Mr Chairman; Excellencies; Fellow Speakers; Ladies and Gentlemen:
Let me start by thanking the State of Qatar for hosting this event and making us feel so welcome. It is a pleasure to address this distinguished gathering. In fact, it is a little bit like coming home. Having spent four decades in the petroleum industry, including a period as Vice-Chairman of Saudi Arabia’s National Committee of the World Petroleum Council, both the WPC and this Congress are very close to my heart.
For the last eight years I have been head of the OPEC Fund for International Development (OFID), where we work with the global community to help promote economic and social progress in developing countries. I therefore commend the organizers of this year’s Congress for providing us, in this Special Session, with an opportunity to discuss the importance of social responsibility programs in promoting human development.
Excellencies;
Ladies and Gentlemen:
Human development and social responsibility
Let me begin my speech this afternoon by referring to something which is a key consideration when discussing human development – the number of people sharing our planet. You may recall that only a few weeks ago, the United Nations Population Fund announced that the global population had reached seven billion people – a mind-boggling number, without a doubt. But what does it mean precisely?
Gender-wise, at fifty-fifty, the figure splits pretty much down the middle – a perfect balance, some would say. In terms of regional distribution, 60 percent live in Asia, 16 percent in Africa, and the remainder in the Americas and Europe. Which is by no means an even spread, but less significant given the relative size of the regions and the population-size of individual countries like China and India.
So far so good. But what happens when we look at income? This is where the real disparities emerge. Compare these two population groups:
- The 1.2 billion people from OECD countries that own two-thirds of global wealth.
- The 1.2 billion people from developing countries that survive on less than US$1.25 a day.
Quite frankly, the gap could not be wider. And, for human development, the ramifications are immense, especially within the context of our industry – energy. Which brings me to another two shocking statistics:
- Some 1.3 billion people globally have no electricity.
- Some 2.7 billion people rely on traditional biomass for cooking and heating.
As we all know, income disparities are not new. Nor is the level of poverty worldwide, much of which is caused by inadequate access to modern energy sources. Our challenge, as responsible global citizens, is to search for solutions to change this long-term paradigm.
Social engagement as good business practice
And, of course, working with society has become good business sense. Just as corporations moved a decade ago from “doing their bit for charity” to actively engaging in “corporate social responsibility”, so today we are seeing another shift. This time towards concepts like “shared value” and “social business,” where corporations acknowledge society as a key stakeholder. According to a recent article in the Harvard Business Review, companies who align their business strategies with these principles enjoy enduring success. The message coming through is that generating money and investing in society are not mutually exclusive, but rather mutually reinforcing.
My intention is that, at the end of my statement, we will all agree that the private sector, including oil and gas companies, and institutions like OFID, among other partners, can work together to address the issue of human development, and more specifically one of its greatest obstacles (energy poverty), through coordinated investment and innovative social programs.
Introduction to OFID
I should properly begin by introducing my institution, OFID, and the countries behind it: the OPEC Member Countries. OFID and its Member Countries have a long-standing commitment to development. Indeed, the economic and social development of poor countries was highlighted as, and I quote, “the overriding global priority” in the Caracas Declaration of the Second OPEC Summit in 2000.
Since its creation in 1976 as a multilateral financial facility to channel OPEC aid to developing countries, OFID has worked to advance human development through a widening range of innovative financial support. The total cumulative assistance now stands at over US$13 billion spread over 130 countries, notably the poorest among them.
The work of OFID encompasses many aspects of the struggle against poverty and is distributed across many sectors, including Agriculture, Education, Health, Water, Industry, Transportation and Energy. The last two sectors – Transportation and Energy – account for over 50 percent of commitments.
As I mentioned before, my focus today is the urgent need for the international community, including our industry, to work towards the alleviation of energy poverty in the poorest countries, as a way of contributing to human development. This objective has been a priority of OFID since its inception, but our efforts have intensified since the Third OPEC Summit of November 2007. Here, the Heads of OPEC States declared the Eradication of Energy Poverty as a common objective of all OPEC aid institutions and called on these institutions to cooperate with the energy industry and other financial institutions to enhance this important endeavour. OFID took this as a mandate.
Mr Chairman;
Ladies and Gentlemen:
Energy access and development
The international community has agreed that “Energy Solutions for All” must include a special effort to bring modern energy to the poorest. It follows, therefore, that “Cooperation, Innovation and Investment” should be directed at those most in need.
There can be no better demonstration of social responsibility in action than the provision of practical help to eradicate energy poverty.
Energy access is vital to support all aspects of development. If we consider the eight Millennium Development Goals (MDGs) established in 2000, none of them can be achieved on a sustainable basis without affordable access to electricity and to clean and efficient fuels. Let us look at some of the main advantages:
- Modern energy use can reduce deforestation and emissions of black carbon.
- Modern energy use can improve indoor air quality and free women and children from the burden of collecting fuel-wood.
- Electricity access can allow for longer working and study hours and make possible refrigeration in village clinics.
- Affordable energy can boost agricultural productivity and improve the management of scarce water resources, making a direct contribution to better food security.
- Cheap, efficient lighting and better communication can help integrate isolated rural communities and enhance social participation.
Building momentum
As we speak, the momentum for worldwide action on Energy Poverty Alleviation is building. In an address made in October this year by the UN Secretary-General at an international conference on the subject of “Energy for All: Financing Access for the Poor”, Mr Ban Ki-moon said, and I quote, that “energy poverty translates into grinding, dehumanising poverty.” He called for, and again I quote, “practical and large-scale action.”
Other actions include the designation of 2012 as the “Year of Sustainable Energy for All.” This UN initiative will effectively launch efforts to achieve universal access to modern energy services by 2030.
OFID is proud to contribute toward this initiative as a member of the UN Secretary-General’s High-Level Group. This Group, which will direct the global program of work, includes leaders with considerable energy industry experience.
Our task will be to turn the increased visibility and concern for energy poverty into a workable agenda capable of producing tangible results on the ground for the benefit of the energy-poor. OFID hosted the first technical meeting just three weeks ago.
We also recently hosted an IEF-OFID symposium on energy poverty. Its recommendations are going forward to 86 ministers of energy from both producer and consumer countries.
In January 2012, in Abu-Dhabi, the High-Level Group will outline the framework of the Action Agenda. By the time of the Rio+20 Conference on Sustainable Development in June we expect to have a detailed plan for priority areas of intervention.
Despite consistent pressure from OFID and other institutions, the eradication of energy poverty has not been added to the list of Millennium Development Goals. It is my firm expectation that this will be remedied at the Rio+20 Conference and that universal access to energy will take its rightful place as a high priority Sustainable Development Goal.
Ladies and Gentlemen:
Examples of initiatives
I am sure you will all agree that our industry should be fully engaged in this struggle to bring modern energy to the poorest. Indeed, embedding energy poverty alleviation as a core element in the social responsibility program of the petroleum industry would be a significant and visible contribution to human development. This commitment can take many forms. Let me highlight four examples of practical work undertaken to improve energy access:
- The first is an innovative scheme for the distribution of solar units to poor households in Tanzania, Kenya and Nigeria. Under its recently launched Energy Access Grants Program, OFID has joined forces with the Shell Foundation and social enterprise d.light to help fund the African rollout of the scheme. This initiative has already improved around three million lives in Asia, including those of some 600,000 children, who are now using solar lamps instead of candles or torches to study.
- My second example is a natural gas distribution project in Armenia. This project tackled the problem of solid unprocessed biomass, which continues to be the main energy source for some 2.7 billion people in developing countries. Used primarily for cooking, the burning of biomass leads to indoor air pollution and carries serious health risks. An affordable supply of gas, either natural gas or LPG, can provide an efficient solution to this problem. However, as many of you will know, inadequate distribution is frequently an obstacle to the wider use of natural gas. In 2008, therefore, OFID part-funded a 240 kilometre gas network in rural Armenia to bring natural gas to 32 rural communities. I witnessed first-hand the impact of this project, which has reduced both living costs and deforestation.
- My third example involves power generation from rice husks in Cambodia. This project highlights an important, but often over-looked, aspect of universal energy access - the need to provide energy for productive use. Communities need power for irrigation, food processing and workshops. Increasing productivity is an important route out of poverty, but requires energy services of sufficient scale and reliability. It is important to maintain flexibility regarding the choice of technology and fuel mix. In some cases hybrid diesel-renewable solutions are the best alternative.
- My fourth and final example concerns associated gas in Nigeria and illustrates how large-scale projects to generate and transmit electricity also work to alleviate energy poverty.
OFID is considering projects to scale up the use of LPG in developing countries in cooperation with the private sector. Such private–public initiatives work to improve the living conditions for the poor and create the basis for a profitable and growing market in clean fuels.
OFID is considering a grant to support two hybrid power plants in Cambodia. One of the plants will use rice husks as a fuel source, in parallel with diesel. The other will be a solar-diesel hybrid. The two plants are capable of providing over 500kW in total and will benefit 13,500 people.
Frequent power blackouts and unreliable supplies make it impossible to run efficient manufacturing and processing operations. Thousands of companies in South Asia and Africa rely on dirty and inefficient private generators to keep their businesses alive.
In OPEC Member Country Nigeria, the industry has been working for years with the Nigerian National Oil Company to capture associated gas and use this fuel to provide clean and reliable power for thousands of people in the Niger Delta. Such projects also reduce the environmental consequences of flaring the gas.
These four projects – the solar lights in Africa, the natural gas distribution in Armenia, the rice husk power generation in Cambodia, and the associated gas in Nigeria – are all practical examples of initiatives that have benefited from the commitment of our industry to work against energy poverty.
Ladies and Gentlemen:
OFID as hub for cooperation
As we go forward, the keys to success will be cooperation and coordination. Successful cooperation to overcome energy poverty will require efforts from many partners - representatives of local communities, governments, the private sector and financial institutions. We cannot hide from the fact that energy poverty – both the problem and the solution – concerns everyone, including all of us gathered here today. Indeed, as Rex Tillerson, CEO of Exxon Mobil, pointed out recently in Riyadh, when speaking about the multiple energy challenges facing the world, it is up to the oil industry to lead the way.
At the same time, coordination will be essential to prevent fragmentation and duplication. Countries prefer to deal with focussed and experienced partners. This was a subject of the recent aid effectiveness conference in Busan, South Korea, in which OFID participated with its eight sister development institutions.
I strongly believe that OFID can serve as the hub of petroleum industry efforts to contribute to the Sustainable Energy for All Initiative. As a member of the UN Secretary-General’s High-Level Group, we will encourage our industry to engage with the Action Agenda. There is enormous scope for the private sector to contribute leadership, technology and much relevant experience to help bring energy access to the poorest countries.
Mr Chairman;
Distinguished Ladies and Gentlemen:
Getting the oil industry on board
Let me conclude with the position that the World Petroleum Congress provides an ideal opportunity for the petroleum industry to commit to the goal of universal energy access by 2030.
Putting the strength of our industry behind the UN campaign for “Sustainable Energy for All” would be a landmark achievement for this 20th World Petroleum Congress.
The oil industry has been integral to the economic and social development of much of the world. Acting together, our resources can surely make a huge difference to progress towards affordable, clean and efficient energy for all.
Energy sustainability is the greatest challenge facing humanity today. Moreover, there is no quick fix. It is a task for the coming decades – a long term commitment. OFID, for one, together with other OPEC aid institutions, is determined to be part of the solution, and will continue to expand its efforts through all means possible. Today, at this Special Session of the Congress, we invite the industry to join us in this noble endeavour.
Today, at this special session of the Congress, we invite industries to join us in this noble cause. As a matter of fact, at this Congress we have heard some encouraging remarks from difference CEOs on this matter. And therefore OFID is offering to host a forum with industry representatives at our headquarters in Vienna in 2012 with the objective of reviewing concrete ideas and proposals.
Let us move forward together and reach out to those without modern energy services in the world.
Thank you all very much.