The Affordable Energy Challenge
John S. Watson, Chairman And Ceo, Chevron Corporation
Since the International Energy Forum last gathered, some dramatic events in the Middle East, Asia, and elsewhere have added to the challenges of energy ministers and of the energy industry. That is just the nature of the energy economy: the whole enterprise is so central to the life of the world that almost every year brings a critical new development, whether a political crisis, a major discovery, or a potentially game-changing technology.
For all of the unexpected turns, however, there are certain constants that we can set our sights by. We know that demand for energy of every kind will continue to rise with population and economic development. And we know what will make such development and progress possible: affordable energy. I view this as the great objective that keeps us moving forward on all the right fronts. If we stay focused on delivering affordable energy to a world of seven billion people, we will achieve many other important goals along the way – from growth and job creation to the success of new energy sources.
Progress will also depend mainly on the very same energy sources – the ones we draw from the earth. Their share of the global energy portfolio will not diminish in the foreseeable future, even under the most hopeful projections for renewable and alternative fuels that have yet to reach commercial scale. Worldwide demand will grow by some 45 per cent just in the next 20 years. For the industry’s part, this will require large, long-term investments in the exploration and development of oil and gas reserves. And prudent public policy will follow a balanced approach that sustains such investment, allowing access to resources while holding energy producers to high standards. One of the worst mistakes we could make is to take the affordability of energy for granted, discouraging production until one day we are confronted with scarcity and all the economic troubles that would bring.
At the same time, we have to understand that as vital as fossil fuels remain, even they will not be enough in the long term. Every element of the portfolio is crucial to the overall picture. Oil, gas, coal, nuclear, all the various renewables in development – in the end, we will need them all, along with technologies that reduce the amount of energy needed at the point of use. Efficiency, after all, is the cheapest source of energy we have, yielding gains at no cost whatever to the environment.
At the strategic level, there is agreement on these broad goals among the nations represented at the IEF. There is agreement as well that technological innovation is our best ally on every energy front – preserving affordability against the enormous pressures of rising demand. This consensus extends across the industry, and is shaping the policies of many governments – all to the good.
In the end, we can get everything else right, but still go nowhere unless we have affordable supplies of the energy that makes things run, economies grow and improve lives. As this biennial conference recognises, energy producers and government regulators can achieve this objective only together – committed to shared progress, and moving forward as partners in a common enterprise.