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Think globally, act locally

Countries must work together on energy sustainability
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March 5th, 2008 issue

By Leslaw Kuzaj

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As a citizen of Central Europe for the past 18 years, I have hoped for regional cooperation to address our common challenges. However, until now, very little progress has been made.

Countries in our region, most of them fresh European Union members, tend to look first to Brussels or the United States for solutions to local economic problems, while it is very well possible that applicable answers are already available from our neighbors.

Working for General Electric as a regional executive, I see that global companies can be proactive in solving global challenges — like the need for clean energy. We have the means and the knowledge to develop necessary technology to make our energy systems sustainable.

It is clear today that global energy needs are great.

Between now and 2030, electricity demand is projected to double. Both the energy “haves” and “have-nots” face huge challenges in meeting this increasing demand for energy on both a global and regional basis. Energy interdependence has an impact on all continents and regions, including Central and Eastern Europe. Moreover, our region — with a population of almost 140 million — is striving to find its place in the global economy, and we need to tackle these pressing issues to bring about real changes.

What should our goals be today to ensure energy sustainability and introduction of new technologies by 2030 in our region?

I would say there are two goals in solving this great challenge: One is for this region to have an energy industry that is economic, secure and diverse. The second is that the region, particularly EU member countries and those who seek new membership, must commit themselves to reduce pollutant and greenhouse gas emissions by 2020, when the new emissions legislation is to be implemented within the European Union.

As an example, the Czech Republic should more than double its share of renewable sources in its overall energy consumption, from the current 6 percent to 13 percent by 2020. This goal comes from a draft package of recently released measures from the European Commission. It has already sparked intense industry debate in this country.

According to statistics from the Czech Energy Regulatory Office, 3.34 billion kilowatt hours of electricity were produced from renewable sources of energy in the Czech Republic last year. This is roughly the same as in the previous year, but the share of renewable sources on total net production of electricity across the country decreased from 4.26 percent in 2006 to 4.1 percent.

But that still lags far behind the energy situation in Western Europe.

Recently, GE has also seen significant activity and interest across the region in every single renewable energy technology — from biogas, biomass, wind, hydro to solar just to name a few.

We attribute much of this activity to EU legislation. We expect that the European Commission’s recent decision will further speed the already growing interest in renewable energy sources in the Czech Republic.

However, the challenge can be turned into positive action. A common and unified energy strategy for our region and cooperation between governments, academic leaders, energy companies and the nonprofit sector would help individual countries, including the Czech Republic, to meet EU renewable energy standards.

As a result of our company’s global understanding and our significant presence and experience in the region, we have been working to facilitate regional cooperation to find a common path. Building off of the first successful regional stakeholder dialogue initiated by GE on “Global Challenges, Megatrends and Regional Answers” in Warsaw in 2006, we reached out to six American Chambers of Commerce in our region and the European Union American Chamber of Commerce to address our energy challenge from a regional point of view.

Our first regional energy forum, “Energy Sustainability and New Technologies,” was held Oct. 12 in Budapest. It was organized by chamber officials and it brought together key stakeholders from the region to learn from each other and from global players, to share best practices, and figure out what we can do together; to take a proactive role in finding solutions to our energy challenges rather than waiting for others to instigate new approaches.

We believe the forum was an important catalyst for starting a regional energy dialogue that can result in real long-term solutions.

GE initiated the forum for two reasons. First, because the future growth of our company is largely dependent upon regions such as Central and Eastern Europe and other growing markets (such as Latin America, the Middle East, India and China). Second, we have been active in the region as an investor, employer and a good corporate citizen for 18 years. We have been present on the Czech market since 1990.

So it’s important that GE actively contribute to this region’s development and ensure its sustainability. We believe the development of a unified and regional energy strategy, where the countries of our region join forces and act collectively, is a clear opportunity.

Energy sustainability was a key topic of the Budapest forum, because it presents a threat and an opportunity for Central and Eastern Europe, in terms of economic development as well as in securing its competitiveness in the European and global economies.

Outdated energy systems represent a major obstacle for the region to catch up with more developed countries. Since the Czech Republic and its neighbors have common historical, cultural and economic experiences, we encourage countries to work together to upgrade the aging energy infrastructure.

Specifically, while old power plants currently lag behind those in the rest of Europe, Czechs and others have a great opportunity now to invest in the latest generation of technology and become more efficient. Already, ČEZ, the state-run power company, is investing in numerous regional projects, from building a new plant in Hungary to planning other collaborative projects in nearby countries.

While our region’s energy infrastructure may still lag behind that of Western Europe, we have an excellent opportunity to diversify and advance to the latest technologies as the energy sector is modernized. It is clear that our region, including the Czech Republic, has a unique opportunity to leapfrog from where it is today to the latest generation of technologies. This could represent a major advantage in relation to other parts of Europe or even the world, where many countries are hindered by existing infrastructure and energy investments.

Our regional energy forum made it clear to all participants that they can generate momentum by using their collective voices to agree on energy issues within our region.

It is a progressive sign that the managing directors of American Chambers of Commerce from the Czech Republic, Hungary, Poland, Romania, Slovakia and Ukraine signed a declaration to confirm their commitment to working together. The document calls for signees to “leverage their respective and collective influence” on cross-border, cross-sector and “multi-stakeholder” discussions.

MOL Group, a leading Hungarian oil/chemical company, recently introduced a concept to combine the region’s gas transmission networks under a single entity. This is just the first result of last year’s forum. We hope these new plans and collaborative efforts will lead to more regional actions and projects.

In 2008, we will explore these topics further — from current joint projects and technologies to more discussions about financing, renewable energy, nuclear power and cleaner coal plants — at another annual regional energy forum.

The more our region’s governments and stakeholders collaborate to create a regional strategy, the more we can all benefit on the global market. The outcome has the potential to play a pivotal role in terms of the future and competitiveness of our region.

Leaders of our region must act now and act together.

— The author is the regional executive for GE Central Europe.

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