IEEJ: 2011 年 3 月掲載

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The Challenges of Energy Security: A UK Perspective

Introduction: outlining the energy challenge Toyota-san and Ladies and Gentlemen, thank you very muchindeed for your kind introduction and for inviting me to the institutethis afternoon. I really am very pleased indeed to address a lot ofvery distinguished and expert people on these important issues.
My career has brought me into contact with your institute several
times, particularly when I was as you said Toyoda-san president of
the British Institute of Energy Economics. I have always been very
impressed by your skilful analysis and contribution to policy
development in a very complex world.
 This afternoon ladies and gentlemen I want to share with you
some thoughts about the challenges we face today on energy
security and how in this dangerous world government andbusiness can help navigate towards a stable supply of energy.
This is a subject close to my heart and one that I have been
engaged with since the 1980s when I indeed served as you
reminded us as Britain’s Secretary of State for Energy under thepremiership of Margaret Thatcher.
 Ladies and gentlemen, the energy challenge facing the world issimply this: how to balance meeting the increased global demand
for affordable and secure energy, while at the same time tackling
the enormous challenge of climate change. This is the task of theenergy transition which we all have to achieve in all our nations

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2right across the globe. Maintaining a sufficient supply of reliable,affordable and sustainable energy is essential for global growthand development. With world energy consumption expected todouble in the first 50 years of this century; and most of that growth
will be outside the OECD countries, in fact all of that growth, withaccess to resources becoming ever more difficult; and climatechange challenges increasingly urgent, the energy task we face iscomplex and multi-faceted.

 Japan is of course a net importer of fossil fuels and the United
Kingdom, my country, is becoming more reliant on oil, gas andcoal from overseas so we share the pressures being exerted on
world energy markets by the rapid growth of China and otheremerging economies, who are hungry for energy, abundant energy,and if possible affordable energy. The importance of thesecountries will grow – as both consumers and producers ofconventional fuels and new technologies as well. So engagementwith them is essential.

 At the same time, access to existing and untapped resources is
becoming much more difficult. And much of the world’s energy
infrastructure lies in severe environments such as the Arctic andthe ice, which is maybe melting, and even where physical accessis easier – such as in Iraq’s huge and fully-proven oil reserves,
some of the world’s largest – there are political and security risks
which then add heavily to the challenges, and the costs.

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3 So in my view this new energy landscape requires a different,
more agile diplomacy than in the past, to guarantee both ourenergy security and our wider safety. Energy issues are clearlyboth the drivers of, and driven by, geopolitics. It is therefore rightthat energy policy is a high priority for our Foreign andCommonwealth Office in London where I currently serve. We
recognise that the UK needs to work bilaterally and multilaterally toaddress the opportunities and challenges that the international
environment poses. The present mid-east political turmoil presents
an acutely vivid picture of the dangers to our conventional energy
patterns. Like Europe, Japan draws substantial oil supplies fromthat region. We must do we can to ensure that legitimate
aspirations for democracy and freedom are balanced with orderly
political evolution in the countries and societies of the middle east
region and to allow the peoples of the Arab world to work out their
future in a context of stability.
 The key consideration around energy security is of course thethreat of climate change. We have to recognise the dangerous
impact of conventional fuels on the climate pattern and to look to afuture of cleaner, more sustainable energy technologies. Althoughof course not all conventional fuels have the same effect or havethe same load or charge of carbon dioxide emissions. The British
Prime Minister, David Cameron, has promised that our coalition
government in which I serve will be the greenest British
government ever. I believe that our ambitions for energy security
and greater climate security do march together. If we lose sight ofeither of these goals we will sacrifice both.

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4A shared vision for energy security

 The UK believes that security of supply and security of demand
are of equal importance. As the world’s third largest consumer ofoil your country, Japan, would no doubt share this view. We want
to secure prices that are both predictable and affordable. We all
remember oil prices reaching $147 a barrel in the summer of 2008,
that’s only two and a half years ago, and then crashing to less than
$40 six months later. This kind of volatility creates uncertainty,affects the economy, undermines investment. It is possible, andthis is only an assessment, but it is possible that we are again
entering a volatile period as Middle East instability reacts on crude
oil prices. As we emerge from global recession, high oil prices
bring with them the risk of double dip return to recession. The UK
is working with partners, such as Japan, through the G20, theInternational Energy Forum, the International Energy Agency andother international organisations to promote transparency andstability in global energy markets. And in addition we aredetermined to remove drivers of excess demand, such as fossil
fuel subsidies, which of course inflate demand enormously, arevery costly, and distort oil markets.

Unconventional gas

 Let me just say a word about the gas markets as well as the oilmarkets, and in particular the phenomenon of “unconventional”

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5gas. In our view gas has a very important role in the transition to a
low carbon energy mix. There is great potential in “unconventional”
gas sources, especially shale gas. For example, in the UnitedStates unconventional gas has transformed the domestic energymarket, with the US becoming self-sufficient in gas. And therefore
increased supply in global markets as a result of the decline inAmerican demand has lowered spot market prices and taken themaway from oil prices in spot markets which is a new and very
important phenomenon. Other nations, including China and Saudi
Arabia, are believed to have vast, commercially recoverable
reserves of unconventional gas. And we may also have some inEurope as well on quite a large scale although it may take time todevelop.

 If the US experience is repeated elsewhere, unconventional gashas the potential to end import dependency for many countries andmany regions. This transformation in relationships between
producer and consumer countries could have a profound effect on
the world energy scene and on our international relations.

Renewable energy
 Now let me turn from that to renewable energy, which is I know ofgreat interest to the institute. Domestic policy also plays a vital rolein encouraging sustainable future energy supplies. The British
Government recognises that for a secure energy future it must
provide the right environment for investment in infrastructure andin new technologies. Only with continued investment can weIEEJ: 2011 年 3 月掲載

maintain access to, and distribution of, fuel supplies during thetransition to a low-carbon energy base and beyond. In the UK wehave an ambitious programme to upgrade, refurbish and replacemost of our power station plants, and to achieve step-by-step amajor energy transition.
 Indeed, the UK has a target of securing 15% of all its energy
needs – that’s for electricity, heat and transport – from renewablesources by 2020, that’s nine years from now. The UK already hasthe world’s largest capacity of off-shore wind generation. But wecannot rely on wind technology alone. All effective forms ofrenewable energy will play their part. Intermittency of energy will
have to be met by backup capacity and ideally by new storage
technologies of which I have had a fascinating chance to observein a visit only yesterday to the major developments by Sanyooutside Osaka.
 I understand that Japan is at an early stage of implementing feedin-tariffs, and there are proposals to extend tariffs to wind andother energy products, in addition to solar photo-voltaics. I believethat feed-in-tariffs can be an effective tool to encourage thenecessary investment to make renewable energy supplies
commercially viable. In fact last year my country, the UK,
introduced a feed-in-tariff to encourage investment in renewableenergy up to 5MW and we are currently reviewing this scheme toensure that the government support is being used effectively.

Smart grids

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IEEJ: 2011 年 3 月掲載

7 Let me turn to another aspect of the energy revolution, namelytransmission and smart grids. Diversified supplies of energy posea new challenge to maintaining reliable supply. The developmentof smart grids and transmission systems is arguably as importantas developments in power generation itself. And again, this is anarea where the UK and Japan are each exploring important newideas. In the UK we have established a £500 million fund for smart
grids trials, are supporting eight pilot projects for electric vehicle
infrastructure, and aim to install smart meters in every householdin the UK by 2020.
 I am impressed by the smart communities initiatives that theMinistry for Economy, Trade and Industry, that’s METI, supportedby NEDO, has begun within Japan and overseas. I believe that ourtwo countries can share findings and expertise, and collaborate onprojects jointly. Indeed on Monday I had the pleasure to attend a
UK-Japanese seminar on smart grids hosted by the British
Consulate General in Osaka. That’s yesterday. Participants in thisevent included policy makers, academics, business
representatives from both countries, and I expect that seminar tolead to further expert-level cooperation in the coming months.
 The UK is also working to ensure that investment in renewableenergy and smart grids is encouraged throughout the whole
European Union, which is our immediate neighbourhood. We
support initiatives such as the North Sea Grid, an integrated
offshore energy grid which links wind farms and other renewableenergy right across the whole North Sea. And we hope that a
European Super Grid, which would pool power supplies from

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8diverse energy sources, will one day become a reality. We do wantto see a really competitive energy policy in Europe and obviouslycompetition only works where the energy supplies can betransmitted swiftly from one market to another without impediment.

Nuclear power The UK also believes, and let me now turn to the other great lowcarbon power of the future, the UK believes that nuclear power hasa central role to play in low carbon energy mixes because it can
provide a steady baseload without the risks of intermittency thatcome with other sources as I have indicated. Nuclear power is theobvious longer-term route both to meeting emissions reductions
targets and securing the reliable, low-cost and abundant electricity
that our own societies - and the developing world – and the smaller
economies, and the poorer areas of those economies, will certainlydemand.
 The British Government’s commitment to nuclear power can beseen in a new generation of ten nuclear power stations, which weplan and which will involve replacement of many of our much older
nuclear power stations. It will be a challenge to ensure that they
produce electricity competitively, safely and above all in a way thatis commercially viable.
 We are obviously not alone in taking up the nuclear challenge. The
International Atomic Energy Authority, who I visited in Vienna
recently, is now following the construction of 60 new reactors
worldwide. It would not be an exaggeration to say that a nuclear

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9“renaissance” is underway. And we want to be part of thatrenaissance in order to contribute to our own energy security andclimate change targets.

 Going back a few years when I was Secretary of State for Energy,
I sought to launch a nine-station nuclear reactor programme in theUnited Kingdom, in 1980 that was, and frankly that plan did notcome to fruition, it was thwarted by international factors, including
the collapse of oil and gas prices. So those with long memories willremember that oil and gas prices dramatically declined in the1980s, undermining all previous assumptions. But by pricing in thetrue cost of carbon today, nuclear energy should be able tocompete on a fair footing with oil and gas. Cap-and-trade schemes
such as the European Emissions Trading System ought to be able
to give private capital the confidence to invest in the nuclear andlow carbon technologies of the future, although there are still manyproblems to overcome. I also should add that the UK isconsidering how it might most effectively carry out long-term
management of its stocks of plutonium. Our Department of Energy
and Climate Change, to which I referred, has recently launched aconsultation on a potential new program for reusing the plutonium
as MOX fuel, provided this option meets value for money andsafety criteria.
 CCS
 Now I have one more area to turn to, indeed more than one, but
this is a very important one, that is Carbon Capture and Storage,

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10the securing of the CO2 emitted from burning fossil fuels. Fossilfuels, whatever we do, are going to remain an important part of theglobal energy mix for the medium term. The development anddeployment of Carbon Capture and Storage for both coal and gas
will therefore be critical in reducing CO2 emissions from power
stations and will probably do so by up to 90%. The individual
elements of Carbon Capture and Storage technology are available
to us. We know what to do. Transport, capture, reinjection, andunderground storage are all immediately deployable. But tosucceed we need to prove also their economic viability on acommercial scale to producers and consumers alike.
 We are very pleased to be working in this important area withJapan in such fora as the Carbon Capture Use and Storage Action
Group of the Clean Energy Ministerial process, and the Carbon
Sequestration Leadership Forum. This is where progress will bemade.

Energy efficiency
 Perhaps overarching all these considerations of new sources, wehave to look at more efficient ways of using energy. Like Japan,
the UK recognises that in addition to new sources of energy weneed to use energy much more efficiently. Energy efficiency
needs to become a core part of domestic life; business andindustry; as well as a central task for the power production andtransmission industries. We believe that government has a vitalrole in ensuring a framework is in place to encourage energy

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11efficiency and the necessary investments into it at every stage ofthe energy chain.

 I know that developing better energy and energy-efficiency
technologies has long been ingrained in the DNA of Japan. Your
industrial sector remains the world’s most efficient and mostenergy-efficient. We in the UK can learn a considerable amountfrom Japan in this regard. In return, I believe the UK has acomprehensive programme for energy efficiencies in buildings
which could be helpful to Japan as you examine how to respond toincreasing emissions from households. I hope a UK-Japanbilateral Energy Dialogue later in the year will help us tackle
together the challenge of developing new energy frameworks andputting both our countries at the forefront of the great low carbon
transition.

Conclusion: the opportunities in a low carbon energy transition
 My conclusions, ladies and gentlemen, are these. I finish byreflecting on the roles our countries can, indeed must, play in themove towards low carbon energy and the opportunities that lie
ahead. The position Japan takes towards a low carbon economy
has the power in itself to change markets and develop thebreakthrough technologies that will be needed worldwide beyond
2020. Indeed, Japanese know-how – whether in wind power,
storage, solar power, electric vehicles, nuclear reactors or othertechnologies – will be critical to our own UK low carbon transition.
But we must make sure this transition is harmonious, which meansthat it must avoid inflicting hardship and it must be affordable, bothIEEJ: 2011 年 3 月掲載

12for hard-pressed households with heavy energy bills, and forindustry struggling to compete in world markets.
 Ladies and gentlemen, the concept of a low-carbon energy
framework is not a gimmick. It is a pillar of developing sustainablegrowth in mature economies at a time of unprecedented pressure
on resources. Secure and affordable energy supplies arefundamental to our social and economic well-being and to oursecurity infrastructure at home and overseas. How we – the UKand Japan, our two countries – respond to the coming energy
challenges will determine our future prosperity.

 The United Kingdom believes that all of these developments inenergy technologies bring significant opportunities for UK
companies, including opportunities in terms of jobs andemployment and profitability. And not only in exploration andproduction of oil and gas, but also in supply chains, downstream
industries, and the research and development of low carbon
technologies. Japan’s world leading technological expertise meansthat you too have much to gain from these developments.

 Government needs to be helping industry to make the energy
business easier and more transparent, including for long term
investment. This means a clear framework for operating andinvesting. It also means actively engaging with the many countries– both producers and consumers – which are critical to sustained
UK and global energy security. Japan is among the most importantof these countries, and that is why it is such a pleasure for me toIEEJ: 2011 年 3 月掲載

13share thoughts with you and to talk to you today. I believe we arein dangerous times and I believe we need to think calmly andclearly and above all work very closely together to meet theimmediate challenges ahead.
 I thank you for listening to me.

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