May 12, 2015
Thank you for the kind introduction! I’m really happy to be back here in Taipei and to be able to join all of you at what I hope and expect will be a very useful conference to help promote the development of clean and renewable energy in the region. I also want to welcome in particular our friends and colleagues from Cambodia, Laos, Myanmar, Papua New Guinea, Philippines, Timor-Leste, and Vietnam who are joining us here today. I hope that you will also get a chance to enjoy the wonderful and vibrant city of Taipei and the warm hospitality of its people over the next few days.
I do want to let you all know from the outset that I’m not an expert on energy policies or technology. So if any of you have hard questions on these issues, please save them for the speakers and the real experts coming up. What I want to do this morning is simply to talk very broadly about energy policies and issues from the perspective of someone who has done a bit of work on economics and foreign policy in the field. I am also looking forward, like all of you, to learn more at this conference about the policies that will promote the exciting opportunities that renewable energies are presenting today.
So let me start now by making a few simple observations, which most of you probably already know.
First, the cost of using fossil fuels, which we have done for most of human history, is not as cheap or as low cost, as it sometimes appears to be, especially when you take a broader and longer term perspective. For example, governments around the world in 2013 spent a total of about $548 billion, according to the International Energy Agency (IEA), just to subsidize the use of fossil fuels. What this does of course is to artificially lower the cost of fossil fuels for consumers, thus making new renewable energy resources relatively less competitive in general. That’s partially why it’s been harder to develop renewable resources. So this is why we are making an effort in APEC as well as in the G-20 and other international forums to encourage countries and economies to volunteer to do expert peer reviews that examine how each country is subsidizing fossil fuels and whether it is being done efficiently to benefit only those that truly need these subsidies. The ultimate goal is to remove inefficient subsidies. A number of APEC economies, like Peru, New Zealand, Philippines and Vietnam, have already volunteered or completed these studies, and we are now encouraging Taiwan and others in APEC to do so as well. China and the United States have also volunteered and are currently starting to conduct similar peer reviews within the G-20.
Also, although the market price of oil is relatively low at this time, we all know that this is not sustainable in the long term. As history has shown, the price of oil and gas will depend not only on economic and technology factors but also on political developments around the world, for example, in the Middle East or Eastern Europe. So it is reasonable to expect fossil fuel prices to continue to go up and down in the years ahead.
But even more importantly, taking a broader and longer term view, we now all know very well the environmental costs associated with the wide and continued use of fossil fuels. So I won’t talk about it here at length, except to say that having worked and lived in China for a total of over ten years, I have become personally even more aware of these costs, which are not just environmental but also economic and human. For example, I was serving in Beijing in the winter of 2012 when our embassy PM2.5 air monitors (detecting particulates as small as 2.5 micrometers in diameter) registered an air quality index (AQI) of over 500 for several consecutive weeks. This is what we called “crazy bad” air. According to the U.S. Environmental Protection Agency (EPA), an AQI index of 151-200 is considered to be “unhealthy,” 201-300 is considered “very unhealthy” and 301-500 is considered “hazardous” or dangerous. So an index of over 500 was literally off the charts! We immediately brought in health and environmental experts from the United States to assess the situation, to test the air inside and outside the houses and apartments where our employees lived, and to make recommendations on how we should address this critical and alarming problem. We eventually had to fix up many of our houses by reducing leakage to limit the amount of polluted air coming in from the outside, and buying and shipping thousands of air purifiers to China, not just to Beijing but to our different consulates in Shenyang, Chengdu, Guangzhou and Shanghai. We even had to evacuate a few families with young children back to the U.S. This all cost quite a lot of money and time but needed to be done to protect the health of our employees and their families.
So you can imagine how much China will need to spend if it is serious about cleaning up its air across the country in the coming years! Already, there are studies that indicate that the average life span of a Chinese living in certain areas has been significantly reduced by air pollution. This will eventually have consequences for China’s economy, not to mention millions of human lives.
Finally, we need to face and confront the long-term threat of climate change. If we do not curb carbon emissions and other greenhouses gases, the resulting climate change, and the environmental, economic and human costs, will be truly catastrophic. The reality is that the world cannot sustain its growth and development unless we all begin to adopt a low-carbon and resilient approach. Climate change simply poses too great a threat, whether to food production, water supply, or exposure to extreme weather events. With the predicted rise in ocean levels, vast coastal areas – and even island countries – are likely to be flooded. While these are subjects for another conference, protecting our climate and environment and developing sustainably are the main reasons we need urgently to work together to explore and develop renewable energy. We hope this conference will make a contribution – however minor – to this effort.
Secondly, on the reverse side, the price of most renewable resources, while relatively high in the past, is becoming increasingly more competitive and should continue to go down, and go down significantly, in the long term.
One main reason for this trend is because of modern technology advances in the energy area. For example, just think of what happened in the internet era that started only 20-30 years ago, and how things have changed in terms of how we communicate today and the ease and low cost communication via Skype, WeChat, Twitter and so on. I think there is little doubt that such technology advances can and will occur in the renewable energy sector as well. Solar and wind power technology has already seen major advances. I am sure our experts will discuss these developments later in the conference. The business opportunities associated are also tremendous, and I welcome you to talk to the business representatives who have joined us at this conference.
Apart from this, one unique feature of renewable resources, like wind and solar, is that they are not only renewable indefinitely but that they are also actually free. Of course, we need to develop the technology and build and maintain the panels and windmills and grids that use renewable energy like the sun and the wind. So there will be significant start-up costs and the price will be higher up front. But once you complete the start-up phase, you don’t need to pay for the sun and the wind. And I think it’s safe to say that they should be around and free of charge for some time. There are of course critical issues related to their intermittency or variability, and that’s why scientists are working on technology to store power and to reduce their variability through smart grids that experts will be discussing at this conference. The point is not that developing these energy resources is free but that the resources themselves are infinitely renewable and free so that the long term cost should be significantly lower.
So, it seems clear to me, from the economic perspective, that this is the time to begin developing and expanding the use of renewable resources in all of our countries. We are reaching the point when many types of renewable resources are becoming competitive in the market at least in certain areas and for certain uses. I understand that some of you have already begun developing and using renewable energy. Of course, each country or economy will have different needs and different geographical features and natural resources that will determine what is feasible and what is not. So we hope that those of you who are here from abroad can get together with our expert speakers to discuss needs and issues specific to your countries during our breakout sessions tomorrow. Once you have their contact information and get to know them, we hope you will also be able to continue this discussion with them after you return to your countries.
Finally, I would like to say something about the development of renewable resources from a political and foreign policy perspective. I think that developing renewable energy broadly around the world can also contribute to the peace and stability of the international system in the long term.
Another unique and interesting point about renewable resources is that every country around the world has access to some form of renewable resources, whether it is solar, wind, or geothermal. What we need is the technology and the facilities to utilize those renewable energy sources that meet the needs of our own country and society. No single country or association of countries can control these renewable energy resources. Unlike traditional fossil fuels, they are not predominately located in some countries or regions of the world. Thus, it will be more difficult for certain countries to use the supply of traditional energy sources, such as oil and gas, as political instruments to pressure other countries, which we have seen happen many times in recent history. The development of new renewable energy sources will also reduce the potential for conflict over energy resources themselves, whether on land or offshore.
Thus, by developing renewable energy sources more widely around the world, we can all increase our energy security, even if we continue to use traditional sources of energy, which we will all need to do for some time. The greater availability and use of renewable resources can create a more diversified energy mix for individual countries but will certainly create a more diversified global energy mix that reduces excessive reliance on any single energy source. This will reduce economic and political risk in general with respect to energy supply and demand. This should contribute to great energy security and greater regional peace and stability.
In conclusion, I want to welcome all of you again to this conference, especially for those of you coming from abroad. I know that all of you are more knowledgeable than I am about the issues of energy security and renewable energy, so I expect you will also contribute very much to this conference. At the same time, I hope you will benefit from interaction with the expert speakers as well as the business representatives whom we have invited to this conference. We hope this conference will provide you with more information and ideas on energy policy, technology and financing to help you consider how you might want to move ahead to meet your country’s future energy needs.
Thank you! I look forward to getting to know many of you in the next two days!