9 Sep 2009

NIB’s President: price mechanism key in securing energy supply

NIB President Johnny Åkerholm at the Nordic Climate Solutions conference in Copenhagen. Photo: Johannes Jansson / norden.org

“Without intelligent energy, no long-term growth is possible in the global economy,” said the Nordic Investment Bank’s President and CEO, Johnny Åkerholm, at the Nordic Climate Solutions 2009 conference in Copenhagen on 9 September.

NIB’s President highlighted the need to increase the supply of energy while reducing emissions. “Huge long-term investments are required in order to add 50% to the energy supply by 2030 (IAE estimate) and reduce emissions at the same time,” said Mr Åkerholm. “The digestion period of these investments is very long: what we plan today will take many years to materialise, which increases investors’ risks.”

“It is widely recognised that increasing the energy supply, in general and new and renewable energy forms in particular, will not come about at current prices,” he continued.

Mr Åkerholm pointed out that the key to securing an investment flow for boosting energy supply lies in price mechanism. “We cannot rely on the market itself. It cannot incorporate externalities. Hence market prices are structurally too low and too volatile for supply and demand decisions. We need a mechanism that would put the price of energy, carbon in particular, on a steady upward trend,” he said.

NIB’s President also stressed the need for a global agreement to cap carbon emissions that would make it possible to identify carbon prices.

“We also need a common understanding that energy taxes are to be used for establishing the price level for energy and smoothing out its fluctuations,” he concluded.

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