Toespraak van minister Lilianne Ploumen bij de Energy Charter Conference

Toespraak | 21-05-2015

Ladies and gentlemen,

A man named Eric Opoku travelled to Libya, where he intended to get on a boat to Europe. At the very last minute he decided to turn around and go back to his native Ghana. ‘I’ve got to make it here’ is now his motto. He started an internet café, but now the power is out. He also has a small restaurant, but the power is out there too.

Ironically, these power cuts, which affect Eric and so many others in the Ghanaian capital of Accra every day, are the result of Ghana’s success. The power grid hasn’t been able to keep up with the strong economic growth of the past few years.

So despite having two businesses, Eric Opoku has hardly any income. And he’s not the only one who can’t get ahead because of structural problems. Over a billion people worldwide have no electricity at all. And nearly three billion people still have to burn wood or other solid fuels to cook their food.

Worldwide energy demand is universally projected to increase over the coming years. The population is growing and billions of people are joining the middle class. And it’s not only consumers who need more and more energy. Companies, too, depend on a stable gas and electricity supply for their production, distribution and sales. The International Energy Agency has estimated that 48 trillion dollars will have to be invested in the energy sector over the next two decades to meet the growing worldwide energy demand. So we’re faced with a global challenge. We need more energy, we need cleaner energy and everyone must have access to a stable energy supply.

Meanwhile, the risks and disadvantages of traditional energy generation are becoming ever clearer. Fossil fuel reserves are increasingly found in difficult locations, being extracted at great depth or in harsh conditions. Or in regions that are politically or socially unstable, or ecologically vulnerable. The transition from fossil fuels to renewable energy has begun and it’s gaining momentum.

But you are all well aware of this. After all, energy is your business and you face the enormous demand for reliable energy production and supply every day. So you can see the opportunities. Technology, for instance, can turn shortage into abundance. The solar power yield is already increasing by 30 per cent a year. I see major oil companies transforming into gas companies and large utility companies abandoning fossil power plants and turning to renewable energy. Investment in renewable energy plants has now overtaken investment in fossil fuel plants. Energy savings are also growing faster. According to the World Bank, global energy savings in 2010-2012 equalled the total amount of energy used by Japan in the same period.

But the road ahead is long. And the transition needed in the longer term still requires a massive effort in technological innovation, behaviour change and supporting policy. Meanwhile, big investments are needed to ‘connect’ people like Eric Opoku to energy. That is an urgent, global challenge, and not only for governments. The involvement of the business sector is crucial. To give shape to new, future-proof energy policy we need governments and businesses to join efforts. Together we must chart an ambitious and realistic course towards a future with reliable and, where possible, renewable and clean energy for all.

So I’m pleased to see so many of you here today at this business event of the Ministerial Conference on the International Energy Charter. The countries attending the conference are here to sign a renewed political declaration, setting out agreements on energy trade and transit, investment protection and arbitration. It will provide the stability and security companies need to be able to do international business. We are creating the conditions for your investments – those trillions of dollars that will eventually be needed to reach our goals.

Those investments are in particular demand in low and middle-income countries. Countries like Mozambique and Tanzania seek the technology and knowledge to extract their large oil and gas reserves in a sustainable manner and the infrastructure to distribute that energy. But at the same time they’re looking for the best way to organise and manage the process. The Dutch can play a role in this respect. After all, we learnt the hard way that finding a large natural gas field brings challenges with it – Dutch Disease was named after us for a reason.

We now know from experience precisely where the opportunities lie too. Not only for businesses, but for the countries as a whole. First of all there are the direct gains, from the sale of oil, or extra tax revenue. And indirectly, the local economy benefits in the long run from spill-over effects. Employment is a good example. Local businesses are hired to supply products and services, like building materials and cleaning and catering services. The initial investments can create a value chain of related businesses. These spill-over effects strengthen the private sector at local level. And other companies, not directly involved in the investment project, can benefit too. One investment can have a snowball effect on the surrounding area. And that creates a more stable environment for new businesses.

But in practice these spill-over effects don’t happen automatically. One condition, for instance, is the availability of trained staff – not always guaranteed in emerging countries. Local manufacturers are often not yet able to meet foreign investors’ standards and requirements. As a result, the foreign investors bring in their own people, and import products and services that are not yet available locally. If major investment projects – which should mean a great step forward – fail to yield any visible benefits for the local economy, this can lead to frustration among the local population and damage the investors’ reputations. In economic terms, that’s a missed opportunity, in social terms it’s undesirable, and in political terms it’s risky. If the benefits of change don’t reach the local population, it’s a recipe for social unrest.

This needs to change, but that's not easy. I hear from both businesses and governments that they are struggling to channel investments in energy and to embed them in the local economy. So I want us to look at how we can ensure investments in low and middle-income countries are beneficial to all parties.

Some companies are already taking a pro-active approach. A good example is the Regional Offshore Training Centre in Mozambique. Its roots lie in a collaboration between Dutch suppliers in the oil and gas sector, and it trains local people for jobs in that sector. Initiatives like this start before the contract has even been awarded. And another example: in the coming year, the Hanze University of Applied Sciences, Groningen will be helping the Dar es Salaam Institute of Technology set up a curriculum on oil and gas extraction.

Ladies and gentlemen, energy is not just an economic commodity. It’s a primary necessity that enables people to shape their lives. Energy is a right and more and more people will demand to have that right. I started my story with Eric Opoku. Faced with the choice between a dangerous journey to Europe and a future in his own country, he chose the latter. He wants to make a success of his life in this own country. It's literally vital for him to succeed. But it’s also in all our interests to enable him and as many others as possible to build a life in their own country. And for that, energy is a basic condition.

We’re here to show that we’re all fully aware of that necessity. The political leaders by signing the political declaration, and the private sector by being here in such great numbers. Let us join forces and pool our knowledge and efforts.

Thank you.