Elements of a strategy to ensure long-term security of supply

Let me begin with some general remarks about the term “strategy”. Strategy comes from the greek word ‘stratos’, which means army and ‘agein’ means to lead. Strategy is an objective-orientated process, a long term plan, contrary to short term tactics which are part of a strategy.
Carl von Clausewitz writes about the difference between strategy and tactics: “ Tactics is the art of the use of military forces in a battle, strategy is the art of the use of battles to win a war.”
Or to quote another Prussian general, Neidhardt von Gneisenau: “Strategy is the science of the use of time and space.”

So, do we have a long term European energy policy /strategy? Do we have a science of the use of space and time in the area of European energy policy? Do we really know how to ensure a long-term security of supply?
I am sure you know what the answer is. The answer is no. We may have visions, we may have elements of a strategy like research into new technologies, we may have knowledge about our needs or problems, e.g. the problems of security of supply, we may see the danger of a sudden increase in the oil price, but we do not have a strategy for avoiding these dangers for offsetting the dangers and the risks by means of courageous and coordinated action.

One of the reasons why we lack a coherent energy strategy is due to the legal basis as laid down in the treaty of Nice and the not yet ratified treaty of a European Constitution. The European institutions lack major elements of a common energy strategy. The EU has no control over our natural resources nor does it have any influence over the oil price. Europe cannot decide on common energy taxes. Of course, in principle it could, but in practice you need unanimity in the Council, which is nearly impossible. It is like the story about Radio Eriwan. Question to Radio Eriwan:”Is it true that the greatest inventions were made by Russians?” Answer from Radio Eriwan: ”In principle yes. Because we invented the inventors!”
Another reason for the lack of a common energy strategy is the patchwork nature of public opinion. Whereas e.g. the Czech population is in favour of the use of nuclear energy, the Austrians are virtually unanimously against it . If strategy is really the science of time and space, as Gneisenau said, then our space is at the very least not homogeneous.
We could summarize this observation by saying, that we might be able to act in one or the other area but these individual actions do not yet fit together to allow us to speak of a European energy strategy.

However, there is a real need for such a strategy. There are three main reasons why a strategic approach is necessary.
The first reason is the demographic development of the world and in consequence the enourmously growing need for energy. According to the 2004 World Population Sheet, which has the most up-to-date demographic data and estimates for all the countries, world population is likely to reach 9.3 billion by 2050. By mid-century industrialized countries are projected to increase their population by a mere 4%, whereas the population of developing countries is expected to grow by 55%.
Without going into the details, you do not have to be an expert to understand that these people want to have access to energy. Where will this energy come from? And how can it be financed?

In the World Energy Investment Outlook, the IEA estimates an overall investment requirement for energy-supply infrastructure worldwide between now and 2030 of $16 trillion, or almost $550 billion a year. This is equal to around 1% of projected global GDP and 4.5% of total investment on average. In the developing countries the figures will certainly be higher than these averages.
Although Europe’s population will decrease, we are indirectly affected by the growing world population, because their gas and oil comes from the same sources as ours. We are experiencing this phenomenon already today. China’s economic growth is absorbing much of the world’s resources. Coke is becoming a precious material. Its price has quadrupled. The Chinese suck oil like a sponge sucks water. This is one of the reasons, why the oil price is so high. The same is happening with steel and other materials.

We are becoming more and more interdependent. One answer could therefore be to reduce our dependence on energy imports by developing our own, indigenous energy resources. This we did in the 70’s and 80’s of the last century, when we launced a programme for renewable energy resources and when we started an ambitious nuclear programme. On the demand side we encouraged the rational use of energy and increased our energy efficiency.
Europe benefited also from the oil and gas bonanza in the North sea. And we still relied on king coal (as we call it in Germany)l .

Today’s picture is different. We are phasing out our indigenous coal production and replacing it more and more by imported coal. North sea oil and gas prodution is declining rather than increasing. Some countries want to phase out nuclear energy or are not willing to build new nuclear reactors. And the contribution of renewables – although they are very popular – is limited by its very nature, by technology or by the lack of financial resources. So we are far from becoming less dependent on energy imports. On the contrary, we import more and more oil, gas and coal. In 15 years time Europe will be just as dependent on energy imports as it was in 1973, when we experienced the first oil price crisis.

To be dependent is not a risk in itself. We all depend on one another. When you drive your car on the motorway you depend totally on the correct behaviour of the other drivers. As long as they respect the rules of the road nothing will happen. But as soon as you have a drunken driver on the road or someone who uses the right lane like the left one you are lost. Part of our strategy must therefore be to urge the international community to behave in a civilized manner. International law has to be respected. And on the other hand we have to do what we can to reduce our insatiable appetite for oil, gas and other raw materials – or replace them by intelligent new materials.

Population growth and increasing energy imports are a foreseeable risk. Climate change is another risk. If the climatologists are right, we should not allow the concentration of CO2 in the atmosphere to exceed 550 ppm. This figure corresponds to a global emission of 30 billion t of CO2 annually. Currently we are at about 24 billion t, but already in 2015 we will reach 30 billion t. The climatologists consider this figure to be a threshold because it corresponds – according to their climate models – to an overall increase in temperature of the order of 2°C.
Assuming the climatologists are right and also assuming that 550ppm is the magic figure that ought not be exceeded, then the consequences are clear. Divide the 30 billion t CO2 by the population of perhaps 7 billion people and you end up with a figure of 4.3. In other words, from 2015 onwards we are not allowed to produce more CO2 per person per year than something between 4 and 5 t. Currently the average German emits about 10t CO2 per person per year. A French citizen emits between 6 and 7 t, an American 18 t. And an Indian 1 t!

We have just over 10 years before we reach 2015. Is Europe really committed to act like the climatologists recommend? Is the world willing to follow us? We all know, that there are serious doubts about whether these questions can be answered in the affirmative.

This is the framework we have to respect. It is defined by the growing need for energy worldwide, by our decreasing ability to produce enough energy in Europe, in other words, our own resources are depleting , and we are limited by our climate policy. Whatever energy we use, we have to use it in a way that reduces the emissions of greenhouse gases.

What then in such a context is the adequate level of security of supply? And what are the requirements for security of supply?

Concerning the adequate level of security of supply it is very difficult if not impossible to give you an exact figure. A wise answer would be: good relations with the countries where our energy comes from and a high degree of self reliance.
We certainly need what I would call an energy foreign policy. The dialogue with OPEC and with Russia has to be intensified. The problem is that many of the oil and gas exporting countries are far from being democratic and there are doubts about their respect for human rights. Very often energy, corruption, violations of human rights, disregard for the natural enviroment form a distasteful whole and cast a dark shadow particularly on the oil business. Some even say even that the price of oil is blood. It is all the more vital that oil companies behave correctly and respect the rules of international law. Corruption should not be allowed although I suppose it is sometimes easier to insist on that than to comply with our anti-corruption strategy.

Some years ago I read an article about the costs for the Americans of securing the supply of oil from the Arabian gulf. The figure that was given amounted to more than 200 billion Dollars per year and included the military presence in the region, the secret services, development aid etc. The author of the article recommended withdrawing from the Gulf and using the amount saved to develop America’s own energy resources, including renewables.

The author of this article – whether his figures are right or not – put his finger on a real problem. Oil is linked to power. What would happen to Europe’s oil supply, if the Americans withdrew their troops and battleships from the Gulf countries? Would the Europeans replace them? Just thinking about it is a nightmare!
On the other hand, do we really want to link our energy supply to military presence? I think not, but then the consequence would be to reduce our imports as much as possible.

What could be an alternative – or perhaps the alternatives? How could we increase our self reliance?

It is not surprising that my answer is not new. But the conditions under which such a policy could be developed are new. And the development of new technologies allows us greater room for manoeuvre. My recommendations are very specific, but not always popular.

First of all we should increase our efforts in research and development. We have to replace energy by intelligence. It seems not impossible that one day we may not need more than a quarter of our current energy consumption without giving up our lifestyle. Think about the enourmous progress we made in the last 200 years in agriculture. 200 years ago more than 90% of the European population toiled to produce our food and although they worked hard they couldn’t avoid the famine which forced millions of Europeans to emigrate. Today not more than 2% of our population produces more than we can eat or drink.
If we applied the same development to energy we might expect a similar efficiency revolution. But it needs time and it needs a lot of research and innovation.

My second recommendation relates to oil. Oil is mainly used in the transport sector and is so far difficult to replace. The most reasonable strategy would be to replace oil by gas or by synthetic fuels which originate from gas or organic substances, mainly waste. Some car manifacturers believe in such a strategy of substitution and believe that in 30 years time 2/3 of our fuel could originate in gas and biological materials.
Plants could be treated with enzymes as a cow does in her stomach or – what seems to be more promising – could be gasified under supercritical conditions, in other words under high pressure and high temperature.
The more unpopular recommendation is that we substitute gas in the electricity sector by nuclear in order to avoid greater dependence on gas imports.

A third element of our energy strategy ought to be to burn coal in a way that is compatible with our climate policy commitments. We clearly need a clean coal strategy.
Currently our coal fired power stations burn coal with an efficiency of around 40 or less percent. The most modern ones, which are still to be built, achieve 46%. It seems to be possible to increase efficiency up to 55, perhaps even 60%. In this case we need new heat resisting materials, new nickel based alloys and new ceramic compounds. This brings us back to research. In a similar effort CO2 has to be removed from the exhaust gases and has to be safely disposed of. This so-called sequestration technology would allow us to produce electricity or hydrogen from coal without the emission of CO2. I guess that sequestration will cost us 10% in terms of efficiency but 55 minus 10 gives 45 and with an efficiency of 45% we would still be above the current efficiency of coal fired power stations. In addition we would burn coal without emitting CO2.
To sum up we would have the following elements of an European energy strategy:
- research to increase energy efficiency
- foreign policy
- substitution of oil by gas and organic substances in other words synthetic fuels
- replacing gas by nuclear energy in the electricity sector
- clean coal
If we want these proposals to be followed by action – and only then could we speak of a strategy – then we have to increase our expenditure on research and development, we have to develop a European diplomatic service including experts, we have to invest in the production of synthetic fuels, nuclear energy needs a new boost and finally we need an ambitious programme called clean coal.
But we also have to stand firmly by the policies already developed. Greenhouse gases must receive a price tag. The directives on emissions trading must be implemented. We have to create a common market for renewables, i.e. in the coming years we need a new directive on renewables in order to harmonize the national support systems and to create a uniform European area for renewables. The regulator has to do his job.

Finally, we should not forget that companies and consumers are the real actors in the energy strategy. We need big players, big companies to stabilize the system, we need small and medium ones to deal with the consumer and to introduce new innovative services. And we need energy-conscious consumers who behave in an energy saving manner. This turns the spotlight on our education system. People must be informed about their own responsibility and the possibilities for using energy in a more intelligent way.

Strategy is an art. It can’t be decided in council. Nor can the Parliament vote through a strategy. But they could provide the Commission with the necessary elements of a strategy hoping that the Commission acts wisely and with success.
In the famous battle of Cannae on the 2nd of August 216 B.C. 90 000 Roman soldiers fought against 50 000 Carthagenians under the leadership of Hannibal. Although the romans were superior in numbers they lost the battle. As we know from our school lessons the romans lost and only 3 000 men escaped. All the others were killed. Hannibal was the better strategist on the battlefield.
But then he made a mistake. He didn’t attack Rome. He hesitated. “Vincere scis, Hannibal; victoria uti nescis” – ‘you know how to win, but you do not know how to use your victory’, was the criticism directed at him by his general Marhasbal, according to the Roman historian Livius. In the end the Romans won the war.
It is not enough to win the battles, you need to win the war. That is the essence of military strategy.

In energy policy we are in a similar situation. What matters is the end result, not the intermediate steps. Like the Romans we need stamina and a strong will.
The problem is that we do not always have this strong will. We only develop it in a crisis, e.g. when the oil price soars. What we need is a long term policy in order to make Europe and the world more stable and to reduce our vulnerability.
This is – as I already said – an art and therefore we should ask our politicians to become artists.