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FEATURE MARCH/APRIL 2014
 
Professor Karl Rose in a conversation with IMP and WirtschaftsBlatt about
 

GROWTH & ENERGY
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Energy and climate policy in the European Union is at a crossroads. The common goals for 2030 are set: CO2 reduction, renewable energy and increased energy efficiency. The debate is heating up. Yet what we typically hear are just RECOMMENDATIONS as to the direction the Commission should embark upon when the new members take their seats in fall 2014.

Professor Karl Rose is convinced global warming is "clearly influenced by humankind", and that it is a global problem that "cries" out for a GLOBAL SOLUTION. The question that he still asks, however, is: "Have we been too focused on climate goals over the last decade and lost sight of the fact that developments in global energy prices have altered our competitive edge for the worse?"
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Time for a "new realism" in the European energy debate?

There is no doubt that a transformation in energy policy is right and urgently necessary. Yet the suggested path is obviously not working. The reasons:

  • For many years now, existing regulatory UNCERTAINTIES coupled with HIGH ENERGY COSTS have led to the flight of many companies from Europe as well as to a large portion of the population simply not being able to afford "energy".
  • Low gas prices in the USA (influenced by cheap shale gas) combined with a "flagging European economy" are also leading to a re-focus on "CHEAPER ENERGY" in European Union policy making.
  • Increasing CAPITAL FLIGHT from Europe and the resulting danger of an even more complicated employment situation are influencing the "trend".

So is it time for a new sense of realism in the European energy debate? The following three "real" statements from Professor Rose perhaps illustrate what we may have lost sight of in the chaos of this overly motivated "energy romanticism". It may be that a bit of NEW OBJECTIVITY* outside of the world of literature would help us here to make a departure from this radical romanticism and "build" a future based on facts and authentic visions of reality.

Reality 1: There will be no letup in energy price increases

Due to its structure, energy can not get cheaper. Therefore, anyone who wants to have sustainable and green energy will have to pay more for it. The massive output of sustainable energy – in particular in Germany – only leads to "Europe drowning in power when the sun shines or the wind blows hard." But electricity doesn't end up being cheaper for customers that way. On the contrary: Suppliers are often unable to cover their increased costs and have to pass on those increases to customers.

Reality 2: The vision of imminent peak oil is false and causes false conclusions to be made

The "peak oil" debate got going way back in 2000. Some people were and still are of the opinion that crude oil extraction will soon be reaching its peak. Others look to large reserves of tar sand and shale oil. The fact is that with new technological advances such as fracking (despite its very controversial nature) we can still extract massive amounts of oil and gas until long after 2050. The ostensible end of our oil reserves is thus the wrong argument for renewable, "green" energy. The discussions often end up going in the wrong direction because oil is always positioned as the OPPONENT of renewable energy. That is a "false" view, primarily because oil is vital for TRANSPORT and not for GENERATING POWER. Clear communication on this subject is required in order to then develop alternatives.

Reality 3: Decisions about the energy transofrmation in Germany have a direct influence on Austria

Because Germany and Austria are linked by their common energy market, the situation for electricity in Austria will intensify here too. The effect of Germany's energy transformation will definitely be felt in 2014 and 2015. Due to Austria's immense dependence on Germany's decisions in this matter, it is absolutely necessary that we understand exactly what is going to happen under the new government.

Time for the right energy policy decisions?

In particular, the right energy policy decisions on the EU level, based on the "realities" listed above, will be of the utmost significance for our economic success. We can only hope that a realistic approach among decision-makers will lead to a NEW OBJECTIVITY emerging – for the benefit of us all.

 

 

 

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We had a long interview with Karl Rose about why Europe, due to a number of developments in energy politics, will be facing dramatic challenges as a place to do business. Rose will also be present at
Vienna Strategy Days on May 6, 2014.




 

Karl Rose


PROFESSOR KARL ROSE ON GROWTH & ENERGY

Rose is a longstanding chief strategist at Royal Dutch Shell | Senior Fellow at World Energy Council for the development of global energy scenarios for 2050 | University professor for strategic management at Karl Franzens University of Graz
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*NEW OBJECTIVITY ...
was a movement in literature during the Weimar Republic that distinguished itself unemotionally and realistically from the pathos of expressionism. In the midst of emphatic changes and radically romantic images, it represented a sobering, even coolly distant and observant demeanor. The study and portrayal of external reality as well as the structure of life based on facts determined the "new objectivity" in the literature of the 1920s and 1930s.


 

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