More than 80 percent of the world's energy supply comes from coal, oil and gas. There is a general consensus that CO2 emissions place a strain on our climate, yet our inability to set a proper price on these emissions means that it is still far too cheap to pollute. The costs of our inaction are already all too clear. At current emissions rates, the UN's Intergovernmental Panel on Climate Change expects that global temperatures will rise by two degrees compared to pre-industrial levels, even before 2040.
If we are to succeed in reducing the use of fossil fuels and bring a halt to global warming, the world must have access to independent green energy that is cheaper than fossil energy. That is a huge, but by no means impossible, task. It requires, among other things, a significant downward pressure on the price of renewable energy. The industry must ensure that this happens. Similarly, the use of the very same fossil fuels that pollute our environment must become more expensive. That is a job for the politicians, and hopefully they will take an important step in the right direction with a global climate agreement at the COP21 in Paris.
We must utilize the renewable energy resources available in order to reduce global warming and future-proof our global ecosystems for generations to come; but also to become less dependent on energy imports. Europe should build a more independent energy system, leveraging our own natural resources and world-leading capabilities within wind, hydro and solar energy. EU imports about 90 percent of its oil and about 65 percent of its gas, spending around EUR 400 billion ($435 billion) per year on imported fossil fuels. It would make good sense to direct some of that money towards renewable growth and job creation instead.
Offshore wind power is currently the fastest-growing energy technology in Europe. In just 20 years, Europe has installed enough offshore wind farms to supply electricity to 18 million Europeans, and with the EU countries' current plans to build offshore wind farms, it is estimated that offshore wind power can cover the annual power consumption of 68 million Europeans by 2020.
However, offshore wind power, like other renewable energy technologies, is still a maturing industry. Consequently, renewable energy currently costs more than energy generated from coal and gas. We must change this. If green energy is to stand a chance of replacing fossil fuels, it is essential that cost is brought down.
As CEO of the world's largest offshore wind power company, with operations in Denmark, the U.K., Germany and – most recently – the United States, I lead a large organization, working tirelessly to reduce the costs related to renewable energy, such as offshore wind power and bioenergy. We have a strategic goal of reducing the costs of offshore wind power by 35 percent to 40 percent by 2020, and we are well on the way to achieving this.
However, the extensive efforts of the energy sector – which today represents about one third of global CO2 emissions – to reduce costs will not be sufficient. We also need a global climate agreement in which world leaders set out a global direction that creates a stable framework for the transition to green energy.
If green energy is to become cheaper than fossil energy, CO2 emissions must be priced at a level that more fairly reflects the damage they inflict on the planet. If the price of CO2 increases to the levels expected when the EU emissions trading scheme was set up, the cost of electricity from fossil fuels will consequently increase to a level where it is feasible that offshore wind power in the foreseeable future will match fossil fuels on cost.
We already know the renewable energy solutions we need in order to transform global energy systems. First and foremost, those are wind, water and solar energy, supplemented with biomass. Yet the prices of those energy sources must come down now, and it must become more expensive to pollute.
With a global climate agreement at COP21, I hope that the world's political leaders will join us in making an effort to ensure that in the future, it will simply be too expensive to choose those energy technologies that pollute our environment. The climate needs a global agreement that can support the transformation of our energy systems. If political leaders, the industry, regulators and investors provide a final push, the world will, within the next decade, see a major breakthrough where green energy becomes cheaper than black energy. It is a breakthrough which holds a great promise for future generations.
Lead image credit: DONG Energy.