I was invited to give a presentation at the CEE Energy 2010 conference organized by EastEuro Link in Budapest September 30th and October 1, 2010. I decided to diverge from the typical conference presentation about energy developments and the need for cross border cooperation and how companies operate in the CEE and SEE region. Instead I went straight to the urgent need to speed up our institutional and professional efforts at reducing carbon output.
I drew on a current project that I’m doing for the Regional Centre for Energy Policy Research (REKK) at Corvinus University. It is the Pathways for Carbon Transitions – or PACT, an EU financed FP7 project. For this study I interviewed over 30 people and analyzed the risks associated for companies and institutions in transitioning to a carbon neutral society by 2050. This is a chief goal of the EU’s second strategic energy review (past posting here, on old blog).
To simplify the findings I’ve developed a very simple equation that attempts to capture the key elements that can lead us to reducing carbon output (in the energy sector) to near zero. Or more realistically, to really be on a path where this is entrenched into the institutional and business practices (along with society). The equation is this:
pace of change = institutional change + technological development + (political/social capital)
The pace of change is essential for getting us there on time. To express this I use the quote by Steven Chu, the US Energy Secretary.
Look how long it took to make the transition from wood to coal, coal to oil and gas: 50- 60 years. We cannot make this transition in another 50 or 60 years. It will be too late for the climate.
Therefore, we must speed up how we do things. I purpose that identification of risks can speed institutional and market change. This includes closer scrutiny and identification of the elements associated with risk governance that can enable faster change to come about. Governance risks involves: regulatory, geopolitical, institutional lock-in and technological lock-in and investment risk. For a full analysis please read a recent article I’ve submitted for review to a journal(Risk Governance and Technologies LaBelle).
The presentation offers a more simple explanation of the approach and ties it to periods of market and regulatory change in the CEE/SEE region. A key proposition I made during the speech is that we can learn a lot by looking at past periods of change in the energy sector. Most recently the deregulation of electricity markets in the US and the privatization of energy companies. All profound changes that have (and have not) brought about how energy markets operate. The limitations of change should be noted, but also how change did occur.