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Lars G. Josefsson
CEO, Vattenfall

Lars G. Josefsson

Lars G. Josefsson is president and CEO of Vattenfall, Europe's fifth largest generator of electricity and the largest generator of heat with operations in Denmark, Finland, Germany, United Kingdom, Poland, Netherlands and Sweden. He is also a member of the UN Secretary-General's Advisory Group on Energy and Climate Change. ALL POSTS

Electricity can decrease risk exposure

Q: What does it mean for a nation to be energy independent? Is it realistic and if so how should that be achieved?

The concept of energy independence is usually oversimplified in most political and media discussions. Given the globalization of the economy and the global trade in several key energy sources, a country would have to be exceptionally isolated from its neighbors to have a truly insulated energy system. Such a situation probably isn't desirable for any open or modern society.

As such energy independence really has to do with risk: nations want to avoid the risk of a shock from the outside, either in the form of an embargo, an interruption of supply or, a price spike caused by political issues elsewhere. Having diverse sources of supply, including some of your own, can decrease this risk. But in the case of oil, even a country that produces enough oil to satisfy its own needs is not necessarily protected: if the global price shoots up, domestic producers will raise their prices, too, unless the government decides to set emergency price controls.

One interesting answer -- and one that is obviously good for my business -- is electricity. The more a country can replace traded liquid fuels with electricity, the less it will be exposed to political risks from foreign suppliers. Of course some electricity production uses globally traded fuels, too, but because of the scale of electricity production, fuels are a much smaller part of the price the consumer pays.

That said, electricity can also benefit from trans-national cooperation, with grids that link countries diversifying the production mix and lowering cost. In Europe, the electricity market is headed in this direction, and in fact I believe that the future will not be about energy independence, but electricity interdependence.

By Lars G. Josefsson  |  April 1, 2010; 3:41 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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A conversion to electricity is a wonderful idea ... until you realize that you have to generate the electricity somehow. Coal-burning power plants? They're not exactly "green". Hydroelectric? This interrupts the local ecosystem of the river you just dammed up. Nuclear? Wonderful, but the NIMBY crowd freaks out when this option is brought up. Wind? Again, the NIMBY crowd is fighting this alternative. Solar? Hmmm, possible, but it would cost me $30K to put panels on my house, and then they'll only last 20 years (decreasing in efficiency over this 20-year lifespan).

Don't offer electricity as a viable option until you're wanting to discuss the whole picture. I think we can push forward on the production of electricity in the US, but I do not think we are yet willing to accept the "price tag" that it carries.

Posted by: c0lnag0 | April 10, 2010 1:41 AM
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I have often wondred why Americans speak to global referenes when they themselves are lacking in a commodity. This piece makes one forget that most of the US northeast gets much hydro from Canada as does the mid-West and Western States get gas and oil. When I first heard "W" talk about continental resources, I figures something was afoot. "What we have/do is not up for discussion, now lets talk about your stuff and how much of it we'll take", otherwise known as American policy. Turn off the taps and unplug the connection should be the response.

Posted by: sjag1 | April 3, 2010 9:19 AM
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