SPEAKER

Nobuo Tanaka Executive Director International Energy Agency (IEA)

James Lang, CERA President and Chief Operating Officer, opened Tuesday’s dinner event by acknowledging that it had been a long “but extremely productive” day: “So many ideas, so little time.” He thanked sponsors Black & Veatch, JDR, Total, and MIT and offered a toast “to our future” in Japanese in honor of this global event and the evening’s keynote speaker.

Following dinner, Daniel Yergin, CERA Chairman, welcomed the keynote speaker Nobuo Tanaka, who was appointed Executive Director of the International Energy Agency (IEA) in September 2007, following a distinguished career in national and international affairs.

Mr. Tanaka said that speaking at CERAWeek was the greatest honor he has had since his appointment at the IEA. He sees the agency’s mission evolving beyond emergency energy policy and information sharing to offering a more “comprehensive energy place,” where climate change is an important issue. Energy security and environment challenges must be addressed simultaneously: “We need a global energy revolution,” he said.

Regarding energy security, Mr. Tanaka and the IEA strongly recommend increased investment in upstream oil. Although the long-term effect of climate change policies will be decreased demand for hydrocarbons, in the short to medium term oil demand “will remain robust.” Surging prices, dwindling discoveries, and poor data on the remaining reserves signal the need for increased supply security and spare capacity.

Mr. Tanaka spoke at length on the goal of mitigating climate change, specifically reducing greenhouse gas (GHG) emissions by 50 percent by 2050, a target to which many countries have agreed. The IEA has recommended three steps toward achieving this goal—improving energy efficiency, decarbonizing electricity generation, and revolutionizing the transportation sector. The agency has made 16 “concrete recommendations” for improving energy efficiency for all energy end uses that could cut emissions by up to 5.7 gigatons—or one quarter of current levels—by 2030. Since coal will likely remain the cheapest and most accessible fuel in developing economies with rapidly increasing power demand, carbon capture and storage (CCS) technology will be crucial. Worldwide between 2010 and 2050, 38 coal-fired and 20 natural gas–fired plants per year would have to be fitted with CCS; additionally 26 nuclear plants per year would need to be built. The share of renewables would need to grow as well, with wind turbines increasing by 17,500 per year. The final step, revolutionizing the transportation sector, would be the most difficult and costly, at about $200 per ton of emissions reduction. This would require “widespread deployment” of various technology advances, including advanced biofuels, hydrogen fuel cells, and electric vehicles run on carbon-free technology. All of these advances would require stable governmental policy and support, but the market would ultimately decide which technologies will prevail.

Mr. Tanaka emphasized that this urgently needed energy revolution, or “third industrial revolution,” would require a complete transformation of energy use and attitudes about the siting of wind farms or nuclear power plants. The estimated cost for the carbon emission reduction goal is $50 trillion, or about 1 percent of global gross domestic product. Companies, governments, and individuals must work together toward common aims. Governments need to play a key role in driving policy, and “businesses could become leaders in the fight against climate change” while also profiting from lucrative growth opportunities. Mr. Tanaka concluded by cautioning that time, and not money or natural resources, is in shortest supply in achieving these goals. “Delay is no longer an option. It is time to act, everybody.”