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Remarks to Plenary Session on Market Adoption and Finance

Reuben Jeffery III, Under Secretary for Economic, Energy and Agricultural Affairs
Washington Renewable Energy Conference
Washington, DC
March 5, 2008

Thank you, Greg.

Deputy Prime Minister Olofsson, Governor Pawlenty Michael Liebreich, and Andy Karsner, it is an honor to take part in a panel with such distinguished guests.

I greatly appreciate the expertise that each of you brings to this discussion on market adoption and finance of renewables. While I cannot pretend to add much to that specific issue, I will attempt to put the overall effort into the context of global energy security and national security, and provide some perspective on why renewable energy is so critically important from a foreign policy point of view.

Start with the basic point that world energy prices, particularly for oil, are at historically high levels.

In part this is due to rapidly growing demand. As globalization succeeds, and millions of people grow out of poverty, their demand for energy has increased dramatically, and will continue to grow even faster.

Meanwhile, supplies of traditional sources of energy have simply not kept up with the rising demand.

There are several reasons for this, including the increasing expense of accessing oil, political turmoil in producing countries and policy environments in some countries that are less than hospitable for investment in the energy sector.

A problem closely related to the tight supply is the risk that political turmoil or actions could cause short-term but painfully rapid reductions in global energy supplies.

High prices for hydrocarbons matter, not just for individual consumers, but also for their significant impact on the balance of payments for consuming countries.

The U.S. balance of payments is significantly affected by high oil prices. The U.S. imports 10 million barrels of oil per day. At $100 per barrel, that is one billion dollars per day of imports, or more than $360 billion per year, nearly half of the U.S. trade deficit.

And for developing nations, the burden of high prices is of even more profound economic consequence.

This makes dramatically increasing the available supply of renewable energy a key component of economic development and national security.

A second key factor is the other side of the tight supply-demand equation—oil exporters are acquiring huge financial surpluses that they are seeking to utilize and invest. We are witnessing a transfer of wealth from consuming to producing nations of unprecedented historical proportions.

This is currently manifested in part by the proliferation of sovereign wealth funds – large pools of money that countries, rather than private entities, invest.

This presents a challenge for the United States and other nations to ensure that these investments do not lead to undesirable market distortions, and that our national security interests are protected, while we remain open to the foreign investment that is so vital to our national well-being.

In some cases we must be alert to the risk that certain countries use their oil-based financial surpluses to finance political goals that endanger the political security of less well-off countries.

The third major factor driving the need for more emphasis on renewable energy is the consensus on climate change. Concern about the environment is a leading reason why we need to break our overdependence on hydrocarbons. The shift to cleaner technologies and fuel types like wind, solar or biofuel is one that needs to be hastened for the sake of the environment, as well as for the goal of diversifying energy sources.

Improved energy efficiency is part of the answer to that goal. But more significantly in the longer term, we need a major technological shift to sources of power other than hydrocarbons.

We need to think boldly and creatively about how to fashion new partnerships to advance our collective energy agenda. Just this week we met with our Brazilian counterparts and representatives from other Western Hemispheric nations to promote the adoption and finance of environmentally sustainable biofuels.

The U.S.-Brazil partnership is helping to intensify collaborative research that has the potential to speed the commercialization of next generation biofuels. This initiative is bringing the U.S., Brazil and European countries – together representing more than 90 percent of global biofuels production capacity – closer to having compatible biofuels standards, a necessary step for this alternative source to become a global commodity.

That is just one of numerous examples of our diplomatic effort to promote renewable energy. Perhaps most significantly, President Bush has also announced a $2 billion commitment to a new Clean Technology Fund, which, in concert with Japan, the UK and other partners, is aimed at bringing the best available renewable energy technology to emerging markets.

Since 2001, this Administration has dedicated – and the U.S. taxpayer has invested – $37 billion on science and technology research related to climate change, including $18 billion for development and deployment of clean energy technology.

In conclusion, let me reiterate what a pleasure it is to be here. The working relationships we develop here at WIREC, and beyond, are critical for identifying and moving forward on solutions to the global energy challenge.

Economic, foreign policy, and environmental imperatives are all driving us in the same direction—to rapid development and deployment of renewable energy technologies.

We look forward to following up on the many actionable opportunities which will come our of this year's conference.

Thank you for your attendance.

Released on March 11, 2008

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