What do today’s energy decisions mean for long-term trends?

11.09.2017 | Blog | Laura Cozzi, International Energy Agency

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Decarbonising energy systems while at the same time ensuring growth and energy security is a major challenge globally. How will this extensive challenge be met in the future? Awareness and engagement are prerequisites for progress. Change is possible only by working actively to find and implement solutions globally.

The World Energy Outlook provides strategic insight on what today’s policy and investment decisions mean for long-term trends. The 2017 edition of the WEO, which will be released on 14 November, will contain a full update of energy demand and supply projections through 2040 under different scenarios, and their consequences for energy security, investment, energy industries and the environment.

The WEO will examine China’s economic and energy transitions in detail, and consider how the country’s policy choices can shape not just national prospects, but also global outcomes. China is now firmly established as a global leader in renewable energy, efficiency and innovation.

The WEO will also include in-depth analysis of the gas markets, investigating the wider opportunities and uncertainties for gas in the transition to a cleaner energy system, including its role in tackling local pollution and the risk of methane emissions.

The WEO 2017 series will also feature two special analyses to be released in October. The first describes the close links between energy and development, assessing today’s global picture for access to modern energy, the strategies and technologies that can enable countries to achieve energy for all by 2030, and the ways in which reliable energy can move communities from poverty towards prosperity.

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Joint international efforts are the key to a more sustainable future

The solutions to the challenges in the global energy field and national energy systems should be discussed and organised through international co-operation as much as possible. Joint international efforts within a wide range of technologies, such as CCUS, the electrification of transport and digital technologies, will be key to achieving a more sustainable future.

The 2017 IEA Ministerial Meeting on 7–8 November in Paris will focus on global energy challenges and how they can be overcome. The International Energy Agency continues to provide a forum where also the Nordic countries can exchange ideas and best practices with many international partners, including not only the IEA member countries but also its associate members China, India, Indonesia, Thailand, Morocco and Singapore, as well as other partners around the world.

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Discover the solutions of the Nordic countries

A new regional summit, the Nordic Energy Forum organised by World Energy Council Finland, will take place on 14–15 November in Helsinki, Finland. The Nordic Energy Forum is an opportunity to converse on the current issues and policies concerning especially the Northern European countries. At the moment the Nordic countries are in a leadership position in terms of decarbonisation of electricity generation that is already 90% carbon-free due to high levels of hydro in Norway and Sweden, nuclear power in Sweden and Finland, and wind power in Denmark. The Nordic countries are also leading the way in the decarbonisation of transport.

In the Nordic countries the next steps would be to incentivise and plan for a significantly more distributed, flexible and interconnected Nordic electricity system. Future challenges include better exploiting the possible opportunities created by electrification and digitalisation and tackling the decarbonisation of heating in buildings and industry.

The solutions and experiences of the energy sector of the Nordic countries, as well as today’s challenges in Europe, will be widely discussed during the Nordic Energy Forum.

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Laura CozziLaura Cozzi
World Energy Outlook co-lead
Head of Demand Division

Laura Cozzi will be one of the speakers at the Nordic Energy Forum on 14–15 November in Helsinki, Finland. The programme includes top keynote speakers, as well as a panel of international CEOs and a panel of top officials from European energy departments and ministries.

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Further information about the Nordic Energy Forum: nordicenergyforum.fi

The Nordic energy system is undergoing upheaval, with new technology growing in importance

15.09.2017 | Blog | Matti Vaattovaara, ABB

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Electricity has a key role in tackling climate change and building a lower-carbon future.

A year after the Paris Climate Agreement and as the COP23 summit in Fiji approaches, a record number of renewable energy systems are being built, including in the Nordic countries. In 2016, investments in the electricity sector exceeded for the first time investments in production of oil, gas and coal. Investments in clean energy accounted for 43 percent of all production investments (source: IEA World Energy Investment 2017).

Electric cars still make up a very small fraction of traffic, but the change is rapid there as well. The most electric cars are found in China, the United States and Norway. The latter is especially strong in electric cars, accounting for 29 percent of the total car fleet. In Bergen that share is already 47 percent, and in Oslo 36 percent. The accelerating growth in China is especially noteworthy, since the country has already surpassed the United States in electric cars and accounts for about 40 percent of the world’s electric car market. Electric cars makes 1,6 percent of the total car fleet in China, and the share in both Peking and Shanghai is already around 7 percent. Chinese car manufacturers predict that by 2020 they will sell 4.5 million electric cars a year. European car manufacturers are also heavily involved in these developments. Renault-Nissan believes it will sell 2.5 million electric cars a year by 2020, and Volkswagen predicts annual sales of 2–3 million electric cars by 2025. The ambition is that 30 percent of all car traffic will be electric by 2030.

The energy storage market is also growing rapidly. Renewable energy must be supplemented with suitable storage methods. For this reason, the development of electric cars will drive large investments in battery technology. Global forecasts predict annual growth of more than 50 percent for battery-based energy storage solutions. Already today, batteries are increasingly used with renewable energy production to balance peak loads and bring stability.

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Nordic Energy Forum

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How can these changes be seen in our energy system?

1. The commercial energy market has changed

Significant subsidies for renewable forms of energy have also shaped the commercial energy market. Existing wind and solar power plants have low production costs, and have displaced traditional production in the open energy market. The price of electricity is low, the revenue streams to energy companies have decreased, and consequently the possibilities for new investments are diminishing.
Renewable intermittent energy requires dispatchable production to support it. At the same time, the combination of low electricity prices and base load production, which is initiated only occasionally, is not attractive to investors. This is challenging both for compensating for decreases in renewable energy production and for the reliability of the whole system.

2. As the amount of renewable energy increases, quick-dispatch power and reserves for interruptions become increasingly important

Electricity production is a huge and complex system, the stability of which has been based on a large rotating mass of synchronously running generators and turbines at large production units. With solar power, this element does not exist, and with wind power exists in name only.

In addition to energy balance, the stability of the system is at risk. As intermittent renewable energy production replaces traditional base load power, the significance and commercial value of quick-dispatch power and flexible consumption increase. And the closer to real time that the dispatch occurs, the greater the increase in value.

3. Production and loads are becoming distributed

When it comes to one particular and excellent characteristic of the new technology, namely scalability, the complexity of the challenge becomes apparent. The energy system previously consisted of a predictable load and large, and relatively easily adjustable production plants. Now, inflexible and irregular production is scattered across thousands of small units as solar power units on rooftops or wind farms along the coasts. Consequently, demand must be flexible, since production alone cannot be. Electric cars and energy storage systems will bring their share of flexibility to consumption, in units that are small yet significant when combined.

So the traditional idea of operation and control of the power system and of the energy market behind it is in upheaval. Systems must be created that can ensure the availability and stability of electricity in an increasingly difficult environment. Rapid, real-time adjustment with small units is required. Alongside traditional power companies, new players are emerging in the energy market. Households and new, agile energy operators will combine small energy flows and dispatchability into larger streams. Electricity transmission and distribution grids require more intermittent intelligence to enable the use of renewable energy and flexible energy consumption.

All this will create and demand new technology. ABB Finland has a significant role in the Nordic energy cluster. Finnish innovations in distribution automation, renewable energy production and building smart cities are top of the global technology development. Information technology and digitalization will extend to all devices in production, consumption and grid. All this requires new expertise. ABB Ability is our unified, cross-industry digital capability, extending from devices to the cloud. It offers devices, systems, solutions, services and a platform that enable our customers to know more, do more, and to do better together.

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vaattovaara mattiMatti Vaattovaara
Vice President, ABB

Matti Vaattovaara is the head of local sales and marketing for the Power Grids division of ABB Finland and also heads sales for the energy and transportation sectors. He has been working for ABB since 2005 in various leadership positions in the sales and service. Vaattovaara has a Ph.D. in Industrial Management, an M.Sc. in Nuclear Engineering and an M.Sc. in Electrical Engineering.

ABB is a pioneering technology leader in electrification products, robotics and motion, industrial automation and power grids, serving customers in utilities, industry and transport & infrastructure globally. Continuing more than a 125-year history of innovation, ABB today is writing the future of industrial digitalization and driving the Energy and Fourth Industrial Revolutions. ABB is involved in promoting the transformation of the energy system throughout the entire energy chain from energy production to transmission, distribution and energy use with leading digital, automation and control solutions. As a technology leader and global pioneer in digital competence, ABB responds to customers’ needs in the energy revolution on the move towards a smarter, stronger and greener grid of the future.

More information about ABB: http://new.abb.com/

ABB is one of the Gold Partners at the Nordic Energy Forum on 14–15 November in Helsinki, Finland. The programme includes top keynote speakers, as well as a panel of international CEOs and a panel of top officials from European energy departments and ministries.

Further information about the Nordic Energy Forum: nordicenergyforum.fi
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Solving headaches makes new business

27.09.2017 | Blog | Anne Särkilahti, UPM Energy

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Take a closer look at your core competences along with market trends – your next business model might lie within. Or, think about your biggest headache – or even better, the biggest headache you would have unless you were excellent in solving it. There surely exists someone who would like to buy your solution!

We know the trends: Solving the climate change is not easy and the solutions will cause a chain effect of new challenges to be solved, too. Increasing amount of renewables have shaken power market models and prices. Power trading does not look like becoming easier or cheaper, not to talk about increased risk management needs with more volatile and less forecastable short-term prices. In the aftermath of the financial crisis, increasing regulation has increased reporting and costs. Companies have a continuous race against each other on operational excellence – on the other hand, IoT, digitalization and analytics provide us with new tools.

.UPM Energy Nordic Energy Forum

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Turn difficulties to your strength

I believe an industrial power consumer with complicated processes at multiple sites does not have a choice not to take its power sourcing seriously. Not keeping up with the pace in a quickly developing market will give the cost benefit to its competitor. The difficulty lies in the complexity of managing this commodity. If establishing an expert organization of its own, there are enormous fixed costs – possibly even including power trading desks with back-office activities. Buying a service is not an easy task either. Does there exist a good enough one-stop-shop? If not, what is the ideal service provider combo, and how do you manage the data and information flow between them? Is the internal work still a burden? How do we solve the continuous need for developing and adjusting the processes as the time goes by? And after all, sourcing energy was just one of the numerous sourcing elements for the core business. But wait – could the most clever sourcing even be your competitive edge towards your competitors?

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You are not aloneUPM Energy Nordic Energy Forum

Very seldom are you the first to spot a problem. Surely someone else has had the same headache too, and might have even solved it. Typically someone like you, someone who has same kind of challenges. That is why for ages, there have existed peer groups sharing hints how to manage toddlers, teenagers or difficult bosses.

That was exactly what we realized: someone else’s headache was our new business opportunity. We had been dealing with this service for ages. We just needed to package it and tell the world about ourselves. We might not have been the most obvious service provider, but actually a very logical one.

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Anne SärkilahtiAnne Särkilahti
Director, UPM Energy

Anne Särkilahti is heading the new energy service business at UPM Energy. She has been working at UPM Energy since 2009 being responsible for the physical energy trading in the UPM-Kymmene Corporate. Särkilahti has a M.Sc. in Technical Physics and a M.Sc. in Finance.

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ABOUT UPM ENERGY

UPM Energy is the second largest electricity producer in Finland. It generates low-emission electricity in its own and co-owned power plants and in addition, it is also an expert of industrial energy.

UPM Energy provides industrial electricity consumption and flexibility services to industrial consumers and other energy companies. Deep understanding of industrial consumption as well as efficient, low-emission electricity generation, offer the company a unique position in the marketplace.

UPM Energy is a part of the UPM-Kymmene group. Read more about UPM Energy at www.upmenergy.com.

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UPM Energy is one of the Gold Partners at the Nordic Energy Forum on 14–15 November in Helsinki, Finland. The programme includes top keynote speakers, as well as a panel of international CEOs and a panel of top officials from European energy departments and ministries.

Further information about the Nordic Energy Forum: nordicenergyforum.fi
Check program »

Opportunities and Challenges for Renewable Energy in Finland

06.10.2017 | Blog | Timo Laakso, ÅF Finland

 

One of the basic assumptions of Finland’s new energy and climate strategy is that the role of combined heat and power (CHP) generation will remain unchanged up until the year 2030. Within the same period, however, the capacity of around 3000 megawatts of ageing cogeneration is about to retire from the system –  the amount which is in the same ball park than the output  of two nuclear power plants.

Consequently, the lost capacity should be replaced by new CHP plants by 2030 if we assume that the level of cogeneration will remain at the current level. However, today new CHP investments are typically not profitable due to the prevailing low price of electricity in the Nordic energy markets. Moreover, the general price level of electricity is expected to remain modest also in the foreseeable future due to the ongoing revolution in power generation. We can expect a lot of production capacity with low marginal costs in the energy markets in the near future.

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Market expectations regarding electricity prices contradict forecasts

What can be said about the market price trend for electricity during this period? The underlying assumption of Finland’s energy and climate strategy is that the price per megawatt-hour in the Nord Pool region will be between 50 and 60 euros up until 2025. However, the markets themselves appear to disagree, as the futures price projection for electricity up until 2022 is now below 30 euros per megawatt-hour. Although the sales volumes for these futures are small, the current price contradicts the forecasts used when compiling Finland’s energy and climate strategy.

The price forecasts for electricity are further challenged by new solar and wind power technologies, and probably also by the rapid development of battery technologies over the next decade. According to ÅF, the costs of rooftop solar systems for industrial properties have already come down significantly, as much as 15 to 20 percent a year over the past couple of years. Also it is easy to understand the logic for investing in these and continuing to do so in the future.

ÅF will continue to implement both cogeneration plants and solar and wind power projects around the world, including in Finland. We are well positioned to observe in practice the development of renewable energy technologies and their profitability in the Finnish market.

In the coming years the extensive implementation of renewable energy investments in Finland will depend largely on the competition model for renewable energy subsidies, which will be decided this winter. If we look at projects that have already been implemented and the prevailing cost level, wind power will most likely be in a strong position in this competition.

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How to ensure sufficient power generation during peak consumption

What do the trends described above mean for the Finnish energy system? We are not running out of energy, but a real challenge will be ensuring sufficient power generation during peak consumption, when weather-dependent forms of energy production cannot be relied on.

This problem can be resolved so long as our old CHP and thermal power plants that are now in reserve can be reactivated. The situation is trickier when this physical capacity no longer exists. The construction of a new CHP plant from the moment the decision is taken to start-up would take around five years in practice.

There is remarkably little discussion in Finland right now about investing in replacing CHP plants. However, if we want to ensure sufficient energy production and maintain the current level of cogeneration capacity, political decisions will most likely have to be taken soon.

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Timo LaaksoTimo Laakso
Senior Vice President, Energy Consulting
ÅF Finland

Timo Laakso is heading the Energy Consulting business of ÅF-Consult Oy. The role includes services for energy sector business consulting, project development phase services for renewable energy, conventional power and environmental consulting services. Timo has 16 years of profound and international experience and he holds M.Sc Tech.

ÅF Finland Oy is the largest power and energy sector consulting and engineering company in Finland. Our service portfolio covers the full life cycle of energy business that is starting from support in strategy development processes, M&As and market intelligence and up to project implementation and support in O&M of power plants. The foundation of our knowledge is decades long international experience in engineering and project implementation of energy sector projects which provides us deep understanding of energy business.

 ÅF Finland Oy is part of ÅF Group. ÅF Group is an engineering and consulting company for the energy, industrial and infrastructure markets. Since 1895, we have been contributing to the development and success of our clients. By combining various engineering areas and skills, we create profitable, innovative and sustainable solutions for a better future. Our base is in Europe but our organisation and customer base is worldwide.

More info about ÅF Finland,
http://www.afconsult.com/en/about-af/at-a-glance/

ÅF Finland is one of the Gold Partners at the Nordic Energy Forum on 14–15 November in Helsinki, Finland.
Further information about the Nordic Energy Forum »
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Hybrid energy + smart storage: the winning combination of renewable energy

23.10.2017 | Blog | Risto Paldanius, Wärtsilä Energy Solutions

 

Renewable energy production forms have expanded rapidly and will doubtless continue to do so as production costs continue to decline. There is broad consensus regarding the importance of solar and wind power for combating climate change. They have even become basic forms of energy production in a growing number of countries. As price competitive and emission-free forms of energy production, albeit dependent on weather conditions, they are challenging not only other forms of energy production, but also the entire electricity system and electricity markets.

In order to ensure the stability of electricity networks, as well as the availability and quality of electrical energy, other more flexible forms of energy production will be required everywhere. For example, engine and gas turbine power will still be required, since the wind does not always blow and the sun does not always shine. By combining traditional forms of production with renewable forms, cost advantages can be achieved in nearly all cases. The optimal solution in most cases also involves utilising energy storage.

Considering the declining costs of renewable, weather-dependent energy production, it is easy to understand why energy storage is attracting growing interest around the world. The development of battery-based energy storage is being driven in particular by the automobile industry, for which advancing battery technology is vital for developing electric vehicles. The continuously declining price of batteries and advancing battery technology have already improved the competitiveness of battery-based solutions in many markets.

 

Storage alone is not enough

Cheaper energy storage alone is not enough to solve all the challenges facing renewable energy systems. Energy production, storage and distribution factors should be optimised in a way that safeguards the reliable and cost-effective functioning of the entire energy system and maximises the service life of the required storage technologies. The introduction of battery technology in large energy systems will open up new opportunities.

Developing countries face almost continuous electricity shortages. Solar energy would be an affordable and easily implementable technology in many African countries, for example, but the challenge is managing their electricity networks. Storage would allow energy that is generated during the daytime to be used during the peak consumption hours during the evenings while preventing excessive loads on the network during the day. Regulators in India have already begun requiring storage for solar power plants that generate over 10 megawatts, as large power plants can cause major fluctuations in energy output and thus create additional stress for electricity networks.

In countries that have a strong infrastructure, hybrid energy – traditional power plant technologies combined with solar or wind power – together with smart storage and state-of-the-art control systems offers solutions for meeting power demands and quality criteria for electricity production, as it is one of the most effective means available for adjusting the frequency of electricity networks. In addition, hybrid energy provides a reserve for consumption peaks without requiring major investments in additional traditional power plants. If the power grid is resilient and maintained accordingly, energy storage systems can effectively balance electricity networks already now and certainly even more so in the future. This trend can already be seen in the UK and Central Europe, for example.

 

Most effective combination will win

The biggest question in terms of energy production in the developed markets is, what is the most efficient and effective combination of production, storage and control? Electricity systems can be hybridised in various ways, and the fuel consumption of engine or gas turbine power plants, for example, can be reduced by combining solar energy with them and balancing production fluctuations by means of energy storage. In addition, energy control systems can optimise battery life.

Hybrid power plant and energy storage technologies are already utilised profitably in the USA, where the advanced energy markets reward flexibility in terms of both production and consumption. Wärtsilä Energy Solutions’ latest acquisition, Greensmith, has already installed smart battery solutions at power plants generating over a hundred megawatts in North America, where advances in this sector have been particularly rapid.

In these circumstances, the growth of the energy storage sector is accelerating, and this growth is generating demand for better integrated, smart hybrid energy solutions. In order for the Nordic markets to keep up with the pace of development, the electricity markets should reward suppliers for flexibility and efficiency and not just for energy production.

The growth in the smart storage markets has expanded already from the USA to the UK and Central Europe, as well as to Australia with its rapid market products. Many Asian countries are also implementing their first pilot projects. Hybrid power plants optimised with energy storage will soon enable solar energy to be fully utilised in many regions. At the same time, engine power plants that utilise gas and biofuels and can be started up rapidly will safeguard energy supplies whenever solar or wind power is not available.

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Risto PaldaniusRisto Paldanius
Director, Business Development
Wärtsilä Corporation, Energy Solutions

Risto Paldanius has worked over 15 years in different fields of power sector. He has in depth knowledge on the global energy business and portfolio management through his works.

 

Wärtsilä Energy Solutions is a leading global energy system integrator offering a broad range of environmentally sound solutions. Our offering includes ultra-flexible internal combustion engine based power plants, utility-scale solar PV power plants, energy storage & integration solutions, as well as LNG terminals and distribution systems. The flexible and efficient Wärtsilä solutions provide customers with superior value and enable a transition to a more sustainable and modern energy system. As of 2017, Wärtsilä has 65 GW of installed power plant capacity in 177 countries around the world.

More info about Wärtsilä Energy Solutions: www.wartsila.com/energy

Wärtsilä Energy Solutions is one of the Gold Partners at the Nordic Energy Forum on 14–15 November in Helsinki, Finland.
Further information about the Nordic Energy Forum »
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Tackling climate change requires both global and local action

14.11.2017 | Blog | Bruce Oreck

 

Energy is essential for all of us – it is the blood of every country. We can’t operate without it. Energy is needed for modern prosperous life – for home economics and for business life. This is a fact that most countries agree with. What is also an unavoidable fact, however, is that the energy sector and energy consumption don’t work the same way as they once did.

We are in the middle of tremendous challenge. Tackling climate change by reducing greenhouse gas emissions is possible only if we change the way we produce energy, and if we use energy and resources more wisely. We need to accomplish more with fewer resources.

This means changing the way in which the world operates. We need a lot of new and different thinking. The challenges are global and local at the same time, and so are the solutions.

There are plenty of technologies and innovations out there already: renewable energy production, citizen micro grid systems, energy efficient buildings, low emission traffic, energy effective lighting and waste recycling – just to mention a few. Decision-makers also have the possibility to influence people’s behavior through incentives and taxes.

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Collaboration between countries is needed

At the Nordic Energy Forum in Helsinki from 14–15 November, representatives of Northern European countries will be able to discuss these issues and share their perspectives. Collaboration between countries is extremely important as we are all confronted by the same extensive challenges. It is crucial also for sharing best practices and experiences with local solutions.

The Nordic countries face the same challenges and the same fundamental problems as everyone else in this world. Every country has a slightly different energy portfolio and resource policies, but the common perspectives are driving collaboration. The primary need of all of the Nordics is to replace fossil fuels as soon as possible.

The host country of the Nordic Energy Forum has the opportunity to increase the use of wind and solar energy, but the real opportunity for Finland lies in nuclear power. Finland has the opportunity to produce nuclear power better than any other country in the world. The right choices regarding the fourth generation of nuclear energy will allow Finland to meet its energy needs without harming the environment.

Increasing energy efficiency is an enormous opportunity for every country, including Finland. More lights are being turned on in our cities than ever before, even in the middle of the night. The most environmentally friendly energy in the world is energy that is not used. The opportunities of energy efficiency and the means to implement them are not yet being fully realized.

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Successful local solutions demonstrate the possibilities to the rest of the world

Global solutions, like the Paris climate agreement, are crucial for the success in the battle against climate change, but that shouldn’t keep us from fighting equally hard for local solutions. Often the most effective change starts on the local level.

If the Nordic countries are prepared to accomplish more and faster than international commitments require, they’ll prove that there is a successful model for change. This would be a strong message to the rest of the world. The comprehensive energy policies in the Nordics could help achieve results through concrete and deep collaboration.

The Nordics alone are not going to save the world, but when people present solutions that work, others are likely to adopt similar solutions more quickly. For the Nordic countries this would be an opportunity to take the lead and show that there is a group of countries that understand the underlying changes profoundly.

The battle against climate change is a battle we don’t want to lose. Mother Nature pays the price anyway, but we get to decide how costly it’s going to be. The longer it takes, the worse it gets. When this is understood, it is hard to ignore. Everyone needs to make compromises. Unfortunately, ignoring facts is also a global problem.

Taking action for a better energy sector and better energy efficiency is possible. The question is how willing people are to take action. Action is needed at every level. There is no magic solution. Fortunately, there are plenty of changes and innovations that are taking us in the right direction.

 

Bruce OreckBruce Oreck

The writer is the former US Ambassador to Finland. He is one of the founders of the Zero Carbon Initiative, which is committed to implementing both experimental and off-the-shelf technologies in the built environment to offset greenhouse gas emissions. This blog text is based on an interview.

Oreck will be one of the speakers at the Nordic Energy Forum in Helsinki on 14–15 November.

Further information about the Nordic Energy Forum »
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