SPEECH PRINCE FRISO AWARD CEREMONY

BLOGPOST, Fri 24 September 2010 14:00, Martijn van Klaveren

His Royal Highness Prince Friso of Oranje-Naussau was keynote speaker at the Postcode Lottery Award Ceremony. Here is the text of his speech:

"In a few years time, I will have been living more years abroad than at home. I remember when I moved outside of Holland for the first time. It was to California in the '80s, I felt really proud when people wanted to share their experiences and opinions on Holland. Some of you will be surprised there are quite a few Americans who do know where Holland is, and that Denmark is not the capital. Obviously there was flattery about football (or soccer as they call it), but more importantly they talked about our tolerance, our care about those less fortunate and our leadership in social change and innovation (and although I was at University in Berkeley, it was not only the legalisation of soft drugs that was on their minds). Despite our small size we were clearly known for punching above our weight when it came to contributing to making the world a better place.

Sadly, the message I have been getting recently, or should say over the past 3-4 years, is one of more concern, and I am not talking about the World Cup final. Some of you may be disappointed or even surprised to hear that outside of Holland people really don't care whether we have negotiated ourselves the 20th seat at the G-20 table. We all know that that seat will most likely be going to an emerging country within the next decade. What people do care about, and are concerned about, is whether we are becoming more inward looking, less tolerant, less engaged, and less interested in improving the plight of the less fortunate inhabitants of our planet. This apparent change in attitude may be one of the reasons why our country's role, when it comes to climate change and carbon reduction, can hardly be called visionary, leading or ambitious, especially when compared to some other European countries.

But we cannot afford to behave like ostridges, sticking our heads in the clay. And fortunately this negative image does not reflect the actions and ambitions of all individuals and organizations. In my day-to-day activities I have the good fortune to see what continues to make me proud of being Dutch. Our sense of solidarity, social innovation, and a global perspective. Two organisations that are well known abroad, and which we can be truly proud of, are also involved in today's events. They are the Dutch Postcode Lottery and the DOEN Foundation. And although I haven't been involved with PICNIC until this year, it appears from what I have seen over the past two days that PICNIC also promotes these values. So when I got an invitation to speak here today and to be involved in the Green Challenge, it didn't take long for me to accept this invitation, and I am glad to be here with you today."

"It is inspiring to see so many people enthusiastically thinking about how to improve the state of the world and to find solutions to environmental issues, resource scarcity, disease and poverty alleviation.

You have probably come here because you want to know which innovation has won the prestigious Green Challenge award, so I will share some thoughts on this important area.

Over the past 4 years I have been working with Jim Wolfensohn, former President of the World Bank. Our firm focuses on emerging markets. One of our focus areas is low carbon energy solutions for these fast growing markets with seemingly limitless appetite for energy. It has been a challenging but fascinating period, which included the financial crisis, and significant changes in attitude towards clean energy and more general climate change. Trying to raise money and making investments in this space has been challenging, but it has provided me valuable insights in the issues we face in migrating to a low carbon, cleaner environment.

I strongly believe that in order for us to succeed in migrating to a low carbon world we need three components. Firstly we need new technologies and innovative ideas. Secondly, we need governments and regulators to create the right policies and incentives to replace current technologies and to develop and roll-out new ones. And thirdly, the capital and labour markets need to provide the human and financial resources required to meet some very ambitious targets. Let me spend a few minutes on each of these.

Let me start with technology and innovation. There is no doubt in my mind that we can realise the technological innovation that is required to move to a low carbon economy. Whether it is in power generation and distribution, in reduced resource usage and more efficient and effective resource recovery or in new products and materials and their supply chains. We will find innovative solutions that have the potential to achieve our objectives of a low carbon world. Of course there are challenges in making our grids smarter, reducing the cost of generation technologies and developing the next generation biofuels, just to name a few. But these issues can be resolved within the next decade, so in the grand scheme of things they are relatively marginal. Rolling out these technologies at required levels is a much bigger challenge and that requires an appropriate role of governments and capital markets.

Probably the main reason for me to be optimistic about our ability to develop new technologies, to be creative and innovate, is because I have seen this before. When I was studying aeronautics many years ago, a shift in design philosophy was badly needed. Much time and effort had been spent on increasing product and system functionality. Although impressive, this was achieved at the expense of cost and quality. There was a need to reduce cost and improve quality. Changing the design objectives refocused the creative minds of designers and engineers to meet the new demands. In practice what happened was that we started to take into considerations the cost drivers of manufacturing, assembly, maintenance and recycling, and compared those to the value that was created for the end-users. Trade offs needed to be made, and could be made, once there was this understanding of cost and value. This resulted in higher quality products with lower life-cycle costs. Of course we failed to include one important cost element, the cost of carbon emissions associated with these improved designs. And that is what we need to change today. Once we have a substantial price on carbon, the powerful forces of competitive markets, rather than the weak forces of good intentions, will ensure that we will end up with products and services that meet the requirements of a low-carbon society. This gets me to my next point, the role of government.

Fundamentally the role of governments can be summarised in basically as little as three points:

- Firstly, and most importantly, governments have to make sure that we get a price for carbon. This can be achieved through regulations, subsidies, taxes or cap-and-trade schemes. Without a price on carbon there is insufficient incentive for altering attitudes, behaviours and decision making processes;
- Secondly, governments should set ambitious, long term targets, and be willing to create policies and incentives to stick to and achieve those targets. This will require courage, vision, and leadership.
- And finally, governments must create a level playing field and let markets determine how, depending on the price of carbon, those ambitious targets can be achieved as effectively and efficiently as possible, at minimal cost to society.

And this gets me to my third point: the importance of markets, both capital markets and labour markets.

We have been investing in polluting and inefficient technologies, products and supply chains for many decades even centuries. And not just in power generation and distribution, also in construction, transport, and more general the designs of our cities and how we live our lives. We have built an infrastructure that will need to be replaced over the next 50 to 75 years. This cannot be achieved with a few hundred billion euros. To put things in perspective, last year globally 150 billion was invested in renewables alone, and in 2020 we will probably need to invest a trillion dollars every year if we want to achieve any substantial goals by the middle of the century in the area of renewables and CO2 reduction. Not only does this require a lot of money, it also requires trained (and retrained) human resources to design and build the infrastructure and subsequently to manage and maintain it.

I am convinced that it is only Adam Smith's invisible hand that can move the vast financial and human resources required for a cleaner and greener world. However, we all know that markets are not perfect. Especially upcoming and intransparent markets which go through rapid changes will have substantial inefficiencies. The renewables market is such a market, and in these cases it will be important, or at least helpful, to push markets gently in the right direction, or nudged, to borrow a term from Thaler and Sunstein. Having worked in this market for a few years it is clear that the right government policies, and incentives will go along way in nudging markets to ensure we will have the resources to achieve a low-carbon world.

The objective of this year's PICNIC event is to create new solutions for a better world, for a low carbon world. To achieve this we will need, for lack of a better word, a perfect storm, bringing together technological innovation, visionary governments and nudged markets. Clearly the three are interrelated, and none will come about without the other two. However, national governments will be the critical factor in determining who will benefit and who will pay. Countries that get it right will not only be doing most for improving the world, they will create many jobs, and opportunities for economic growth.

We have come together here today to celebrate achievements in the area in which I have the utmost confidence: new technologies and innovation, creativity and design. Having reviewed the ideas that entered this competition, my confidence has been further supported. No shortage of talent, no shortage of ideas, and no shortage of potential. It has been an honour and a pleasure to be involved in this competition and I would like to congratulate and thank all those who have contributed to this year's Green Challenge, especially the Postcode Lottery for taking this initiative, for contributing to a cleaner world and for promoting much needed entrepreneurship and innovation.

Thank you."

His Royal Highness Prince Friso of Oranje-Nassau