Astronaut Neil Armstrong’s first words as he walked on the moon – "a small step for man, a giant leap for mankind" – would have been equally relevant to the challenge of climate change. When Armstrong and all the others of NASA’s Apollo Project were making headlines, I was growing up in Latvia, then a part of the Soviet Union. The U.S. space effort didn't get a lot of media coverage at home in those days, still, I’ve little doubt that when President Kennedy promised in 1961 that within 10 years America would put a man on the moon people were amazed. Such ambition, such complexity and so little time.
In Latvia, 20 years or so later, during Mikhail Gorbachev's glasnost, I remember being asked whether I thought Latvia should leave the Soviet Union, and if so how? I answered: "Yes, but I don't know how", because it seemed so improbable at the time. And yet within a matter of years, Latvia had re-gained independence, and is now an EU member state firmly anchored to its Western European allies.
These have been remarkable events within my lifetime, and it's not over yet! The point I’m making is that we must not be discouraged by the scale of our ambitions. We can achieve more than we think possible, providing we are determined.
So where are we today? We know that climate change is happening and that mankind is the likely cause. The Intergovernmental Panel on Climate Change has been very clear: "Warming of the climate system is unequivocal.... Observational evidence from all continents and most oceans shows that many natural systems are being affected by regional climate changes, particularly temperature increases". And the forecasts suggest that we had better act now to avoid the dangerous effects of climate change from becoming too pronounced.
We are the first generation to realise the scale of the problem, and we have a responsibility to act. And acting quickly is also in our best economic interest. The most comprehensive study of the economics of climate change that I know of was carried out by Nicholas Stern for the UK Treasury. He concluded very clearly that the cost of inaction was substantially greater than the cost of action. The total costs of inaction could be between 5% and 20% of lost GDP every year. These are extraordinarily high numbers, much greater than the proportions of GDP lost by economic slowdown.
The likely cost of the climate-energy package in 2020 is being put at 0.45% of the EU’s GDP, while between now and then Europe’s total GDP is forecast to increase by 38% from today's level. Even if our GDP tails to grow by quite as much, we are talking of a very small economic cost due to doing the right thing. It certainly seems a very small price to pay to avoiding serious climate change.
When in years to come we look back at the first decade of the 21st century, will we be able to say that we did all we should have done to address the climate problem? And what, meanwhile, are we doing? The European Union has already done a lot. The pricing of carbon, within the context of the Kyoto Protocol and the EU's emissions trading scheme, has been a good start. And whatever its peaks and troughs, we can expect energy prices to be higher in the years ahead than in years past. This is true not only of oil, but of electricity prices too, where a great deal of new investment needs to be made in both power generation and in infrastructure. Europe’s energy import dependency is forecast to reach 64% in 2020, if we use "business-as-usual" projection, up significantly on today’s level of just over 50%. The best way to avoid finding ourselves locked into energy intensive production and consumption patterns tomorrow is to give the right signals today.
That’s why I am striving hard to improve European levels of energy efficiency. It’s also one of the least costly ways of reducing our impact on the environment. We have set ourselves the objective of containing global temperature change to 2° Celsius. That is very ambitious as it pre-supposes that emissions of global greenhouses gases will have been stabilised within the next two decades, and that industrialised countries will reduce their emissions by 60% to 80% from 1990 levels by 2050.
The question I’d like to try to answer is "How many steps are we from a global renewable energy economy?" I would say that it is coming into view, and if we mean a global economy where renewable energy is a significant and growing part, then I think we are almost there. I don’t believe, however, that Europe’s energy supply will ever be entirely renewable. Nuclear power will remain part of the energy mix. Fossil fuels too, for as long as we have them, should continue to play a role in combination with carbon capture and storage (CCS). But for all that, renewable energy is a key foundation of a sustainable economy.
In 2007, for the first time more than half of the annual net increase in installed electricity generating capacity in the EU was from wind energy. Investment in renewable energy is now growing at a cracking pace right across Europe, and recently much of my time has been spent ensuring that a legislative framework is put in place that can maintain that momentum.
What the EU is doing today others are either doing too, or soon will be. Part of the case for Europe being a global leader in renewable energy is that we will create the expertise and produce the equipment that others will buy. As in all transitions, old industries will give way to new. It's a process of renewal, not of loss. Renewable energy technologies already account for over €20bn and have created 300,000 jobs in the EU. We in the European Commission estimate that meeting our 20% renewable target will create up to a million jobs. Mindful that others will fill the space if we do not the question, we should be asking ourselves is can we afford not to do so?
The renewable energy Directive, which will be finalised early this year, provides clear objectives for each EU member state and sets a stable framework within which businesses can invest. By 2020, Europe is going to meet 20% of its energy needs from renewable resources, so member states will have to apply themselves to creating the right support mechanisms, streamlining their administrative procedures and ensuring fair access to energy transport networks for renewable installations.
What I believe we will then see is a "giant leap for mankind" akin to Armstrong’s moonwalk. It’s a transformation that needs to happen, and happen quickly. I am often asked why there need to be targets for renewable energy in addition to the climate change targets? In my view there’s a very good case why renewable energy should have its own targets. First, many renewable energy technologies are not yet commercially competitive if left to market forces. Other energy sources benefit from subsidies, including coal, nuclear and even oil in some developing countries, so the playing field for non-supported renewable energy is not a level one. Second, renewable energy provides benefits to society that the market cannot price. These include benefits in terms of climate change and air quality, security of supply, innovation and regional development. As Lord Stern said recently of well-designed subsidies for cleaner technologies, "the world has a very strong reason for the faster development of new ideas and their diffusion than the market is likely to deliver". Third, targets strengthen the efforts of the European Union in providing leadership in a crucial area. For example, targets that attach sustainability criteria to the use of biofuels show a lead that other countries with biofuel policies might follow.
Renewable energy support should not, though, be open-ended. Financial support must be temporary, and reduced over time. Once technologies become mature they should stand on their own feet. This is the case for large hydro-power installations today and for on-shore wind tomorrow. Support for renewable energy should gradually disappear, but on a case-by-case basis. Offshore wind and marine energy will need support for longer than on-shore wind, disappear it eventually must. This is in stark contrast to greenhouse gas targets, which are not only here to stay but are likely to become more stringent over time and more geographically extensive. There is little likelihood of climate change no longer being a problem in 50 or 100 years from now. By that stage, the scarcity of many fossil fuels will probably have made renewable energy an automatic preference. Today's challenge is to put the global economy on a more sustainable energy footing as soon as possible.
In the meantime, I’m confident that the new U.S. Administration will play its part by providing the leadership that befits its status as a global player. It has shown in the past how determinedly it can reach its objectives. We all have a responsibility to look after planet Earth, and the widespread use of renewable energy is part of how we intend to do it.
I want to close with another quote from Neil Armstrong. Standing on the moon's surface, he said later: "It suddenly struck me that that tiny pea, pretty and blue, was the Earth. I put up my thumb and shut one eye, and my thumb blotted out the planet Earth. I didn't feel like a giant. I felt very, very small."