to fetch agricultural residue, cow

Panel Discussion – Are We Running out of Gas?Vijay VaitheeswaranAuthor and Global Correspondent, The Economist, New York, NY, USA

Vijay Vaitheeswaran

42

43

dung, and other really filthy, solid andinefficient forms of fuel to burn in amakeshift cooking stove in their huts.Often children are in the huts at thetime when this happens – according tothe WHO, the resulting smoke and in-door pollution, as well as various otherfactors, constitute one of the leadingpreventable causes of death in the worldbesides malnutrition. But when was thelast time you heard of a Live Aid con-cert to stamp out the cow dung fires inIndia, he asked. We need to think aboutan energy system that meets the needsof not only the world’s wealthiest, butalso of its most needy, and of its mostaspiring, the ones who are now makingtheir way from one side of the ledger tothe other: in Brazil, Russia, India, China,the so called BRIC countries.

The third link Vaitheeswaran talked aboutwas energy and geopolitics, agreeingthat it is undeniable that we will experi-ence geopolitical tension, particularly ifChina, India and other countries approachAfrican or Middle Eastern countries foroil with which the U.S. has existing geo-political alliances. Rightly or wrongly,this is clearly an area of potential con-flict in the future, and is going to happen.

These three examples that have nothingto do with depletion or scarcity, showwhy Vaitheeswaran thinks that the exist-ing inefficient approach to using pri-marily fossil fuels is not sustainable. Heshared Klaus Lackner’s view, however,that fossil fuels can be part of a sustain-able future if used in a carbon-constrainedfashion, and that many technologies canbe part of that solution. Nevertheless,he believes that the current paradigm isnot sustainable. But to add an elementof optimism and talk about solutions,there are some reasons why there ismore hope in the energy world today.Today we are entering a new era ofenergy innovation, for three reasons.The first reason is the trend towards aliberalization of markets we have ob-served over the last couple of decades.Why does that matter? Competitivemarkets are better than the alternatives,because over time they lead to a moreefficient outcome, and liberalization isthe essential enabler of innovation inenergy. And so far, energy is the leastinnovative big business on earth.

If you look at the U.S. electricity industry,it is in many ways a vast enterprise. Interms of revenues, it is bigger than theU.S. long distance and cellular telephone

businesses put together. In terms ofassets it is even bigger. According tothe estimates of the industry’s ownexperts, they have for decades beenreinvesting less than one half a percentof revenues into research and develop-ment. Any other enterprise, be it bio-technology or IT or computing or thelike, reinvests as much as five percent,and sometimes even ten percent of itsturnover. In the energy industry, how-ever, we have seen a “business asusual” mindset that has actually beenanti-innovation. Liberalization, if com-bined with certain other trends, willchange that paradigm and enable thenext innovations in clean energy.

The second mega trend that gives riseto hope is the emergence of a new kindof environmentalism which first and

foremost is a market-minded environ-mentalism. We are seeing an embracingof sensible policies rather than the oldparadigm of left versus right, of environ-mentalism versus business. We areseeing market-based instruments, bethey carbon tax or other kinds of pollutiontaxes, which provide incentives in themarket. It all starts with carbon trading,and with the European trading system.A growing level of environmentalawareness is also evident in developingcountries like China, India and Brazil.People are rich enough now in manyparts of the developing world, particu-larly in urban clusters, to be able toafford to look beyond their next bowl of rice, Vaitheeswaran said.

The third mega trend is technology. Theworld is on course for a clean techno-logy revolution in energy. We are seeingthe arrival of clean carbon technologiesand the incipient introduction of techno-logy policies around the world. This isnot a done deal, but this third great waveof technology really has the potential tochange the paradigm.

So where is this leading? he asked.With these three mega trends combinedwe have the chance to set the world ona much more sustainable energy foot-ing. The future development is not in-evitable; it depends on choices, choicesthat are made in this room, choices thatpolicymakers in the rich world as wellas in the developing world make aboutthe direction of those three mega trendoutlines. Technology sometimes emerges

spontaneously, innovation often happensin the marketplace. But innovations donot necessarily always go in the mostsustainable direction, unless publicpolicy enters the game. In closing, Vaitheeswaran answeredGandhi's question by saying: Of coursewe have only one planet, and we mustmeet the legitimate needs of the deve-loped world, as well as the legitimateaspirations of the developing world,with the resources that are available,including the environmental strains thatare implied by those resources. But weare not resource–constrained, neither interms of primary energy nor in theresource that matters most of all, whichis human ingenuity.

44

Climate Change: Consequences forOceans and People

Frank Schweikert started his speechwith a presentation of his film ‘Sound of the Sea’:

What you can hear now, he explained,is the sound of the seas. These are re-cordings from a coral reef on the Sey-chelles, made audible using underwatermicrophones. The ocean is by no meansa silent world, even though it may oftenseem quiet, uncanny and, to a largeextent, unexplored, concealed as it isunder the surface of the sea.

As we all know, our planet is not calledOcean, but Earth. Nevertheless, theseas are by far the largest habitat of theplanet, covering about 70 percent of theearth’s surface. More than 99 percentof all life on earth is water-based. Evenso, deep sea exploration is far from com-pleted. At unknown depths life formsmay exist that we cannot even begin toimagine; indeed, we are only just start-ing to understand the effects of oceancurrents, salinity, and tides on land-dwellers and global climate. Only about0.1 percent of the entire mass of oceanwaters can be regarded as well-investi-gated.

IntroductionHuman interest in the exploitation ofmarine resources is rapidly increasing,yet education and knowledge about theworld's largest and most important

habitat lag behind. The long-term con-sequences of human interference arestill far from clear. Considering that theseas are extremely important for humansystems like food and nutrition, and toglobal climate in general, the questionof the relationship between humanity andthe oceans is more important than ever.What exactly are the changes we canexpect in marine environments, and whatimplications will they have for humans?And how does human behavior impactupon the complex habitat of the oceans?

The sea as recreation and livingspaceWe all know that the oceans are vital asrecreational and tourist areas. However,the number of people permanently livingon or near the coasts is already highand constantly increasing, due in part to

climate-change-induced desertificationprocesses inland. Currently almost halfthe world’s population lives within 100km of the coast. Seaports and coastalcities have always been attractive forhuman settlement, and the populationof coastal mega cities is rapidly increas-ing. 8 of the 10 largest cities worldwideare located directly on the coast.UNESCO estimates state that about 6.3 billion people will be living in coastalareas by 2025, marginally less than thenumber of people alive today. With agrowing human population in coastalareas, the pressure on marine eco-systems will increase as a result of pol-lution, industrial and municipal waste,and because of the sheer number ofinhabitants and tourists. Infrastructureand urban management have to adaptto ever-changing environmental de-

Monday, October 9, 2006 – Dinner SpeechFrank SchweikertBiologist and Journalist; ALDEBARAN Marine Research & Broadcast

Frank Schweikert

mands. The more people that settle onthe coasts and work in marine industries,the greater the strain on the immediatesurroundings. Coastal erosion, decliningwater quality, increased flood risks, andthe loss of swamps and mangroveforests and of biodiversity in the seaand on land are possible effects. Forexample, an average increase in watertemperatures by just two degrees wouldhave devastating consequences forcoral reefs.

The sea as food sourceFor more than one billion people, thesea is the only source of protein andthus essential to their survival.According to an FAO (Food & Agricul-ture Organization of the UN) survey, thedemand for fish is increasing even morerapidly than the exploding world popu-

lation curve. Due to the ever-increasingdemands on fisheries, there is a greatneed for new catch technologies, depthand fish monitoring systems, while realconservation of fish as a vital resourceis almost impossible given the plethoraof international industries. By the timethe effects of fishing have been re-searched and translated into legislation,it is usually too late. Almost half of foodfish stocks have been overfished orhave simply disappeared.

Aquacultures are supposed to be cheapreplacements, yet they bring moredamage than benefits in the concernedregions. Nevertheless, the World Bankhas been making exorbitant fundsavailable to finance shrimp farms in ahighly sensitive coastal region of Belize.UNESCO states that fish farms are not

an appropriate substitution for naturalfishery. Coast populations are just start-ing to understand that the ocean is notan inexhaustible resource.

Ultraviolet radiation has increased dueto the thinning of the ozone layer, andhas negative effects on plankton, andespecially on fish larvae and eggs. Thequantity and quality of sea food sourcessuffer from these impacts. Problemsgenerated as a result of by-catch andother pressures from human activitiessuch as industrial shipping and fisheryaffect not only fish stocks, but also amultiplicity of species ranging fromminute plankton to marine mammals.

The sea as biological resourceLike the rainforests, the oceans presentan abundance of biodiversity, in parti-

45

46

47

cular in coral reefs and deep ocean.Only a few years ago, scientists dis-covered coral reefs not only in tropicalbut also in cold waters. At the momentscientists are working on projects todevelop cancer drugs based on chemicalprotection mechanisms from underwaterspecies such as cold-water spongesand sea squirts.

Global regulation instruments are notapplied sufficiently, and the fragilebalance of economy and conservation ishard to maintain. The question of humanadaptation to the changing demands ofmarine environment and climate changecircumstances will remain explosive infuture. Many models show that theeffects of climate change on humanswill have wide and mainly negativeeffects. Expected changes due to cli-mate change or variations include anincrease in sea surface temperature, anincrease in mean sea level, a decreasein polar ice cover, as well as variousunpredictable changes in salinity and

layering of water, waves and oceancirculation, as outlined in the IPCCreport for 2007.

According to the latest IPCC report, thereduction in the quality and quantity ofbiological resources from the ocean ishaving immediate effects on human so-ciety, especially as a large number ofcoast-dwellers depend on marine ser-vices like fishing. Humans are record-breaking collectors of data and infor-mation, and we can afford high-profileresearch projects – yet we fail in theevaluation of this data and in communi-cating the results to people worldwidewho should be translating these researchresults into actions. Still, there are indi-vidual projects that help support climateand marine environments.

For example, the renaissance of sailingships: modern freighters can be towedacross the seas using huge kites, savingup to 50 percent in fuel costs. If onlyhalf our commercial ships were fitted

with this towing system, pollution equi-valent to total US emissions could beprevented each year. Tests were carriedout by SkySails technology and tookplace on a 55 meter research vessel a month ago in the Baltic Sea.

In future, human society must learn tobridge the gap between “knowledgeabout the sea” and action. Reliablecultural forms of adequate contact withthe ocean must be reactivated and anew global consciousness created. Thisshould be established quickly, so as not

to bite the hand that feeds us merelybecause we do not know enough yetabout the seas and their immenseimportance for our survival on thisplanet. The oceans will only have afuture if people learn to overcome theinconsistencies of resource exploitationand environmental conservation.

48

Chair:Dr. Fridtjof Unander, Vice President, Enova SF, Trondheim,Norway; Former Acting Head, EnergyTechnology Policy Division, InternationalEnergy Agency, Paris, France

Speakers:Professor emeritus Joachim Luther,former Director, Fraunhofer Institute for Solar Energy Systems, Freiburg,GermanyDr. Gregor Czisch, Researcher, Institute for ElectricalEnergy Technology/Rational EnergyConversion, University of Kassel,Kassel, GermanyAndreas Wagner, Manager, Technology ExternalPrograms Europe, GE Energy,Salzbergen, GermanyDr. Bob van der Zwaan, Senior Scientist, Energy ResearchCentre of the Netherlands (ECN),Amsterdam, The Netherlands

The discussions in Working Group 1 on‘Future Energy Systems’ revolved aroundthe questions of how we can achieve apost-fossil energy supply and which rolealternative energies will play, as well asdealing with energy efficiency and thecost of energy. There were four presen-tations: one on solar energy systems;one on future energy systems based on

wind energy, solar thermal power andhydro storage; one on alternative ener-gies and energy security; and, finally,one on the future prospects for nuclearenergy.

The main problems underlying any dis-cussion of future global energy systemsconcern the protection of our naturallife support systems, the eradication ofenergy poverty in developing countries,the promotion of peace by reducinggeopolitical conflicts induced by de-pendencies upon regionally concen-trated energy reserves, and of courseboundary conditions like reasonableenergy costs, energy security andpublic acceptance.

The main findings of our group in thisarea were the following: – There are no limitations to making

the global energy system sustainable

in terms of restricted physical potentials of energy sources (fossil, nuclear, renewable);

– Limitations arise in connection with the problems of sinks/pollution and risks;

– Sustainability potentials have to be analyzed (biomass, in particular, was discussed in this respect, also with regard to potential conflicts between growing crops for fuel or for nutrition);

– Significant and sufficient cost reductions are feasible as a result of upcoming energy technologies, especially with regard to renewables;

– The electricity grids have to be optimized, i.e. interconnectors, long-range transport of, for example, solar electricity from northern Africa, bi-directional transport from low-voltage to high-voltage lines, smart grids, and load management – something that appears to be very

Tuesday, October 10, 2006 – Summaries of the Working Group Discussionsby Professor emeritus Joachim Luther

Future Energy Systems

Reports from the Working Groups

(For charts and/or notes of the working group speakers please also refer to www.draeger-stiftung.de)

important when it comes to implementing fluctuating or non-controllable energy inputs;

– On a long-term basis, storage systems for fluctuating renewables are important (using the grid as a system of virtual storage);

– Targeted industrial activities are crucial for mass production, cost reductions and energy efficiency; the new energy technologies will come to the market and into use through industry and not through R&D activitiesalone. In other words, we have to get industry on board;

– Another important question that remained unresolved in our discussionconcerned fuel for transport – shouldthis be fossil, bio fuels, electricity andbatteries, or hydrogen?

Finally, we had a very balanced presen-tation and discussion about nuclearenergy, leading us to conclude that it isincreasingly likely that the lifetime ofmost existing nuclear power plants willhave to be extended, in Europe andelsewhere. Let me summarize the keyaspects of this discussion:– The incorporation of externalities into

energy prices would reinforce the competitiveness of nuclear energy.

– Enhancing security to protect againstpotential terrorist attacks on nuclear power plants and spent fuel cooling ponds increases costs.

– The reprocessing and recycling of plutonium is more expensive than the direct disposal of spent fuel.

– The economics of reprocessing remains a relevant subject of study, especially now that some countries face major decisions regarding the future management of spent nuclear fuel.

With regard to radioactive waste, nuclearproliferation, and reactor accidents wehave to admit that the problems relatedto these three intrinsic nuclear draw-backs are real, significant, and will neverbe solved entirely. Nonetheless, theyare dynamic: they have evolved sub-

stantially over the past decades, andmore progress can be made. The wasteproblem can be mitigated, for example,by implementing lifetime reduction(transmutation) and regional disposaloptions (IMWRs). The proliferationproblem can be reduced by introducingnew reactor types (Gen-IV) and expand-ing the mandate of supranational means(IAEA). Last but not least, accident riskscan be cut by incorporating passivesafety features and improving andcoordinating reactor operation. It wasvery clear that nuclear energy requiresaction and control on the part of thegovernment, and will not enter themarket by market forces alone.

49

Chair:Dr. Johannes Linn, Executive Director, Wolfensohn Centerfor Development, The BrookingsInstitution, Washington, D.C., USA

Speakers:Professor Anders Levermann,Potsdam Institute for Climate Research,Potsdam, GermanyProfessor Peter Höppe, Head of the Geo Risks Research,Münchener Rückversicherungs-Gesellschaft, Munich, GermanyProfessor Claudia Kemfert, Head, Department Energy,Transportation, Environment, German Institute for EconomicResearch (DIW), Berlin, GermanyDr. Alexander Golub, Senior Economist, EnvironmentalDefense, Washington, D.C., USA

IntroductionThe working group focused on thefollowing questions: what is the currentand expected future state of the globalclimate; to what extent is energy con-sumption responsible for global warming;where are the scientific political debatesheaded, and what are the policies andinstitutions that can influence humanbehavior for long-term sustainableenergy use and climate conditions.

The session started with presentationsby four outstanding experts, who com-bined skills and experience in the fieldsof science, economics, politics and law.The wide-ranging discussions revealedremarkable agreement among the par-ticipants (with one notable exception)on the key challenges and risks currentlyfacing the global community at the inter-face between energy use and climatechange. Five main issues were dis-cussed.

Issue # 1: Global warming is clearlyon the upswing with serious environ-mental, economic and social costs.

Drs. Levermann and Höppe presentedscientific evidence that there is a globalwarming trend and noted that the year2005 was the warmest year in 140 yearsof global temperature record-keeping.They also demonstrated that there areserious risks associated with this trend:

– the melting of ice sheets in the Arcticand Greenland is causing sea levels to rise at rates more rapid than pro-jected even in the recent past;

– the increased incidence of severe weather, reflected for example in 2002 and 2005 in unusual floods andin 2004 and 2005 in a record numberof severe hurricanes, including in previously hurricane-free areas, has resulted in serious damage to humanlife, infrastructure and the environ-ment;

– extreme heat waves, unlikely to fall within the normal range of probable occurrence, have recently led to many deaths.

The working group discussion concludedthat the scientific community agrees onthese trends; that they present seriousrisks not only in the distant future, but

Summary of Working Group 2by Johannes Linn and Cornelius Adebahr

Energy Policies: Implications for Global Climate and Future Wealth

50

already today; that clear limits need tobe set for global warming, and that theEU ceiling of a further permissible in-crease in global mean temperature byno more than two degrees Celsius is, if anything, too high; and that effectiveaction needs to be taken urgently andearly on to assure that the ceiling is notbreached.

Issue # 2: There is a direct causalchain between energy use and CO2

emissions and between CO2

emissions and global warming.

Dr. Levermann informed the workinggroup that this causal chain had alreadybeen analyzed by the Swedish scientistArhenius in 1886. Ironically, he tried todemonstrate that this was beneficial toScandinavia because it would raisemean temperatures in this cold region.More importantly, the group was in-formed that CO2 emissions tend to risemore rapidly than energy consumption,requiring a more drastic reduction inthe rate of energy consumption growthto achieve any targeted reduction in thegrowth of emissions. Furthermore, giventhe delayed effects of past emissions,global warming would continue for sometime even if greenhouse gas emissionswere stopped entirely today.A voice of dissent: contrary to the gen-eral agreement in the working group onissues # 1 and # 2, a representative of

the German Coal Association assertedthat (a) while global warming is happen-ing, it is not clear from the scientificevidence that there is a link betweensevere weather and global warming, noreven that there is an increase in severeweather; and (b) the scientific evidencedoes not clearly establish that globalwarming is predominantly due to CO2

emissions. In response, panel membersuniformly and strongly argued that whilethe links and causalities are complexand to some extent uncertain, a vastpreponderance of the evidence certainlypoints towards a clear causal chain.

Issue # 3: Policy instruments for re-ducing conventional energy use, CO2

emissions and, therefore, globalwarming exist and should beimplemented.

There was agreement in the workinggroup that policy instruments exist toachieve necessary changes in energyuse and emissions, even though adifferent combination of instruments(energy efficiency, renewable energy,etc.) may be appropriate in differentcountries. Drs. Kemfert and Golubagreed that increased research and

51

52

development (R&D) are critical, sincecurrent technology is not enough toaddress the global warming challenge.Currently there is too little R&D, es-pecially in Europe, and insufficientpolicy focus on how to address this.According to Dr. Golub’s research,emissions caps and trading are thepreferred instruments (better than taxes)since they encourage innovation. Theexperience of the EU with its emissionstrading program is useful, although therehave been problems with its design andimplementation as regards lack of trans-parency, lack of auctions and over-allocation of permits. There was generalagreement that action needed to betaken urgently, since any impacts couldbe delayed by up to 30 years.

Issue # 4: The costs of limiting thegrowth in energy use and controllinggreenhouse gas emissions are sig-nificantly lower than the costs ofglobal warming.

Any estimation of the costs and benefitsin this area is subject to severe analyticaland data constraints. However, accordingto estimates reported by Dr. Kempfert,the damage done by unchecked globalwarming will by 2100 incur costs equiv-alent to about eight percent of globalGDP, while the costs of controllinggreenhouse gas emissions will only bein the order of two to three percent ofGDP, or even as little as one percentthanks to possible future technicalinnovations. Dr. Höppe noted that theinsurance industry has registered asignificant increase in natural disastersand a related rise in insurance claims,leading in turn to higher insurance pre-miums. Dr. Golub observed that the ex-

post costs of environmental controlshave generally been found to be lessthan the estimated ex–ante costs; thatpast control measures have not had anegative impact on economic growth;and that the ancillary benefits of environ-mental protection measures (e.g. re-ductions in pollution and related im-provements in health) tend to beneglected or underestimated.

Issue # 5: Despite widespread andgrowing scientific agreement onissues # 1-4, there is not yet thepolitical will among key players totake the urgent actions necessary toavert global warming and the relatedenvironmental, economic and socialcosts.

Participants noted that there are con-flicting interests in the global and nationalsocieties. In particular, the costs ofcontrol tend to be concentrated in theshort term and affect certain countriesand interest groups within countries,while the costs of not imposing limitsoccur in the long term and affect othercountries and groups. Moreover, politi-cians as a rule tend to have short timehorizons and hence neglect the long-term implications of their actions or lackthereof. Information and public outreachcampaigns are essential, and the en-gagement of the private sector (such asthe insurance industry) is very helpful.Dramatic crises and disasters, such asHurricane Katrina, while highly regret-table and to be avoided, may actually benecessary to swing public opinion andchange political behavior. The UnitedStates is a key player – without pro-gress in US policies, not much is likelyto be achieved worldwide in the fore-

seeable future. Fortunately, there aresome signs of an improving politicalclimate as a result of the public outcryafter Katrina and the path-breakingactions recently taken by the State ofCalifornia. Another key player is China,but the working group concluded thatunfortunately it was not yet clear whatmight be done to entice Chine to domore to limit the rapid growth in itsenergy use and in greenhouse gasemissions.

In sum, there was broad consensuswithin the working group regarding thekey linkages and impacts of energy useand greenhouse gas emissions, andalso regarding the feasibility of andpressing need for action to controlthem, but there was no clarity on how to move forward to achieve the urgentglobal climate agenda in the world’spolitical arena.

54

Chair:Dr. Udo Brockmeier, Chairman of the Board, EnBWKraftwerke AG, Stuttgart, Germany

Speakers:Lord Ronald Oxburgh, House of Lords, Westminster; formerChairman of Shell Transport andTrading plc, London, United KingdomDr. Wolfgang Eichhammer, Deputy Head, Department of EnergyTechniques and Energy Policies, Fraunhofer Institute for Systems andInnovation Research, Karlsruhe,GermanyGary V. Litman, Vice President, Europe & Eurasia, U.S.Chamber of Commerce, Washington,D.C., USADr. V. Sumantran, former Executive Director and Head of R&D, Tata Motors Ltd; StrategicConsultant, Mumbai, IndiaDr. Hans Jürgen Wernicke, Member of the Executive Board and Chief Operating Officer, Süd-Chemie Group, Munich, Germany

Working Group 3 focused on ‘Techno-logical Challenges and Options forFuture Energy Supply’; the discussionsmainly dealt with different technologies,future options, long-term trends and thequestion of how to improve technology

transfer. We addressed our topic in thewake of the Berlin declaration of thefirst German conference on climatechange that took place in Berlin onSeptember 20 and 21, 2006:

"It is already accepted by the vastmajority of climate scientists that humanactivities, through greenhouse gasemissions from burning fossil fuels andland use changes, are the main driver ofthe climate change that is now takingplace. In this regard it can no longer beprevented. What is now important, how-ever, is to reduce as far as we can therisk of ‘dangerous climate change’, i.e.an increase in temperature that causesserious threats to ecosystems andhuman society. We must do all we canto keep the global average temperaturerise from pre-industrial times below 2°C.We recognize the challenge this re-presents. To maintain this 2°C limit, theconcentration of CO2 and other green-house gases in the atmosphere wouldneed to be stabilized at a maximum of450 ppm CO2 equivalent, and probablybelow this value."

Let me present one highlight that sup-ported our discussion of the challengeswe are facing, taken from Ron Oxburgh’spresentation. His figures show theenergy demand per head and per yearin 2002, distinguishing between de-veloped, emerging, developing and

poorest countries. Of course, by far thehighest numbers are to be found in thedeveloped world. Consequently, CO2

emissions are also overwhelminglycaused by the developed industrialcountries. If we take a look at the pre-dictions for the year 2050, which are

based on very conservative assumptions,one thing becomes abundantly clear:due to the increase in the world'spopulation to approx. nine billion by2050, and because of the growth inworldwide per capita consumption, theper capita demand of the emergingcountries (some 1.2 billion people) willreach a level of almost two thirds, whilethat of the developing countries (some4.5 billion people) will reach a level ofalmost half of the industrial countries’demand today.

Summary of Working Group 3by Dr. Udo Brockmeier

Technological Challenges and Options for Future Energy Supply

and developing countries. Researchand development, technology transferand an energy policy that systematicallyallocates economic value to environ-mental resources will indeed becomethe key drivers in climate changelitigation. Finally, and this was one ofthe most important points made duringour working group discussions, wehave to be aware of the fact that thedeveloping world has different priorities;it will be a major challenge to addressthis issue, particularly on the part of theindustrial countries, which in fact arerecognized as being responsible for thepresent level of CO2 concentration inthe atmosphere.

55

From this, it is obvious that the industrialcountries have to bear the greatest re-sponsibility with regard to CO2 reduc-tion. For these countries, the challengewill be to reduce carbon emissions by70-80 percent by 2050. Of course, wereviewed the potential offered by differenttechnologies that are available andfeasible from today’s perspective. Ourconclusion was that there is no singlemeasure capable of solving the problem,and that the only way to achieve thisgoal is to implement a conglomerate ofmeasures based on short- and medium-term technological opportunities alongthe lines of the ‘seven wedges approach’that was brought to the table yesterdayby Dr. Franke:

– Energy efficiency gains achieved by doubling average fuel efficiency

– Ambitious implementation of renew- ables and new storage technologies

– Maintenance of the nuclear option– Decarbonization of the transport

sector– Ambitious program to implement

combined heat and power– Smart grids on a micro-generation

level, especially in the context of urban growth and planning

– Clean coal technologies, including carbon capture and storage

What does this mean for Germany? Itcould be helpful to look at the outcome

of yesterday’s and today’s consultationwithin the German government. Theroadmap for Germany that was definedyesterday aims to achieve a 20 percentreduction in energy consumption by theyear 2020, which also means a 20 per-cent reduction in CO2 emissions inGermany. German CO2 emissions todayare 860 million tons, 20 percent of thisbeing roughly 170 tons. That, interestinglyenough, is exactly the amount of CO2

that will be additionally emitted if wephase out nuclear energy in Germany,which means that German energy policywould achieve only a zero net result incarbon reduction by 2020. That is the truth of German energypolicy.

The key to successful implementation ofthese measures on a global level is tofind a way to make them part of theeconomic growth process in developed

56

Chair:Dr. Robert Watson, Chief Scientist, ESSD, The WorldBank; former Chairman of the Inter-governmental Panel of Climate Change(IPCC), Washington, D.C., USA

Speakers:Professor Gerhard Berz, Professor for Meteorology, University of Munich; Member of the Council, Munich Re Foundation, Munich,GermanyProfessor Graciela Chichilnisky,Director, Center for Risk Management,Columbia University, New York, NY, USAProfessor Nazli Choucri, Professor of Political Science andDirector, Global System for SustainableDevelopment (GSSD), MassachusettsInstitute of Technology (MIT),Cambridge, MA, USAProfessor Peter Eigen, Chairman of the Advisory Council,Transparency International; Chairman,Extractive Industries TransparencyInitiative Berlin, Germany

The presentations and discussions inWorking Group 4 focused on energysecurity and climate protection policiesin emerging markets, and also on thecosts and benefits of sustainable energypolicies for developing countries.

Gerhard Berz from Munich Re Founda-tion talked about the challenges for theinsurance industry. Graciela Chichilniskyfrom Columbia University in the USAtalked about how to move the policyframework forward. Nazli Choucri fromMIT talked about issues to do withadaptation, governments and know-ledge systems, and Peter Eigen fromTransparency International focusedprimarily on the negative correlationbetween resource richness and demo-cratic development – the resourcecurse.

In many respects, our group looked atsome very similar issues to group 2.And in many sections our conclusionsare, as we would hope, quite consistent.The risks associated with a changingand more variable climate – even with

abrupt changes in climate – are in-creasing (e.g. storms, floods, droughts),resulting in both economic losses andloss of human life, with 1.5 milliondeaths recorded over the last 25 years.Climate change is an additional risk indeveloping countries which are alreadystressed, as it adversely impacts onwater resources, agriculture, humanhealth, coastal zones and ecologicalsystems.

Developing countries and poor peopleare most vulnerable. It is clear thatdeveloping countries are alreadyseverely burdened by limited financialcapabilities, limited technological capa-bilities, limited institutional capabilities,and in some cases a lack of access toknowledge. Climate change, therefore,can only be viewed as an additionalstress factor. Climate change is going

Summary of Working Group 4by Dr. Robert Watson

The North-South Conflict – Energy Consumption and Sustainable Development

to put a strain on the agricultural sector,the water sector, human health, coastalzone management and ecosystems thatprovide essential services for sustain-able development. Climate-related risksare not insured in most developingcountries, though new opportunities arepotentially available for poor people inthese countries. Adaptation involvesintegrating climate considerations intosector and national economic planning.Governance and fighting corruption arecritical issues – all relevant stakeholdersmust be involved, from governments tothe private sector and civil society.

A level playing field is needed by theprivate sector to fight corrupt practicesin the energy sector, and civil societycan play a vital role in this. In addition,accountability is needed for all stake-holders, including the NGOs. Andfinally, knowledge is critical – both thedissemination of current informationand the generation of new knowledge,i.e. e-networking.

Energy is needed for poverty alleviationand economic growth, while reform ofthe energy sector is needed to attractprivate sector investments. Only 25

percent of people living in sub-SaharanAfrica have access to modern energytoday. Several million women and chil-dren die every year as a result of indoorair pollution caused by inefficient bio-mass in the home. The InternationalEnergy Agency has estimated that 165billion dollars per year are needed forelectricity in developing countries alone,a figure which increases by about threepercent a year. Today, because of poorenergy sector policies, only about 80billion dollars per year are attracted.The challenges, therefore, are to givepeople access to energy and to provide

57

58

energy for development. We have toenforce energy sector reform to attractthe private sector investment that isneeded for electricity production and

other forms of modern energy, whichalso means a transition to a low carboneconomy. This brings together both thedeveloped and the developing countriesthat have full ownership of the newpolicy framework.

There is an urgent need to find a way toaddress human-induced climate changeinvolving full ownership of both indus-trialized and developing countries. TheClean Development Mechanism of theKyoto Protocol is a financing vehiclethat can transfer billions of dollarsannually to developing countries andstimulate the development of low-carbontechnologies – but the Kyoto Protocolexpires in 2012. Consequently, a regu-latory framework offering long-termstability and equity (with differentiatedresponsibilities) and involving all majoremitters (including the USA, China andIndia) is needed to address climatechange, which in turn would stimulate

the development of appropriate domesticpolicies and investments in climate-friendly technologies by the privatesector. New financing instruments areneeded to complement the currentgrant mechanisms (e.g. the GEF) andcarbon financing mechanisms – newbusiness models are essential.

While a long-term framework is beingnegotiated there is a need to:– encourage bilateral and regional

initiatives – the EU can send a vital signal by extending the time-frame of its carbon trading system;

– improve energy efficiency and renewable energy technologies;

– ensure continuity of the carbon market beyond 2012;

– increase investment in public and private sector energy R&D (e.g. carbon capture and storage),

which has dropped precipitately in the last 10 or 15 years throughout Europe.

One issue that is attracting significant –and controversial – attention is bio-energy, which could decrease green-house gas concentrations if coupledwith carbon capture and storage.However, there are environmental, eco-nomic and rural development issues tobe taken into consideration. While someparticipants believe that biofuel – inparticular the second generation ofbiofuels – is the solution, and that thiscan also benefit rural development aswell as enhance energy security, othersbelieve that environmental and economicissues undermine its potential. If theprice of food is linked to the price ofenergy in the future, this will have seriousadverse effects on poverty.

59

60

How to Reach Global Accords onEnergy, Climate and DevelopmentPolicies: A Perspective from China

I. Some Basic Facts about China’sEnergy Sector(i) Production and Consumption: Chinais the world's second largest energyproducer and consumer and the largestcoal producer and consumer (about 32percent of the world total); China is thesecond largest electricity producer andconsumer, the second largest oil con-sumer and the third largest oil importer.

(ii) Energy Dynamics: In 2000, Chinaconsumed 1.3 billion tons of coal; in2006 coal consumption is expected tobe 2.4 billion tons. In the same period,installed electricity capacity increasedfrom 320 GW to 580 GW. Over the lasttwo years, China added more than 60

GW per year and this will continue forat least the next two years. In 2004alone, oil consumption increased byalmost 16 percent. Total energyconsumption increased by 15.3 percentin 2003, 16 percent in 2004 and almost10 percent in 2005.

(iii) Future Perspectives: Because of itslarge population, China’s per capitaenergy use is still below the worldaverage: in 2004 China’s per capitaconsumption was 7 percent of theaverage global per capita consumptionof oil, 6 percent of natural gas, and 94percent of coal; in total it is less thanhalf of the world average, and one tenthof that of the United States. With GDPgrowing at more than 10 percent inrecent years, the expectation forChina’s future energy demand is high.In 2004, for example, China producedfive million cars, with an expectedcapacity of 14 million by the end of2007.

(iv) Energy Mix: In 2004, coal accountedfor 67.7 percent of the country's totalenergy consumption, oil 27.7 percent.75 percent of electricity capacity wascoal-fired. SO2 and CO2 emissions arethe largest and second largest in theworld, respectively.

II. Why China Needs So Much Energy(1) Growth patterns and industrialstructure: recent major investments inheavy industry have been fueled by

large-scale infrastructural developmentfor economic growth and urbanization.Annual GDP growth has been 9.6percent on average for almost threedecades, while investment as a per-centage of GDP has typically beenmore than 40 percent and is close to 50 percent now. Heavy industry isconsidered to be the most importantindustry in the economy. In 1985, theshare of heavy industry accounted for55 percent of total industry. By 2004this share had increased to 68 percent.In 2003, investments in the automobile,aluminum, steel and cement industriesincreased by 78 percent, 88 percent, 96percent and 113 percent respectively. In2004, China produced 27 percent ofthe world’s total steel output, 30 per-cent of coal, and 50 percent of cement.The production of electricity, steel andcement accounted for 70 percent ofcoal consumption.

(2) Urbanization: Why does China needso many energy-intensive industries? By2020, China’s per-capita GDP isexpected to reach US$3,000, which willmake China a middle-income country.One key characteristic of a middle-income country is urbanization. Judgingby the urbanization process of othermiddle-income countries, about 300million people from China’s ruralregions will move to the cities. It isestimated that the per capita energyconsumption of Chinese urbanresidents is about three times higherthan that of the rural population.

Tuesday, October 10, 2006 – Closing SpeechesProfessor Bo Qiang LinDirector, Center of China Energy Economy, University of Xiamen, PR China

Professor Bo Qiang Lin

Investment in urban infrastructure andhousing will be needed to facilitate theurbanization process. This requiressteel and cement that can only beproduced domestically, because of thelarge quantities needed. These in-dustries are highly energy-intensive. In other words, for as long as China isfirmly resolved to develop into a middle-income country as fast as possible, thecontinued growth of energy-intensiveindustries seems to be inevitable.

(3) Slow market reforms: reforms ofenergy prices, including oil, electricityand coal, have not been completed, andmay not be in place in the near future.The energy industries in China aremainly state-owned monopolies, and theenergy issues are often socialized andpoliticized, leading to slow marketreforms. For example, the power marketreforms started in 2002 have made verylittle progress so far. Most energyinvestments still require governmentapproval, and the government sets

power tariffs, prices of oil products, and– to a certain degree – also coal prices.With a high concentration of state-owned enterprises (SOEs) and activelycontrolled energy prices, the stateessentially still monopolizes the energyindustry.

Why are energy market reforms inChina so slow compared to the reformsof other sectors? Energy, a producergood as well as a consumer good,affects both growth and social stability.If you want me to sum up what I con-sider to be the most valuable lessonlearnt from China’s close to 9.5 percentaverage growth over more than twodecades, I would argue that it has been social and political stability thatprovided a relatively stable and pre-dicable business environment. Chinahas been able to attain high economicgrowth by ensuring social and politicalstability, and in turn has achieved socialand political stability as a result of itsfast economic growth. For the Chinesegovernment, social stability is thenumber one priority. Everything else –including efficiency – comes secondary.

III. Energy Situation

A. Energy Supply and Demand(1) Energy consumption in China in-creased by 50 percent between 2002and 2005. If business continues todevelop as in the past, China may beconsuming 3.5 billion tons of coal by

2015, and oil dependency could reach65 percent. Given its limited energyresources, it is argued that China couldimport energy, like many other countriesthat do not have sufficient energy re-sources of their own. Although Chinawas able in 2005 to meet about 93percent of its energy consumptionneeds from its own resources, theremaining 7 percent could still have asignificant impact on the world energymarket given the size of its demand.

(2) The recent surge in energyconsumption has lifted China’s energydemand to a higher level. Even a lowgrowth rate of energy consumptioncould result in a large absolute in-crease. China’s high dependency onimported oil has been considered amatter of national security that has ledto many Chinese state-owned energycompanies actively engaging in cross-border mergers and acquisitions ofenergy assets.

61

B. Prices(1) Not reflecting energy scarcity orenvironmental impact, energy prices inChina are kept artificially below marketprices, apparently in the interests ofboth social stability and economicgrowth.

(2) The low energy prices lead toinefficient use of energy. The energyintensities of Chinese industries areusually substantially higher than indeveloped countries. A survey of eighthighly energy-intensive industriesindicates that Chinese firms consume47 percent more energy. Low energyprices encourage Chinese firms toinvest in cheaper equipment andtechnologies with lower energyefficiency.

(3) China’s economic investment-drivengrowth has often led to overcapacitiesin many industries. Low energy pricescould have been one of the mainfactors that contributed to this. Giventhe country's resource constraints, theprevious and present policy of keepingenergy prices low – that has led to’excessive’ energy consumption – will in future lead to higher energy prices.The recent surge in energy consumptionhas already been accompanied by asignificant increase in energy prices inChina, though the increases were notsufficient to reduce demand. Thedomestic coal price has increased by29 percent – the sharpest rise inChina’s history. Electricity prices andprices of oil products have also in-creased substantially, though they stillremain firmly under the government'scontrol. In the same period, coal pricesin the international market increased by79 percent and international oil priceshave been more than doubled.

China needs 36 billion dollars to miti-gate all environmental damage causedin 2004, or close to 2 percent of GDP.

(3) Another aspect giving rise toenvironmental concern is the way Chinais rushing to meet its high energydemand. From June 2002 to June 2006,China experienced a severe powershortage. People were impressed byChina’s ability to address the powershortage with an unprecedented rate ofincreasing power capacity. In my view,however, this could prove problematic.It was obvious that China had notexpected the demand surge. Becauseof the urgency to meet the demand, theenvironmental aspects of power plantsmay not have been properly assessed.

V. What China Needs to Do(1) Energy Intensity Target in the 11thFive-Year Plan: a. Energy intensity in 2010 is targeted tobe 20 percent lower than that of 2005.In fact, this is one of the few targetswith specific numbers in the plan whichdemonstrates the willingness of theChinese Government to address energyand environmental issues. But even

IV. Environmental Condition(1) Some rough assessments of theactual state of pollution in China areshocking. According to China'sEnvironmental Protection Agency,environmental damage led to economiclosses of 64 billion dollars or 3 percentof GDP in 2004. More than 400,000people died because of air pollutionand more than 300 million people livewithout clean drinking water. Someother indicators could also be used toillustrate the acute nature of theenvironmental problem in China: 90percent of rivers near cities have beenseriously polluted and one third ofChina’s territory is affected by acid rain.SO2 and CO2 emissions are the largestand second largest respectively in theworld, while coal utilization accountedfor 90 percent of SO2 and 85 percentof CO2 emissions in 2004. 60 percentof the cities in China didn’t meet thesecondary air quality standard, and sixof the 10 most polluted cities in theworld are located in China.

(2) China is exposing future gener-ations to an immense burden in termsof clean-up costs. It was estimated that

“As long as China is firmly resolved to develop into a

middle-income country as fast as possible, the continued

growth of energy-intensive industries seems to be inevitable”.

63

64

though people in China recognize thatcurrent rates of energy consumptionand pollution in China are unsustainable,and improvements in energy intensityare a high priority, adjusting currentpatterns of economic growth mayrequire slower GDP growth and aslower urbanization process.b. Even if China is willing to do this, it is difficult to adjust industrial structureswithin five years. The government isalso actively promoting energy con-servation activities. However, with lowenergy prices and a lack of energymarket facilities at this stage, scantresults are produced by any of theenergy conservation activities. Theenergy intensity target in the 11th Five-Year Plan will therefore be difficult tomeet as all measures to reduce energyintensity take time to implement. In fact,instead of decreasing, China’s energyintensity actually increased during thefirst eight months of this year.

(2) Energy Market Reforms: a. China is now facing a very difficultchoice between a more efficient energysector and higher energy prices. b. Without addressing energy marketand pricing issues, the targets of neitherenergy conservation nor improvedenergy efficiency will be achieved.

(3) Energy Conservation and EnergyMix: a. Given a certain industrial structure,energy intensity can be addressedthrough energy conservation, both onthe supply and the demand side. Theprospect of urbanizing 300 millionpeople is a huge challenge, but also an important opportunity. If thosepeople could be provided with moreefficient housing and transport thancurrent standards, this would producelarge savings in energy consumption.The government can play an importantrole by enforcing building design andenergy efficiency standards based oninternational best practices. Planningcities and other urban areas for moreefficient public transport is a furtherarea of opportunity. b. Given a certain level of energyconsumption, environmental pollutioncan be addressed by achieving acleaner energy mix. However, China’senergy sector will continue to becharacterized by a high level of coalconsumption, high demand for coalproduction and transportation, and an extensive coal infrastructure. A significant shift away from coal in the

medium term is unlikely due to thelimited oil and gas reserves andpotential for further development of itshydropower resources. However, Chinais nowhere near reaching the end of itsclean energy options, including nuclearpower and other renewables.

(4) Building Consensus:a. China needs to establish an effectivemechanism for energy conservation andenvironmental protection. b. China needs to avoid thedevelopment strategy of ‘economicgrowth first and environmentalprotection later’, which is still popular atlocal levels.

VI. Ways in Which Other CountriesCan Help(1) Good Understanding of China’sEnergy Demand: The demand for energy in China willcontinue to increase. With annualgrowth rates projected at nine percent,

a large population and a low level of per capita energy consumption, anemerging high rate of motorization inthe transport sector, and a rapidurbanization process to accommodateabout 20 million rural emigrants a year,energy demand is expected to bestrong and will continue to rise until2020. The central government in Chinanow is very defensive about the impactof its energy demand, particularly in theinternational market. The worry is thatpeople at local levels might take this asa signal that energy is not a problem for China. Positive dialogue andcooperation can help to put this in theright perspective. On the other hand,negative propaganda and a lesscooperative attitude will strengthenChina’s defensiveness and worsen theprospects for addressing world energyand environmental issues. Similarly, itwould be a mistake to think that theChinese government does not takeenergy and the environment seriously.

65

The difficulty is that it has to makechoices without a clear understandingof possible outcomes. For example,large coal-fired power plants will pollutethe environment. But what otherchoices does China have if it is tomaintain low energy prices while fuelingnine percent economic growth andpreserving social stability? Wouldhigher energy prices affect socialstability? It is also not unrealistic toassume that people with a per capitaincome of $1,300 will value the environ-ment less than people with a per capitaincome of more than $35,000 in thedeveloped countries.

(2) Promoting Energy Efficiency andClean Technology: If China were givenenough time, it may be able to resolvethese problems in its growth process.However, will it be too late? Can weimagine the impact when China burnsfive billion tons of coal a year? Wecannot tell China not to burn coal for

its economic development, but we canpersuade China to burn less and in amore efficient and cleaner way. Sincecoal is presently the dominant energy in China and will remain so for a longtime, it is important to encourage theuse of clean coal technology byproviding assistance and technology.Even if there are no serious technicaldifficulties in utilizing coal in a cleanway, it requires the political will topromote and enforce it. In searching forclean energy, some financial incentivescould be provided. But there are otherthings that could be done in this area.For example, the government could beencouraged to more strictly enforceenergy efficiency and technicalstandards for industries, buildingsstandards and pollution emissionstandards. A considerablestrengthening of the monitoring andenforcement mechanism will also benecessary.

(3) Engaging China in Energy PolicyDialogue and Providing Assistance inAddressing Reform Issues: Moreassistance is needed when demon-strating successful internationalexperience to convince China that astrong and fast energy market reformdoes not necessarily lead to socialinstability. Through energy marketreforms, the government can focusmore on the macro aspects of energyproduction and consumption, such assystem planning and resource allocation,and let the market play a more importantrole in micro energy investment de-cisions.

(4) Helping China to meet the energyand environmental challenge meanshelping the planet and ourselves, as weare ultimately all in this altogether.

66

The Psychology of Denial or Why DoWe Find It So Hard to Act AgainstClimate Change?

George Marshall started his presentationwith two slides showing front pagesfrom different magazines, one announ-cing an article on ‘The Melting Mountains’that revealed how climate change isdestroying ‘the world’s most specta-cular landscapes’, and the other adver-tising the world’s 50 best ski resorts.

Is this not extraordinary?, he asked,describing this as a small-scale reflec-tion of a far wider, more profound andsustained disconnection at all levels ofsociety between the seriousness of thethreat of climate change and the actionthat we take in response: Tony Blair, theUK Prime Minister, tells us that climatechange is 'a challenge so far-reachingin its impact and irreversible in its de-structive power, that it alters radicallyhuman existence'. His chief scientificadvisor, Sir David King, says this is themost severe problem we face, far moreserious than terrorism. And yet, nothingin the government's response reflectsthis rhetoric. Its work on climate changeis incoherent, underfunded, and con-stantly undermined by the support thatit continues to give to the pollutingindustries.

In repeated polls, over 90 percent ofthe population identify climate changeas a serious problem. Yet there is noevidence of any change in people's

personal behavior or in their voting pre-ferences. People buy ever larger carsand homes, fly ever further for holidays,and vote for the parties that promise todo the most to support their expansivelifestyles.

People receive conflicting messages allthe time. Even car advertisers working,for example, for the Mini or Jeep incor-porate the same kind of disconnectedmessages into their work. What is in-teresting in these cases is that the ad-vertiser is not ignoring climate changebut is absorbing it into the sales pitchas if to say ‘yes, I know all about that,and I DON’T CARE!’

People who we think might care areNGOs which, historically, have played ahugely important role in social changemovements. Earlier this year I was writinga chapter on the role of climate changein the work of major NGOs, expectingthat it would have a huge influence, sincethe IPCC, for example, estimates thatthere will be as many as 150 million en-vironmental refugees by 2050, and HumanRights Watch has 21,400 references torefugees. And yet climate change scarcelyfigures in their work. I was comparingthe number of times the word ‘climatechange’ appeared on their websites withthe number of mentions of the randomly-chosen word ‘ice cream’ – here are theresults:

Tuesday, October 10, 2006 – Closing SpeechesGeorge MarshallExecutive Director, the Climate Outreach and Information Network (COIN), Oxford, UK

George Marshall

‘Climate Change’ ‘Ice Cream’

Amnesty International 0 1

Human Rights Watch 16 25

World Vision US 4 12

Survival International 0 1

Refugees International 4 27

YWCA 0 1

CARE US 1 1

Numbers of mentions of 'climate change' on websites of major NGOs

Source: website search 8/6/06. ‘Asleep on their watch: where were the NGOs?’ from 'Surviving Climate Change: The Struggle to Avert Global Catastrophe‘, Pluto Press, 2007.

67

68

I think we can draw several conclusionsfrom this:– Our response to climate change is

out of proportion to the threat and urgency of the problem.

– This lack of response cannot be satisfactorily explained as a deficit of information. We can observe a pro-found psychological disconnection between what people know about climate change and what people do about climate change.

– The lack of response can also not beexplained as a temporary failure in the political and economic system. Yes, there is a lack of political will and short time spans, but politicians are able to respond rapidly to other issues. Rainer Laufs said yesterday that ‘politicians have split brains – weneed to push them'… and I would argue that this is widespread.

– Also, the lack of response is not related to an individual’s capacity to effect change. Other people argue that people’s apathy is a result of the powerlessness they feel to effect change. This is no doubt true, but

there are people and organizations that do have that power. And the people I know who are most actively engaged with this issue and deter-mined to push for change actually have very little personal power.

Resolve it, deny it, or displace it Psycho-logists have a name for this discon-nection – cognitive dissonance. Disso-nance is destabilizing because it challen-ges our view of our core principle andsense of self. We can achieve stabilityin three ways: we can resolve it, deny it,or displace it.

Everything I’ve spoken of so far: therefusal to recognize the issue, the com-pulsive over-consumption; the open andactive indulgence in activities we knowto be destructive, the ‘bring it on’ pos-turing - all these behavior patterns would,in a psychotherapy context, be seen assymptoms of denial.

One of the reasons climate change lendsitself to denial is the enormity of itsmoral dimension. We can intellectually

accept the evidence of climate change,but we find it extremely hard to acceptour responsibility for a crime of suchenormity.

There are marked similarities with indi-vidual and collective responses to state-sanctioned human rights abuses whenpeople are faced with huge challengesto their self identity as moral beings.

In such situations people attain a re-markable state of both knowing and notknowing:

Denial in the Face of Human RightsAbuses– Morally neutral euphemisms– Suppression– Denial of knowledge (‘I didn’t know’), – Denial of agency ('I didn’t do it')– Denial of personal power (‘I couldn’t

do anything', ‘no one else did anything’)– Bystander effect

Indeed, the most powerful evidence ofour denial is the failure to even recog-nize that there is a moral dimension withidentifiable perpetrators and victims.The language of 'climate change','global warming', 'human impacts','adaptation' is scientific euphemism thatsuggests that climate change originatesin immutable natural forces rather thanin a direct causal relationship withmoral implications for the perpetrator.

Suppression – in South Africa, manywhite bystanders who intellectually op-posed apartheid retreated into privatelife, cut themselves off from the newsmedia, refused to talk politics withfriends, and adopted an intense im-mersion in private diversions such assport, holidays and families. In Brazil inthe 1970s a special term was coined forthe disavowal of the political: ‘innerism’.

What appears to happen above all isthat people redefine their ‘social normsof attention’. In his book ‘States of Denial,Knowing About Atrocities and Suffering’Stanley Cohen of the London School ofEconomics wrote in 2001 ”Withoutbeing told what to think about (or whatnot to think about), and without beingpunished for ‘knowing’ the wrong things,

societies arrive at unwritten agreementsabout what can be publicly rememberedand acknowledged”.Kari Marie Norgaard of the University ofCalifornia spent a year with a small com-munity in Norway, conducting interviewsto study their responses to climatechange. She concluded: “Denial of global warming was socially organized…It took place in response to social cir-cumstances and was carried out througha process of social interaction”. Thepeople in this community were stronglyaware of climate change but never open-ly discussed it. In interviews it appearedthat they had developed collective nar-ratives to avoid dealing with the issues– little Norway, we are the clean country.

Another very interesting study by aca-demics at the Potsdam Institute andUEA in the UK sought to study climatechange in Switzerland and found denialstrategies specific to climate change.

But I believe there is more to it than thisbecause climate change is not just amoral challenge – it is a very real and

direct threat. Our perception of anyspecific risk is affected by our worldview, by gender, by trust in the sourceof information, by the question as towhether the risk is imposed, by catas-trophic potential, and by the widerattitude to that risk.

Our response is strongest to threatsthat are visible, with historical precedent,immediate, with simple causality, causedby another ‘tribe’, and have direct per-sonal impacts. Climate change, on the

Metaphor of displaced commitment Condemn the accuser Denial of responsibility Rejection of blameIgnorancePowerlessnessFabricated constraints After the flood Comfort

I protect the environment in other waysYou have no right to challenge meI am not the main cause of this problemI have done nothing wrongI didn’t knowI can’t make any differenceThere are too many impedimentsSociety is corruptIt is too difficult for me to change my behavior

Denial Strategies Specific to Climate Change

Source: S. Stoll-Kleemann, Tim O'Riordan, Carlo C. Jaeger, The psychology of denial concerning climatemitigation measures: evidence from Swiss focus groups, Global Environmental Change, 11 (2001) 107-117

69

other hand, has none of these qualities.It is invisible, unprecedented, drawnout, with complex causality, caused byall of us, and has unpredictable andindirect personal impacts. It is, in manyways, perfectly designed to silence ouralarm bells. We know that risk assess-ment is highly subjective – there is

extensive literature on the psychology ofrisk. John Adams, one of the leading UKacademics in this field, argues that hu-mans are all provided with 'risk thermo-stats' with a wide range of differentsettings which trigger a response when people encounter an unacceptablelevel of risk. I believe that climatechange fundamentally fails to triggerour risk thermostat – intellectually weaccept the risk but somehow we do not feel it.

And What Happens If We Do NotRespond?Maybe we will wake up. If so, it will pro-bably happen because one of our risktriggers will be set in motion – whenclimate change becomes immediateand violent and visible. However, this is unlikely to be an easy process.

If we do not wake up, we risk going intoeven greater denial. We could createclimate 'enemies', but we are also verycapable of displacing into an entirelyunrelated issue. One denial strategy isto create scapegoats. Public fear andscapegoats can create a dangerous

70

71

mix. If we now add conflicts over water and land to this scenario, plusmillions of people on the move, we will find ourselves in a very uglysituation.

How Do We Move Forward?– We must recognize that information

alone cannot produce change.– We must openly recognize the

tendency to denial; Professor Cohen argues very clearly that denial is the normal state of affairs. He argues that“far from being pushed into accept-ing reality, people have to be dragged out of reality”.

– We must encourage emotional responses and 'whistle blowers'.

– We must develop a culture of en-gagement that is visible, immediate, and urgent – in other words we must

bestow on our actions the qualities that engage us best.

– As individuals we must act with integrity and clarity, i.e. we must recognize our own impacts and struggle to live a low carbon life, we should not be embarrassed to challenge others, we need to recog-nize that there is a larger truth and historical calling that is greater than our own short-term interests, we must be prepared to take personal risks – for example in our careers, incomes or status – in order to effectthe greatest change on this issue.

72

73

AAdebahr, CorneliusWirtschaft am WasserturmPolitical ConsultantBerlin, Germany

Adeniran, Prof. TundeEmbassy of NigeriaAmbassadorBerlin, Germany

Ahlmann, Hans-JuliusACO Severin Ahlmann & Co. KGManaging DirectorBüdelsdorf, Germany

Ahlmann, IwerBüdelsdorf, Germany

Ahlmann, JohannaACO Severin Ahlmann & Co. KGBüdelsdorf, Germany

Ahlmann, JohannesKarlsruhe, Germany

Altrock, Dr. Martinenergiewerk FoundationDeputy Chairman of the BoardMunich, Germany

Arnold, WolfBundesverband mittelständischeWirtschaftManaging Director of the Federal Stateof Mecklenburg-Western PomeraniaSchwerin, Germany

Artale, Dr. VincenzoClimate Modelling Laboratory, ENEAHeadRome, Italy

BBagdasarjan, JulianeStudentLübeck, Germany

Bartels, Dr. RalfMining and Energy Policy, Mining,Chemical and Energy Industrial Union(IG BCE)Head of DepartmentHanover, Germany

Bassey, S.B.Embassy of NigeriaAttachéBerlin, Germany

Bednorz, Dr. MichaelLandesamt für Kultur und DenkmalpflegeMecklenburg-Western PomeraniaDirectorSchwerin, Germany

Belov, Dr. VladislavEurope Institute of the RussianAcademy of ScienceDirector, Research Center GermanyMoscow, Russian Federation

Berz, Prof. Dr. GerhardUniversity of Munich; Munich Re FoundationProfessor for Meteorology;Member of the CouncilMunich, Germany

Besserer, DirkMoskauer Deutsche ZeitungAdvisor to the BoardMoscow, Russian Federation

Biel, Dr. JörnChamber of Commerce and Industry KielManaging DirectorKiel, Germany

Bilger, Dr. HartmutEnBW AGFormer Member of the BoardEttlingen, Germany

Bitzer, Prof. Dr. KlausUniversity of Bayreuth;ASPO GermanyProfessor for Geology;Member of the BoardBayreuth, Germany

Block, Prof. Dr. Hans-JürgenInnovationsstiftung Schleswig-HolsteinMember of the BoardKiel, Germany

Blumenthal, Dr. Julia vonHelmut Schmidt UniversityAssistant ProfessorHamburg, Germany

List of Participants A – C

Böttcher, Dr. WelfCorporate Communications,Drägerwerk AGHead of DepartmentLübeck, Germany

Bothe, DavidInstitute of Energy EconomicsScientific AssistantCologne, Germany

Boyken, Dr. FriedhelmPolitical Planning, Chancellery of theState of Schleswig-HolsteinHead of DepartmentKiel, Germany

Brockmeier, Dr. UdoEnBW Kraftwerke AGChairman of the BoardStuttgart, Germany

Buchta, UllrichClimate Protection, Ministry of theEnvironment of the State ofMecklenburg-Western PomeraniaHead of DivisionSchwerin, Germany

Burdzy, ZbigniewGeneral Consulate of the Republic of PolandVice ConsulHamburg, Germany

CChaerony, Ade RinaEmbassy of the Republic of IndonesiaAttachéBerlin, Germany

Chichilnisky, Prof. Dr. GracielaCenter for Risk Management, Columbia UniversityDirector New York, NY, USA

Choucri, Prof. NazliGlobal System for SustainableDevelopment (GSSD), MassachusettsInstitute of Technology (MIT)Director Cambridge, MA, USA

74

Christ, AngelikaVerband der Wellpappen-Industrie e.V.Managing DirectorDarmstadt, Germany

Czisch, Dr. GregorInstitute for Electrical EnergyTechnology/ Rational EnergyConversion, University of KasselResearcherKassel, Germany

DDeeva, OlgaStudentLübeck, Germany

Deutch, Prof. JohnDepartment of Chemistry,Massachusetts Institute of Technology (MIT) Institute ProfessorCambridge, MA, USA

Dörffel, MichaelImmission Control, Chemistry,Recycling Management, Ministry of Agriculture and Environmentof the State of Saxony-AnhaltHead of DepartmentMagdeburg, Germany

Dolzer, Prof. Dr. RudolfInstitute for International Law, University of BonnDirector Bonn, Germany

Domonski, DennisGreenStream Network GmbHAssistent to the Board Hamburg, Germany

Dräger, Dr. ChristianDräger FoundationMember of the BoardLübeck, Germany

Dräger, HartwigDräger GmbHManaging DirectorHamburg, Germany

Dräger, LisaLübeck, Germany

Dräger, StefanDrägerwerk AGCEOLübeck, Germany

Dräger, TheoDrägerwerk AGMember of the Supervisory BoardLübeck, Germany

Dreesmann, Dr. GerwinStrategic Planning, Conergy AGDirector of DepartmentHamburg, Germany

Duan, Dr. HongxiaInternational Human Dimensions Programmeon Global Environmental Change (IHDP)Senior Programme ManagerBonn, Germany

Duscha, VickiThe Kiel Institute for the WorldEconomyResearcherKiel, Germany

EEgan, Peter ZacharyColumbia Wanger Asset ManagementFund ManagerChicago, IL, USA

Eichhammer, Dr. WolfgangEnergy Techniques and EnergyPolicies, Fraunhofer Institute forSystems and Innovation ResearchDeputy Head of DepartmentKarlsruhe, Germany

Eigen, Prof. Dr. PeterTransparency International;Extractive Industries TransparencyInitiative Chairman of the AdvisoryCouncil; ChairmanBerlin, Germany

Eisenbeiß, Dr. RalfRegionalpartnerschaft Lübecker Bucht e.V.Regional ManagerLübeck, Germany

Eisenblätter, Dr. BerndDeutsche Gesellschaft für TechnischeZusammenarbeit (GTZ) GmbHManaging DirectorEschborn, Germany

Etzel, Paul ErichNaturkost Oekol AgrarwirtschaftManaging DirectorWehrheim, Germany

Euler, Dr.-Ing. HartmutMinistry for Agriculture, Environment and Rural RegionsDirector-GeneralKiel, Germany

FFeddersen, Prof. Dr. DieterDräger FoundationMember of the BoardLübeck, Germany

Fischer, Prof. Dr. JürgenInstitute for Space Sciences,Free University of BerlinProfessorBerlin, Germany

Fluthwedel, Dr. AndreaGerman Institute for Standardization (DIN e.V.)Managing DirectorBerlin, Germany

Franke, Dr. UweDeutsche BP AG CEOBerlin, Germany

GGadó, Dr. JánosKFKI Atomic Energy Research InstituteDirectorBudapest, Hungary

Geißler, ThorstenHansestadt LübeckSenatorLübeck, Germany

Golub, Dr. AlexanderEnvironmental DefenseSenior EconomistWashington, D.C., USA

List of Participants C – L

75

Graßl, Prof. em. Dr. HartmutMax Planck Institute for Meteorology;Meteorological Institute, University of HamburgMember of the Max Planck InstituteHamburg, Germany

HHakala, RainerDeutsche Gesellschaft für TechnischeZusammenarbeit (GTZ) GmbHEschborn, Germany

Halenka, TomasMeteorology and EnvironmentProtection, Charles University PragueDeputy Chair of DepartmentPrague, Czech Republic

Hamelmann, Dr. RolandKompetenzzentrum Wasserstoff- undBrennstoffzellentechnologie (KWB),University of Applied Sciences LübeckHead of KWBLübeck, Germany

Hartmann, Dr. UweInternational Solar Energy Society,GermanSectionGeneral ManagerBerlin, Germany

Heid, BenediktThe Kiel Institute for the World EconomyResearcherKiel, Germany

Hein, Dr. JoachimFederation of German Industries (BDI e.V.)Official ResponsibleBerlin, Germany

Hersetiati, WahyuEmbassy of the Republic of IndonesiaCounsellorBerlin, Germany

Höppe, Prof. Dr. PeterGeo Risks Research, Munich Re GroupHead of DepartmentMunich, Germany

Holz, FelixCentral Research and Evaluation,Conergy AGHead of DepartmentHamburg, Germany

Huther, Dr. HeikoResearch and Development,AGFW e.V.

Deputy Head of DepartmentFrankfurt/Main, Germany

JJahn, Dr. Karinbremer energie institutResearcherBremen, Germany

Jantzen, Prof. Dr. Jan-PeterKlinik für Anaesthesiologie undIntensivmedizinChief Medical OfficerHanover, Germany

Jungfer, Prof. Dr. EckhardtClimate/Energy, Ministry for RuralDevelopment, Environment andConsumer Protection of the State ofBrandenburgHead of Department Potsdam, Germany

KKatte, Dr. Christoph vonLawyerKamern, Germany

Kemfert, Prof. Dr. ClaudiaEnergy, Transport and Environment,German Institute for EconomicResearch (DIW e.V.)Director of Department Berlin, Germany

Kirk, Dr. AnnetteCorporate Communications, Max Planck Institute for MeteorologyOfficial Responsible Hamburg, Germany

Klepper, Prof. Dr. GernotThe Kiel Institute for the World EconomyDirectorKiel, Germany

Klossok, KarlThyssenKrupp AGExecutive SecretaryDüsseldorf, Germany

Knoche, Dr. GuidoThe Federal Environment AgencyScientific AssistantDessau, Germany

König, Dr. Hannes JochenUniversity of GöttingenNusse, Germany

Krómer, Prof. IstvánVEIKI zrt.Director GeneralBudapest, Hungary

Kromp-Kolb, Prof. Dr. HelgaInstitute of Meteorology, University of Natural Resources andApplied Life SciencesProfessorVienna, Austria

Kusmierczak, StephenColumbia Wanger Asset ManagementPortfolio Manager International EquitiesChicago, IL, USA

LLackner, Prof. Dr. Klaus S. Earth and Environment EngineeringCenter, Columbia UniversityDirectorNew York, NY, USA

Lamp, HelmutBundesverband Bioenergie e.V. (BBE)Chairman of the BoardBonn, Germany

Lapin, Prof. Dr. MilanMeteorology and Climatology,Comenius UniversityHead of Division Bratislava, Slovakia

Laufs, RainerLANXESS AGMember of the Supervisory BoardKronberg, Germany

76

Lehmann, DirkDräger Medical AG & Co. KGSkill ManagementLübeck, Germany

Lehmann, Prof. Dr. EikeThe Association of German Engineers (VDI e.V.)PresidentHamburg, Germany

Leisner, Prof. Dr. ThomasInstitute for Meteorology and ClimateResearch at the Research CentreKarlsruheHead Karlsruhe, Germany

Lender, Hans-JoachimHS-KulturkorrespondenzEditorial JournalistLübeck, Germany

Levermann, Dr. AndersDepartment for Climate System,University of Potsdam; PotsdamInstitute for Climate Impact ResearchPotsdam, Germany

Lieberum, AndreasEcolo – ecology and communicationManaging DirectorBremen, Germany

Lin, Dr. Bo QiangCenter for ChinaEnergy Economic Research,University of XiamenDirector Xiamen, China

Linn, Dr. Johannes F.The Wolfensohn Center, The Brookings InstitutionExecutive DirectorWashington, D.C., USA

Litman, Dr. GaryEurope & Eurasia, U.S. Chamber of CommerceVice-PresidentWashington, D.C., USA

Lomeling, AnnaInvestitionsbank Schleswig-HolsteinCustomer Consultant MunicipalitiesKiel, Germany

Lopatowska-Rynkowska, Dr. JoannaCommission of the Bishops’Conferences of the EU (COMECE)Legal AdviserBrussels, Belgium

Luther, Prof. Dr. JoachimFraunhofer Institute for Solar EnergySystems Former DirectorFreiburg, Germany

MMarshall, GeorgeThe Climate Outreach and InformationNetwork (COIN)Executive DirectorOxford, United Kingdom

Messal, Dr. ConstanzeMICOR GmbHCEOGroß Lüsenitz, Germany

Miller, GunnarRCM a company of Allianz ManagingDirectorFrankfurt/Main, Germany

Mimler, SolveigEuropean Institute for Energy ResearchScientific AssistantKarlsruhe, Germany

Miskinis, Prof. Dr. VaclovasLaboratory of Energy SystemsResearch, Lithuanian Energy InstituteChiefKaunus, Lithuania

Möhrstedt, UdoIBC SOLAR AGChairman of the BoardBad Staffelstein, GermanyMonbart, Claudia M. vonThe World BankSenior CouncelorParis, France

Morris, CraigPetite Planète TranslationsTranslator and AuthorFreiburg, Germany

Müller-Hilgerloh, Heinz-E.Kamue Kommunikations-AgenturMedien Umwelt Energie KGCEOHamburg, Germany

NNath, ChristianDivision for Wind Energy,Germanischer Lloyd WindEnergie GmbHGlobal Business ManagerHamburg, Germany

Neuhoff, Dr. KarstenFaculty of Economics, University of CambridgeSenior Research AssociateCambridge, United Kingdom

North, Peter H.ASPO IrelandCloyne, Ireland

Nowak, WernerEnergy Economy, E.ON Ruhrgas AGHead of the Department Essen, Germany

OObersteiner, Dr. MichaelInternational Institute for AppliedSystems Analysis (ITASA)Research ScholarLaxenburg, Austria

Orth, Dr. Hans WilhelmUniversity of Applied Sciences LübeckFormer RectorLübeck, Germany

Oxburgh, Lord RonaldShell Transport and Trading plc;House of LordsFormer Chairman;Member London, United Kingdom

PPeters, Dr. LutzCHOREN Industries GmbHMember of the Administrative CouncilHamburg, Germany

List of Participants L – S

77

Pierce, Maj. Scott E.American Consulate General IstanbulOlmsted ScholarIstanbul, Turkey

Pissulla, PetraDräger FoundationDirectorLübeck, Germany

Prien, TimStudentLübeck, Germany

Prinz, Prof. Detlef W.Prinz MedienOwnerBerlin, Germany

Priyanto, Wahyu H.Embassy of the Republic of IndonesiaCounselor (Economic Affairs)Berlin, Germany

RRasmussen, Dr. CornelisBremer Energie-Konsens GmbHManaging DirectorBremen, Germany

Read, Dr. PeterDepartment of Applied and InternationalEconomics, Massey UniversitySenior LecturerPalmerston North, New Zealand

Rehder, SönkeEnergy Resources, Federal Institute for Geosciences and NaturalResources (BGR)Member of Department Hanover, Germany

Reim, Dr. WolfgangDräger Medical AG & Co. KGCEOLübeck, Germany

Rickels, WilfriedThe Kiel Institute for the World EconomyResearcherKiel, Lübeck

Riecke, WolfgangGerman Meteorological ServiceHead of Regional Consultant OfficeHamburg, Germany

Riedel, Dr. ErikEnergy and Environment Policy, RWE AGEssen, Germany

Rogers, Prof. Dr. KatrinaInstitute for Social Innovation,Fielding Graduate UniversityDirectorSanta Barbara, CA, USA

Rohwer, Prof. Dr. BerndChamber of Commerce and IndustryLübeckManaging DirectorLübeck, Germany

Rolle, Dr. CarstenGerman National Committee of theWorld Energy CouncilManaging DirectorBerlin, Germany

Rudek, BarbaraPolicy & Govermental Affairs, Sharp European HeadquartersManager Hamburg, Germany

SSauer, Dr. Gustav W.Ministry for Science, Economics, and Transport of the State of Schleswig-HolsteinDirector GeneralKiel, Germany

Sawicki, DanielaLübeck, Germany

Sawicki, OttoActorLübeck, Germany

Schläpfer, AugustDivision of Science & Engineering,Murdoch UniversityLecturer/Coordinator for SustainableEnergy ManagementMurdoch, Western Australia

Schmidt, Dr. Susanne M.German Institute for EconomicResearch (DIW e.V.)Managing DirectorBerlin, Germany

Schwara, Dr. MatthiasSTEAG AGHead of President’s OfficeEssen, Germany

Schwarz, Heinz-WernerBWE AGChairman of the Supervisory BoardHamburg, Germany

Schweer, RüdigerClimate Protection, Ministry forEnvironment Protection, Rural Regions,and Consumer ProtectionHead of Department Wiesbaden, Germany

Schweikert, FrankALDEBARAN Marine Research & BroadcastBiologist and JournalistHamburg, Germany

Snower, Prof. Dr. DennisThe Kiel Institute for the World EconomyPresidentKiel, Germany

Solms, JürgenGerman Council for SustainableDevelopmentConsultantBerlin, Germany

Spahr, KristoffPrivate Banking, Haspa – Hamburger SparkasseHead of DepartmentHamburg, Germany

Spitzer, Prof. Dr. HartwigUniversity of HamburgCoordinator of Working Group „Energy and Environment“Hamburg, Germany

Stricker-Berghoff, UndinePro EconomyCoachLübeck, Germany

78

Stryi-Hipp, GerhardGerman Solar Industry Federation (BSW)Managing DirectorBerlin, Germany

Sumantran, Dr. V.Science Advisory Committee of thePrime Minister of India; Tata Motors Ltd.Strategic Consultant;former Executive Director and Member of the BoardMumbai, India

Szoboszlai, BeátaMOL plc. (Hungarian Oil and Gas plc.)Risk Management ExpertBudapest, Hungary

TTänzler, DennisAdelphi Research GmbHResearch FellowBerlin, Germany

Thiele, TorstenInvestec BankProject & Infrastructure FinanceLondon, United Kingdom

Traerup, SaraUNEP Risoe Centre, Risoe National LaboratoryResearch AssistantRoskilde, Denmark

UUnander, Dr. FridtjofEnova SFVice PresidentTrondheim, Norway

VVaitheeswaran, Vijay V.The EconomistAuthor and Global CorrespondentNew York, NY, USA

Vajen, Prof. Dr. KlausInstitut für Thermische Energietechnik,University of KasselProfessorKassel, Germany

WWagner, AndreasTechnology External Programs Europe,GE EnergyManager Salzbergen, Germany

Waldmann, LarsSCHOTT Solar GmbHPublic Relation ManagerAlzenau, Germany

Watson, Dr. Robert T.The World BankChief Scientist and Senior AdvisorWashington, D.C., USA

Weber, Dr. Gerd-RainerGerman Coal Mining AssociationEnvironment and PolicyEssen, Germany

Welina, ReinholdGerman Institute for Standardization (DIN e.V.)Member of the Board of ManagementBerlin, Germany

Welling, IngoDrägerwerk AGLübeck, Germany

Wernicke, Dr. Hans-JürgenSüd-Chemie AGMember of the Executive Board and COOMunich, Germany

Werring, LucDirectorate-General for Energy andTransport, European CommissionPrincipal AdvisorBrussels, Belgium

Wilcke, AngelikaDLG-VerlagChief EditorFrankfurt/Main, Germany

Winkler, Prof. Dr. WolfgangFuel Call Lab, Hamburg University of Applied SciencesDirector Hamburg, Germany

Wittenburg, Dr. ChristianUniversity of HamburgScientist and Head of Energy-TeamHamburg, Germany

Wojtkowska-Lodey,Prof. GrazynaInstitute of Foreign Trade and EuropeanStudies, Warsaw School of EconomicsProfessorWarsaw, Poland

Wolf, AndreasMinistry of Economics of the State of BrandenburgChairman of the Second Chamber of AllocationPotsdam, Germany

ZZwaan, Dr. Bob van derEnergy research Centre of TheNetherlands (ECN)Senior ScientistAmsterdam, The Netherlands

Zweifel, Prof. Dr. PeterSocioeconomic Institute, University of ZurichProfessor of EconomicsZurich, Switzerland

List of Participants S – Z

79

XVI

Editorial

© 2006Dräger FoundationMunich/Lübeck

Responsible:Dipl.-Volksw. Petra Pissulla

Design:Werbeagentur von Krottnaurer,Lübeck

Print:Dräger + Wullenweverprint + media Lübeck GmbH & Co. KG

Photographies:Axel Kirchhof, Hamburg

80