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  Business Times 11 Sep 07
Securing our shared energy future
By Dave O'Reilly

ENERGY security was one of the key issues on the agenda at the Asia-Pacific Economic Cooperation (Apec) Business Summit last week in Sydney.

This is certainly understandable. Apec represents many of the world's fastest-growing economies, and access to reliable, affordable energy will be needed to power this vibrant region into the future.

But energy security now means more than just ensuring ample energy supply. It also means doing so in ways that are environmentally responsible and sustainable.

The fact is, the interconnection between energy security, economic security and environmental security has never been more apparent.

And while I share Australian Prime Minister John Howard's view that the Asia-Pacific region is poised to be “the cockpit of history” in the 21st century, this leadership role is not guaranteed.

It will happen only if this region, and others around the globe, can overcome the many challenges to securing the energy supplies needed for growth while protecting our environment.

A recent report by the US National Petroleum Council (NPC) - with input from more than 1,000 experts representing government, NGOs, universities and businesses, as well as the oil and gas industry - warns of growing risks to meeting the world's energy needs.

We face limited access to energy resources, rising demand, geopolitical uncertainties and the need to address carbon constraints. The study concluded that we need to develop all the energy we can and use the energy we have more efficiently.

I believe the best way to do this is to treat energy as a portfolio of sources.

First, we need a savings plan. Efficiency is the world's cheapest and most plentiful form of new energy. For example, the NPC study concluded that new technologies can improve US vehicle efficiency by 50 per cent by 2030 and appliances such as refrigerators by more than 20 per cent. A 40 per cent improvement in efficiency in developing Asia would save roughly 10 per cent of total global energy consumption.

But efficiency alone will not meet the world's energy needs. Under any scenario, oil, natural gas and coal will be indispensable for many decades to come.

The challenge will be to maximise these resources while serving the broader goal of environmental sustainability.

We also need to integrate more alternative and renewable sources into the supply mix and continue to develop nuclear power.

What it takes

This mix of initiatives will require a tremendous capital investment.

The International Energy Agency estimates that US$20 trillion will be required over the next 25 years - US$6 trillion in the Apec region alone - to build the energy infrastructure needed to meet demand. That does not include the cost of addressing climate change.

Just as important, these initiatives will require political leadership and the overcoming of entrenched parochial interests.

I believe a sensible way forward will rely on two pathways: multilateral cooperation and technological innovation. The world's energy challenges cannot be solved in isolation.

Just as multilateral efforts are required to sustain economic progress, countries must also work together, along with all energy stakeholders, to increase energy production, manage demand and develop new sources. Multilateral cooperation also is needed to address climate change.

Carbon reduction must be shared equitably by all of the world's major emitting countries, and all governments need to be transparent about the costs, risks and trade-offs associated with climate change policies.

The second pathway to overcoming our energy challenges is through the development of new technologies that can help the world expand its energy supply while reducing its environmental footprint.

Over the past decade, tremendous advances have been made in deepwater oil production, liquefied natural gas and ultraclean low-sulphur diesel, just to cite a few examples.

In Australia, Chevron is working with its partners on a massive carbon sequestration project at Gorgon. This technology, which would allow carbon to be captured and stored underground, holds the potential to significantly reduce the carbon footprint of oil, coal and natural gas.

I am optimistic about the world's ability to innovate and deploy game-changing technology in the 21st century. The energy challenges we face are large. But so, too, is our collective reservoir of ingenuity and problem-solving abilities.

One thing is certain. If we are to secure our energy future, the Asia-Pacific region has an opportunity - indeed, a responsibility - to play a leading role.

Apec provides an excellent model of how multilateral cooperation can drive economic progress. Apec countries must continue to focus on two important foundations of economic growth - energy security and environmental sustainability.

I am confident that if we respond to energy and climate challenges with collaboration, pragmatism and innovation deeply, our success not only is possible, it is inevitable.

Dave O'Reilly is chairman and CEO of Chevron Corp
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