P. 1
IEA_WORK_2005

IEA_WORK_2005

4.0

|Views: 49|Likes:
Publicado porserhat_ertan

More info:

Published by: serhat_ertan on Mar 28, 2009
Direitos Autorais:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/10/2014

pdf

text

original

Sections

Findings of Recent

IEA Work

2005

I N T E R N A T I O N A L E N E R GY A G E N C Y

Findings of Recent

IEA Work

2005
An electronic version of this book with direct links to references is available at www.iea.org/findings

I N T E R N A T I O N A L E N E R GY A G E N C Y

I N T E R N AT I O N A L E N E R GY AG E N C Y The International Energy Agency (IEA) is an autonomous body which was established in November 1974 within the framework of the Organisation for Economic Co-operation and Development (OECD) to implement an international energy programme. It carries out a comprehensive programme of energy co-operation among twenty-six of the OECD’s thirty member countries. The basic aims of the IEA are: • to maintain and improve systems for coping with oil supply disruptions; • to promote rational energy policies in a global context through co-operative relations with non-member countries, industry and international organisations; • to operate a permanent information system on the international oil market; • to improve the world’s energy supply and demand structure by developing alternative energy sources and increasing the efficiency of energy use; • to assist in the integration of environmental and energy policies. The IEA member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. The European Commission takes part in the work of the IEA.

O R G A N I S AT I O N F O R E C O N O M I C C O - O P E R AT I O N A N D D E V E LO P M E N T The OECD is a unique forum where the governments of thirty democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to coordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Commission takes part in the work of the OECD.

© OECD/IEA, 2005 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to: International Energy Agency (IEA), Head of Publications Service, 9 rue de la Fédération, 75739 Paris Cedex 15, France.

FOREWORD
This new edition of “Findings of Recent IEA Work”, launched at the Ministerial-level meeting of the IEA's Governing Board on 2-3 May 2005, provides a broad sampling of the Agency’s working programme. Each page focuses on a specific subject, including references to further IEA work that will be of use to governments, academics, journalists and the wider public. “Findings of Recent IEA Work” is divided into five sections which correspond to the main challenges policymakers face in the energy domain:
■ ■ ■ ■ ■

Security of Supply and Energy Markets Energy Diversification and Efficiency Energy Technology Environment and Climate Change Energy in the Wider World

This publication is designed to serve as a ready reference to IEA work and will provide an overview of the many, varied and fascinating activities in which we are engaged.

Claude Mandil Executive Director of the IEA

3

TABLE OF CONTENTS

SECURITY OF SUPPLY AND ENERGY MARKETS
● ● ● ● ● ● ● ● ● ● ●

7
8 10 11 12 13 14 15 16 17 18 19

World Energy Outlook 2004 World Energy Investment Outlook 2003 Emergency Response Strategies and Mechanisms Global Oil Market Security Energy Policies of IEA Countries - 2004 Review IEA Monthly Oil Market Report The Oil Market Report Website The Impact of Higher Oil Prices on the Global Economy Energy Statistics, an Essential Component of Energy Analysis and Policy The Joint Oil Data Initiative (JODI) Security of Supply in Electricity Markets

ENERGY DIVERSIFICATION AND EFFICIENCY
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

21
22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Security of Gas Supply in Open Markets The Future of Gas for Power Generation Power Generation Investment in Electricity Markets Demand Response in Liberalised Electricity Markets Saving Electricity in a Hurry Towards Hydrogen Coal and Sustainable Development Research, Development and Demonstration Trends A New Methology Measures Solar Collector Market Data Renewable Energy Cost Developments for Electricity Generation Renewable Energy Policies in IEA Countries Renewable Energy Markets Natural Cycles of Renewables and the Case of Wind Intermittency Biofuels for the Transport Sector IEA Energy Indicators Energy Efficient Domestic Appliances and Equipment

ENERGY TECHNOLOGY
● ● ● ● ●

39
40 41 42 43 44

Advanced Electricity Networks CO2 Capture and Storage Technologies Experience Curves for Energy Technology Policy Trends in Energy Use and Efficiency-impact on CO2 Emissions Basic Science and Future Energy Technologies

5

● ● ● ● ● ● ●

Energy Technology Information International Collaboration in Energy Technology Oil and Gas Supply Technologies and Energy Security IEA R&D Collaboration on Fusion Power and ITER Coal Technology Roadmapping Transport Technologies to Reduce Oil Consumption and Emissions Saving Oil in a Hurry

45 46 47 48 49 50 51

ENVIRONMENT AND CLIMATE CHANGE
● ● ● ● ● ● ● ● ●

53
54 55 56 57 58 59 60 61 62

World Alternative Policy Scenario CO2 Emissions from Fuel Combustion Dealing with Climate Change - Database for Policies and Measures Greenhouse Gas Emissions Trading: an Energy View Competitive Implications of European CO2 Emissions Trading Energy Security and Climate Policy Interactions Beyond Kyoto Technologies and Climate Policies Emissions Reductions through Project-based Activities

ENERGY IN THE WIDER WORLD
● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

63
64 65 66 67 68 69 70 71 72 73 74 75 76 77 78

The Producer-consumer Dialogue Energy and Development Russian Energy Policy Developments Russian Electricity Reform Energy Efficiency in Transition Economies District Heating Policy in Transition Economies Energy Reforms in the Black Sea/South East Europe Region China's Quest for Energy Security China's Challenges in Developing its Gas Market India's Quest for Energy Security Gas in India Working with South East Asia on Oil Security and Emergency Preparedness Electricity and Gas Sector Reforms in Brazil Towards African Energy Information Systems African Energy – In-depth Review of Angola's Energy Sector

6

1

SECURITY OF SUPPLY AND ENERGY MARKETS

2

WORLD ENERGY OUTLOOK 2004 WORLD ENERGY INVESTMENT OUTLOOK 2003 EMERGENCY RESPONSE STRATEGIES AND MECHANISMS GLOBAL OIL MARKET SECURITY ENERGY POLICIES OF IEA COUNTRIES - 2004 REVIEW IEA MONTHLY OIL MARKET REPORT THE OIL MARKET REPORT WEBSITE THE IMPACT OF HIGHER OIL PRICES ON THE GLOBAL ECONOMY

3

4

5

ENERGY STATISTICS, AN ESSENTIAL COMPONENT OF ENERGY ANALYSIS AND POLICY THE JOINT OIL DATA INITIATIVE (JODI) SECURITY OF SUPPLY IN ELECTRICITY MARKETS

7

SECURITY OF SUPPLY AND ENERGY MARKETS

1

WORLD ENERGY OUTLOOK 2004
KEY MESSAGES

2

In the World Energy Outlook 2004 Reference Scenario, the world's energy needs are projected to be almost 60% higher in 2030 than they are today and fossil fuels continue to dominate the energy mix. Developing countries will approach OECD countries as the largest consumers of commercial energy by 2030; nonetheless their per capita energy use will remain well below that of the OECD. The worlds' energy resources are ample to 2030 and beyond. Less certain is how much it will cost to extract them and deliver them to consumers. Major oil- and gas- importers - including most OECD countries, China and India - will become ever more dependent on imports from distant, often politically unstable parts of the world. These medium to long-term energy supply and demand trends raise serious concerns. The world's vulnerability to supply disruptions will increase as international trade expands. Climatedestabilising carbon-dioxide emissions will continue to rise. Huge amounts of new energy infrastructure will need to be financed. And many of the world's poorest people will still be deprived of modern energy services.

3

4

SUMMARY
World Energy Outlook 2004 paints a sobering picture of how the global energy system is likely to evolve from now to 2030. If governments stick with the policies in force as of mid-2004, the world's energy needs will increase to 16.5 billion tonnes of oil equivalent. Fossil fuels will continue to dominate the global energy mix, meeting most of the increase in overall energy use. The earth's energy resources are more than adequate to meet demand until 2030 and well beyond. Fossil-fuel resources are, of course, finite, but we are far from exhausting them. Our analysis suggests that global production of conventional oil will not peak before 2030 if the necessary investments are made. Proven reserves of gas and coal are even more plentiful than those of oil. There is considerable potential for discovering more of all these fuels in the future. A central message of this Outlook is that short-term risks to energy security will grow. Recent geo-political developments and surging energy prices have brought that message dramatically home. Rising oil demand will have to be met by a small group of countries with large reserves, primarily Middle East members of OPEC and Russia. Booming trade will strengthen the mutual dependence among exporting and importing countries. But it will also exacerbate the risks that wells or pipelines could be closed or tankers blocked by piracy, terrorist attacks or accidents. If current government policies do not change, energy-related emissions of carbon dioxide will grow marginally faster than energy use. CO2 emissions will be more than 60% higher in 2030 than now. Well over two-thirds of the projected increase in emissions will come from developing countries, which will remain big users of coal – the most carbon-intensive of fuels.

5

8

Converting the world's resources into available supplies will require massive investments. In some cases, financing for new infrastructure will be hard to come by. Meeting projected demand will entail cumulative investment of some $16 trillion from 2003 to 2030, or $568 billion per year. The electricity sector will absorb the majority of this investment. Reducing energy poverty is an urgent necessity.There will be some encouraging advances in energy development in non-OECD countries over the projection period. But even for the most developed among them in energy terms, the use of modern energy and the per capita consumption of every kind of energy will remain far below that of OECD countries. These trends are, however, not unalterable. More vigorous government action could steer the world onto a markedly different energy path.This Outlook presents an Alternative Scenario, which analyses, for the first time, the global impact of environmental and energy-security policies that countries around the world are already considering, as well as the effects of faster deployment of energy-efficient technologies. In this scenario, global energy demand and carbon-dioxide emissions are significantly lower than in the Reference Scenario. Dependence on imported energy in major consuming countries and the world's reliance on Middle East oil and gas are also lower. But even in this alternative case energy imports and emissions would still be higher in 2030 than today. It is therefore clear that achieving a truly sustainable energy system will depend on technological breakthroughs that radically alter how we produce and use energy.

1

2

3

4

5

REFERENCE World Energy Outlook 2004, IEA/OECD, Paris 2004
9

SECURITY OF SUPPLY AND ENERGY MARKETS

1

WORLD ENERGY INVESTMENT OUTLOOK 2003
KEY MESSAGES

Energy sector investment of $16 trillion is needed over the next three decades to meet the expected 60% rise in global energy demand. Although the challenge of financing this investment will be toughest in developing countries and emerging market economies, securing the reliable supply of affordable energy will be crucial to the economic health of IEA member states and non-members alike.

2

SUMMARY

3

The quantitative study identifies the amount of capital needed to finance the construction of energy supply infrastructure, including production, transformation and transportation of energy for oil, gas, nuclear, electricity, coal and renewables worldwide in 18 countries and regions. It also analyses the obstacles the energy sector must overcome in order to attract this level of investment and fund its required expansion. OECD countries face challenges in financing electricity investments. This has not been a problem until now, but different financial risks have been introduced by the transition to competitive markets.While liberalisation has resulted in many benefits, there is some increased risk to investors in power generation, especially peaking capacity.There are also obstacles, such as public resistance to expansions in transmission networks, which lag behind investment in generation capacity in some OECD countries. Recent power failures in the United States and some European countries have driven home the importance of this issue. Total investments in the oil and gas sectors will each amount to more than $3 trillion to 2030, or around 19% each of global energy investment. Whether the huge amounts of capital needed to mobilise the bulk of the world's remaining hydrocarbon reserves in the Middle East will be forthcoming is a major uncertainty. If the projected amount of investment in this region is not forthcoming and production does not, therefore, increase as rapidly as expected, more capital would need to be spent in other more costly regions. Financing the $5 trillion of investment in the electricity sector in developing countries will be a daunting task, particularly in Africa and India. Far-reaching reforms are urgently needed - chief among which is to make tariff structures more cost-reflective - to facilitate higher capital flows in these and other developing regions.

4

5

REFERENCES World Energy Outlook 2004, IEA/OECD, Paris 2004 World Energy Investment Outlook 2003, IEA/OECD, Paris 2003
10

SECURITY OF SUPPLY AND ENERGY MARKETS

EMERGENCY RESPONSE STRATEGIES AND MECHANISMS
KEY MESSAGES

1

The IEA has continued to review and improve its emergency response policies. Regular reviews of emergency policies in IEA member countries and emergency exercise activities have highlighted the need for emergency policy to be flexible and quick to implement.The IEA must respond to oil supply disruptions with swift, decisive and collective action. Workshops on crisis scenarios, scenario exercises and tools for evaluating the economic impacts of oil crises are an important part of IEA emergency response strategy. The IEA will continue to monitor and assess its emergency capabilities and response measures including stockholding and stock drawdown, demand restraint, fuel-switching and surge capacity.

2

3

SUMMARY
The emergency measures available to the IEA must necessarily evolve with the complexity of world energy markets if they are to be effective. In 2004, the emergency response capability of the IEA and its member countries was reviewed through the Third Emergency Response Exercise, reviews of IEA member and candidate countries' emergency preparedness, workshops and the continued monitoring and assessment of emergency reserves in IEA member countries which are net importers of oil. The Third IEA Emergency Response Exercise illustrated that, very early after a disruption, the Agency must take the opportunity to impress markets by making an immediate public statement that is factual, authoritative and credible. Within IEA member countries, there is also the need for more flexible response procedures which could be approved quickly in an IEA coordinated response. Also, key IEA non-member countries were involved, for the first time, in the Emergency Response Exercise. A survey of macro-economic impacts of oil supply disruptions and the study into the impact of higher oil prices on the world economy demonstrated the global economic importance of oil.The OECD estimates that a sustained increase in the crude oil price would reduce economic growth in the OECD and by a greater amount in developing economies. Emergency response measures and instruments, including stockholding, demand restraint, fuel switching and emergency website information are continuously assessed and improved by specific studies and workshops. In 2004, one such study, Oil Demand Restraint in the Transport Sector:An Analysis of Potential Fuel Savings, offered a fresh look into the transport sector, which is by far the biggest sector in terms of international growth in oil demand. REFERENCES The Third Emergency Response Training and Disruption Simulation Exercise, IEA/OECD, October 2004 Emergency Response Reviews of IEA Member Countries: Finland, Greece and Portugal, IEA/OECD, 2004 Oil Demand Restraint in the Transport Sector: an analysis of potential fuel-savings, IEA commissioned study conducted by Imperial College, London, May 2004
11

4

5

SECURITY OF SUPPLY AND ENERGY MARKETS

1

GLOBAL OIL MARKET SECURITY
KEY MESSAGES

2

Continuing tightness and volatility in the oil market is underpinned by capacity constraints, growing demand and geopolitical tensions. The evolution of emergency policies and mechanisms must remain closely related to developments in global market trends and sociopolitical events. In recognition of the importance of IEA non-member countries emergency response capabilities, the IEA continues to work closely with these countries, including China and India, on emergency response policies and the development of strategic oil stocks. In 2004, the IEA was particularly involved with China, India, the ASEAN countries and new EU-members.

3
SUMMARY
The oil market in 2004 was characterised by high oil prices, increasing demand in Asia and reduced spare production capacity in the Middle East. Such a combination of factors greatly amplifies the potential effect of an oil supply disruption. For this reason, oil security continues to be a core mission for the IEA.

4

An assessment of the near-term risks to the oil market was the first phase of the Third IEA Emergency Response Training and Disruption Simulation Exercise, conducted in 2004. Industry and financial experts identified issues in oil supply chains as the main risk in the near-term, especially with the current conditions of a tight supply/demand balance, low spare production capacity and high price volatility. Growing Asian demand is a critical feature of the global oil market today and, consequently, security of supply is an issue of increasing concern to affected countries. China and India have shared information with IEA member countries whilst making preparations to build strategic oil stocks. India, notably, hosted a 2004 IEA workshop on emergency oil stock issues. Furthermore, events such as the IEA/ASEAN joint conference on Oil Supply Disruption Management Issues, held in Cambodia in 2004, have helped raise the profile of energy security amongst the countries of South East Asia.The IEA will continue to collaborate on emergency preparedness and have dialogue with key non-IEA member countries in all areas of the world.

5

REFERENCES Non-member country training and simulation activities held during the Third Emergency Response Training and Disruption Simulation Exercise, IEA/OECD, October 2004 Oil Supply Disruption Management Issues Workshop, IEA/ASEAN/ASCOPE, Cambodia, April 2004 India-IEA Joint Workshop on Emergency Oil Stock Issues, India, January 2004
12

SECURITY OF SUPPLY AND ENERGY MARKETS

ENERGY POLICIES OF IEA COUNTRIES 2004 REVIEW
KEY MESSAGES

1

In 2003 and 2004, energy security was the object of renewed attention, reflecting factors such as higher and more volatile energy prices, historically low oil stocks and growing geopolitical concerns in the Middle East, notably the hostilities in Iraq. Energy Policies of IEA Countries focused on how the 3 E's can be simultaneously ensured: energy security, economic growth and environmental protection.

2

SUMMARY
2004 marked the 30th anniversary of the IEA. While energy markets and the world have changed in many ways since 1974, energy security remains a fundamental goal of the IEA member countries. However, the security considerations have become more broadly defined.The IEA's focus has been expanded from oil to other forms of energy, such as natural gas, of which consumption and imports are rapidly increasing, and electricity, following several series of transmission failures in recent years. Furthermore, reliable access to energy supply needs to be compatible with other policy objectives, namely the pursuit of greater economic efficiency in the energy sector and the mitigation of environmental consequences of energy production and use. Achieving all these objectives simultaneously presents a daunting task. While market reforms should, in principle, reinforce energy security, they also depend on the design of reforms and incentives for investors. Actions to reduce greenhouse gas emissions, meanwhile, could have profound implications on energy markets and energy security. In short, the challenges for energy policy makers have become far more complex than in 1974. In the 2004 review, the IEA tried to identify common challenges based on the in-depth reviews over the past four years covering all 26 member countries.While they have made considerable progress in pursuing the shared goals, there remain challenges to make their energy policies more effective. These include co-operation among all stakeholders including the general public, the relevant ministries and central/local governments; cost-effectiveness in climate change mitigation including energy efficiency and renewable policies; ensuring real benefits from market reform; and fostering appropriate investment under liberalised energy markets.The governments have to pursue strong and coherent energy policies.

3

4

5

REFERENCES Energy Policies of IEA Countries - 2003 Review, IEA/OECD, Paris 2003 Energy Policies of IEA Countries - 2004 Review, IEA/OECD, Paris 2004 Energy Policies of Canada, France,The Netherlands, Sweden, Portugal, Luxembourg, IEA/OECD, Paris 2004-2005
13

SECURITY OF SUPPLY AND ENERGY MARKETS

1

IEA MONTHLY OIL MARKET REPORT
KEY MESSAGES

2

The IEA's monthly Oil Market Report (OMR) covers short-term developments in the world oil market. It provides the first opportunity to examine the latest OECD statistics and gives up to 18 months projections for future oil supply and demand in OECD and non-OECD countries. The OMR highlights changing trends in oil demand, with recent data and forecasts for OECD and non-OECD countries. It features supply data for OPEC countries, as well as production on a field-by-field basis (when available) for OECD countries, as well as over 50 other oil-producing countries. End-user, spot and futures price developments in crude and products are analysed, as well as developments in regional crude and product prices: North West Europe, Mediterranean, United States Gulf Coast,West Africa, North Sea, Middle East and Asia. The OMR gives details of the latest refinery crude throughputs for OECD countries and calculations of net product worth and refining margin trends for Northwest Europe, the Mediterranean, the United States West and Gulf Coasts, Singapore and China. It includes a comprehensive coverage of industry and government-controlled stock data in each OECD region (and selected OECD countries) for crude oil, gasoline, middle distillates and fuel oil, in both barrels and days of forward demand. A user guide and an annual statistical supplement, containing historical background data, is produced in conjunction with the August issue of the OMR.

3

4

SUMMARY

5

Over the last 20 years, the IEA's Oil Market Report has become essential reading for all those involved in oil market decision-making, forecasting, analysis and planning. It provides extensive coverage of market fundamentals: demand, supply, prices, refinery activity and OECD stocks. Forecasts of oil demand and supply are summarised in a World Balance Table, with extensive detail of the underlying analysis provided in supplementary tables. The OMR provides comprehensive coverage and analysis of the oil market based on timely data submitted to the IEA by member governments each month. Spot crude and product price assessments in the Report are based on daily Platts prices. An annual statistical supplement is published in order to provide readers with a longer perspective of the evolution of the oil market than the short-term developments covered by the Report. A condensed version of the Report in Russian is available on the IEA Website. The Report is published under the responsibility of the Executive Director and Secretariat of the IEA. Although some of the data are supplied by member governments, largely on the basis of information received from oil companies, neither governments nor companies necessarily share the Secretariat's views or conclusions in the OMR.

REFERENCE Oil Market Report, monthly IEA publication, www.oilmarketreport.org
14

SECURITY OF SUPPLY AND ENERGY MARKETS

OIL MARKET REPORT WEBSITE: WWW.OILMARKETREPORT.ORG
KEY MESSAGES

1

In the effort to provide the most up-to-date oil market trends and add transparency to the market, the IEA's Oil Market Report (OMR) website is an internet portal offering further coverage of the in-depth analysis on short-term oil market developments provided by the Report. This web service is a perfect complement to the macro analysis in the Report. For each section of the OMR, a counterpart on the website with drop-down boxes, enables the rapid selection of topics. The charts also come with a choice of “views” that allow subscribers to look at developments according to their analytical need. The information is downloadable in PDF format and can be copied and pasted into other documents for use in presentations and essays.

2

3

SUMMARY
In addition to providing a PDF of the latest OMR, the website, through over 3 000 charts covering all aspects of oil market fundamentals, provides greater detail. The charts reflect the latest data contained in the OMR and allow subscribers to go beyond the broad market trends presented in the report. The service went online for OMR electronic subscribers in July 2003 for an initial two-month operation period; the site was then officially launched on 10 September 2003, accompanied by a mirror public access site. Monthly updates to www.oilmarketreport.org are reserved for OMR subscribers for two weeks following the release of the Report, but are then made available for all visitors via the public site at http://omrpublic.iea.org. The organisation of the website mirrors that of the OMR. Information is searchable by section (supply, demand, stocks, prices, refinery activity, trade and market overview), location (regions, individual countries) and products (gasoline, distillates, crude oil etc.). In addition to over 3000 downloadable charts and the latest OMR, the web site supports a full archive of previous OMRs going back to 1990, a Russian version of the OMR, special features, presentations, a publication schedule and OMR contacts.

4

5

REFERENCE www.oilmarketreport.org
15

SECURITY OF SUPPLY AND ENERGY MARKETS

1

THE IMPACT OF HIGHER OIL PRICES ON THE GLOBAL ECONOMY
KEY MESSAGES
Oil prices still matter to the health of the world economy. Higher oil prices since 1999 – partly the result of OPEC supply-management policies – contributed to the global economic downturn in 2000-2001 and are dampening the current cyclical upturn. Higher oil prices affect all consumers, but they hurt those in developing countries most as they are more reliant on energy-intensive manufacturing sectors to spur economic growth. Moreover, in developing countries there are often limited alternatives to oil products. An IEA study indicates that world GDP would be at least half of 1% lower – in the year following a $10 oil price increase.

2

3

SUMMARY
Higher oil prices since 1999 contributed to the global economic downturn in 2000-2001 and are dampening the current cyclical upturn.World GDP growth may have been at least half a percentage point higher in the last two or three years had prices remained at mid-2001 levels. Higher prices are contributing to stubbornly high levels of unemployment and exacerbating budget-deficit problems in many OECD and other oil-importing countries. The vulnerability of oil-importing countries to higher oil prices varies markedly depending on the degree to which they are net importers and the oil intensity of their economies. According to an IEA-study in collaboration with the OECD and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $351 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. Inflation would rise by half a percentage point and unemployment would also increase. The adverse economic impact of higher oil prices on oil-importing developing countries is generally even more severe than for OECD countries. This is because their economies are more dependent on imported oil and more energy-intensive and because energy is used less efficiently. World GDP would be at least half of 1% lower – in the year following a $10 oil price increase. This is because the economic stimulus provided by higher oil-export earnings in OPEC and other exporting countries would be more than outweighed by the depressive effect of higher prices on economic activity in the importing countries. A loss of business and consumer confidence, inappropriate policy responses and higher gas prices would amplify these economic effects in the medium term. For as long as oil prices remain high and unstable, the economic prosperity of oil-importing countries – especially the poorest developing countries – will remain at risk.

4

5

1.This is equivalent to the price of WTI increasing in current dollars from about $31 to $41 per barrel.

REFERENCE Impact of Sustained High Oil Prices on the Global Economy, IEA Paper, 2004
16

SECURITY OF SUPPLY AND ENERGY MARKETS

ENERGY STATISTICS, AN ESSENTIAL COMPONENT OF ENERGY ANALYSIS AND POLICY
KEY MESSAGES

1

Detailed, complete, timely and reliable statistics are essential to monitor the global energy situation. Energy statistics on supply, trade, stocks, transformation and demand are indeed the basis for any sound energy policy decision. In view of the importance of energy in world development, one would expect that basic energy information to be readily available and reliable. This is not always the case and one can even observe a decline in quality, coverage and timeliness of energy statistics over the last few years. This decline happens at a time when transparency is high on the agenda: at the 9 th International Energy Forum in Amsterdam in May 2004, energy ministers commended the work done in the Joint Oil Data Initiative, and at their October 2004 meeting, G8 finance ministers called for more action to improve transparency. The International Energy Agency has embarked upon a programme of actions to reverse the current trends by developing tools to facilitate the preparation and delivery of reliable statistics, thus raising the profile of energy statistics.

2

3

SUMMARY
There are several reasons behind the decline of quality in energy statistics, including liberalisation of energy markets, additional data requests, budget cuts and diminishing expertise.The liberalisation, for instance, has had a double impact on statistics: more companies to survey, and more confidentiality issues. Additional data have been requested from energy statistics offices over recent years, ranging from statistics on renewables to indicators on energy efficiency and data on greenhouse gas emissions. This additional workload occurred at a time when statistics offices in many countries were experiencing a reduction in their resources. The actions taken by the IEA to improve statistics include raising awareness of policy makers, strengthening bonds with national administrative and international organisations and facilitating the preparation of reliable statistics. Strengthening the expertise of energy statisticians, and rebuilding corporate memory are also key priorities.This is the reason why the IEA, in co-operation with Eurostat, has released an Energy Statistics Manual. REFERENCES Energy Statistics of OECD Countries, 2001-2002, IEA/OECD, Paris 2004 Coal Information 2004 - with 2003 data, IEA/OECD, Paris 2004 Energy Balances of OECD Countries, 2001-2002, IEA/OECD, Paris 2004 Electricity Information 2004 - with 2003 data, IEA/OECD, Paris 2004 Energy Statistics of non-OECD Countries 2001-2002, IEA/OECD, Paris 2004 Oil Information, 2004 - with 2003 data, IEA/OECD, Paris 2004 Energy Balances of non-OECD Countries 2001-2002, IEA/OECD, Paris 2004 Natural Gas Information, 2004 - with 2003 data, IEA/OECD, Paris 2004 CO2 Emissions from Fuel Combustion, 1971-2002, IEA/OECD, Paris 2004 Renewables Information 2004 - with 2003 data, IEA/OECD, Paris 2004 Oil, Gas, Coal and Electricity, IEA/OECD, Paris 2004 Energy Prices and Taxes, IEA/OECD, Paris 2004 Energy Statistics Manual, IEA/OECD, Paris 2004 CDs and Electronic Services For all the above (except Oil, Gas, Coal and Electricity Quarterly Statistics) Monthly Oil Data Service and Monthly Gas Data Service

4

5

17

SECURITY OF SUPPLY AND ENERGY MARKETS

1

THE JOINT OIL DATA INITIATIVE (JODI)
KEY MESSAGES

Enormous progress has been made since the launching of the Joint Oil Data Initiative, but there are still challenges ahead. At the 9th International Energy Forum in Amsterdam in May 2004, ministers were invited to substantiate their commitment to the initiative. A JODI World database, which is updated monthly, has been developed and although currently not yet open to the public, it is envisaged to release the database in 3rd Quarter 2005. The International Energy Forum Secretariat has taken over the co-ordinating role for the JODI and the management of the World database and website.

2

3

SUMMARY
Six international organisations - APEC, Eurostat, IEA, OLADE, OPEC and UNSD - took up the challenge in early 2001 to improve oil data transparency. They combined their efforts, involved their member countries and launched the JODI, with the aim to provide more reliable and timely monthly oil data from as many producer and consumer countries as possible. Progress was fast and substantial.Within a short period more than 85 countries, representing about 95% of world oil demand and supply, as well as many oil companies have been participating. The focus has been on participation, timeliness, completeness, quality and accessibility of data. Political support was provided through the presentation of the initiative at the 8th and 9th International Energy Forum meetings.

4

5

At these meetings, the political awareness of the JODI was raised by showing the difficulties encountered with statistical systems, such as confidentiality issues, reliability etc. Contacts between oil companies, countries and organisations have been multiplied and reinforced, strengthening the producer-consumer dialogue. Following the 5th JODI conference in Indonesia in October 2004, the IEFS took on the co-ordinating role of the JODI and the management of the JODI World database and the JODI website. The next challenge ahead is the opening up of the JODI World database to the general public. If the data quality standards are met, the database will be released in third quarter 2005.

REFERENCES The Joint Oil Data Initiative - Closer to Transparency, brochure for 9th International Energy Forum, Amsterdam, May 2004 www.oil-data-transparency.org
18

SECURITY OF SUPPLY AND ENERGY MARKETS

SECURITY OF SUPPLY IN ELECTRICITY MARKETS
KEY MESSAGES

1

With careful market design and regulation markets can deliver long term benefits including adequate and timely investment in power generation. Failures in markets must be clearly distinguished from failures in the regulatory framework. Efficient transmission investment and operation to support trade and competition call for a regulatory framework to provide the right incentives. Electricity reform did not cause the 2003 blackouts. However, transmission system operators must communicate and coordinate to meet the challenge of increased trade from liberalisation.They must also be well trained and have access to real-time system management tools. Appropriate ventilation management is also required to maintain reliable transmission services.

■ ■

2

■ ■

3

SUMMARY
Security of supply in the electricity sector requires a secure supply of fuels for power generation, adequate and timely investment in generation and network infrastructures and efficient and reliable operation of these assets. Markets are a powerful tool for achieving these goals efficiently. Experience in OECD power markets confirms that competitive electricity markets can work to deliver long term benefits if they are well designed and regulated and politically supported. Most OECD electricity sectors were characterised by comfortable reserves of generating capacity before reform. When markets opened, this overcapacity provided a cushion. Competition has successfully deflated the cushion, so now there is increased focus on the investment challenge. Electricity markets have in general been able to attract adequate and timely investment in power generation.Yet the issue has been the subject of intense debate. Investment in transmission capacity has mainly remained a regulated business in OECD countries. It is a challenge to establish a regulatory framework that encourages efficient investment in transmission to support reliable operation, trade and competition. Concerns were raised following the 2003 blackouts that electricity reform may have reduced transmission reliability.Although investigations show that reform was not to blame, increasing trade from market liberalisation has created new real-time challenges for transmission system operators. Enhanced coordination and communication in transmission system operation is necessary to maintain reliability. Effective vegetation management and well trained system operators capable of identifying and managing emergencies, supported by effective real-time system management tools, are also necessary to maintain efficient and reliable transmission services. REFERENCES Security of Supply in Electricity Markets - Evidence and Policy Issues, IEA/OECD, Paris 2002 Transmission Network Reliability in Competitive Electricity Markets Workshop, IEA, Paris 2004 Transmission Network Performance in Competitive Electricity Markets Workshop, IEA, Paris 2004

4

5

19

1

ENERGY DIVERSIFICATION AND EFFICIENCY

2

SECURITY OF GAS SUPPLY IN OPEN MARKETS THE FUTURE OF GAS FOR POWER GENERATION POWER GENERATION INVESTMENT IN ELECTRICITY MARKETS DEMAND RESPONSE IN LIBERALISED ELECTRICITY MARKETS SAVING ELECTRICITY IN A HURRY TOWARDS HYDROGEN COAL AND SUSTAINABLE DEVELOPMENT RESEARCH, DEVELOPMENT AND DEMONSTRATION TRENDS A NEW METHOLOGY MEASURES SOLAR COLLECTOR MARKET DATA RENEWABLE ENERGY COST DEVELOPMENTS FOR ELECTRICITY GENERATION RENEWABLE ENERGY POLICIES IN IEA COUNTRIES RENEWABLE ENERGY MARKETS NATURAL CYCLES OF RENEWABLES AND THE CASE OF WIND INTERMITTENCY BIOFUELS FOR THE TRANSPORT SECTOR IEA ENERGY INDICATORS ENERGY EFFICIENT DOMESTIC APPLIANCES AND EQUIPMENT
21

3

4

5

ENERGY DIVERSIFICATION AND EFFICIENCY

1

SECURITY OF GAS SUPPLY IN OPEN MARKETS
KEY MESSAGES

2

In open gas markets, supply and demand can be balanced by the market. The challenge for security of supply is to make sure that the market can always achieve this balance and that adequate investment all along the gas chain can be mobilised in a timely way. While open markets provide customers with choice and more efficiency, market reform also changes the well-established business environment that has supported security of supply and raises new issues that policy-makers must address. Instead of managing the sector, governments have to create a regulatory framework that will enable markets to deliver reliable and secure supplies from the production/import point to the final customer. This may involve efforts to minimise geopolitical risk in some cases.

3

SUMMARY
OECD countries increasingly need to import gas, as the discovery of additional gas reserves in OECD countries has not kept pace with the depletion of gas reserves in OECD and the increase in gas demand. The growing import dependence calls for a greater awareness of gas policies in supplier countries and along ever longer pipelines. Furthermore, dependence on one exporting company and one country compounds this situation for some European importing countries. Most of the increase in gas demand is driven by the power sector. As the gas and the electricity systems become more closely interlinked, the reliability of the two systems has to be assessed in combination. In some countries, the projected high dependence of power generation on imported gas might create a domino effect on the power sector in cases of gas supply shortages, if not anticipated. Global cumulative investment in the gas industry is estimated at $2.7 trillion up to 2030. In view of such investment requirements, governments will need to create a regulatory framework, which is transparent, stable and conducive to business. While markets are developing in the OECD, price signals may still be insufficient or come too late to provide enough incentives for new investment. Open markets raise new issues for the security of supply. Where markets demonstrably fail to deliver timely and adequate investment, governments will have to define objectives, responsibilities and standards for security of supply.

4

5

REFERENCES Security of Gas Supply in Open Markets, IEA/OECD, Paris 2004 Workshop with Gas Regulators on Security of Gas Supply in Liberalised Markets, IEA, Paris 2003 Workshop on Gas Security of Supply, IEA, Paris 2002
22

ENERGY DIVERSIFICATION AND EFFICIENCY

THE FUTURE OF GAS FOR POWER GENERATION
KEY MESSAGES

1

Globally and across all three IEA regions, power generation will be the driver of gas demand growth over the next 10 years. However, there are uncertainties, including high gas prices, regulatory risks, impact of climate change policy and dependency on imported gas from a small number of suppliers. Technological developments, commercial incentives and environmental legislation will continue to shape demand for gas in power. Environmental legislation can introduce major uncertainty. For electricity companies, this means that all fuel options should remain open. The choice of the electricity mix will be made by market players and will vary from country to country according to its own resource base, its proximity to other global resources and its domestic regulations. However, government policies will shape these decisions and can greatly contribute to minimise risks and uncertainties.

2

3

SUMMARY
Gas demand in the power sector is the major driver of growth in gas demand.The main advantages of using gas for power generation include economic, environmental and technical advantages. Gas also better fits to liberalised power markets as combined-cycle gas turbines (CCGTs) plants can be built in a more flexible way when demand arises. However, there are a number of uncertainties that may postpone or even deter investment in gas-fired CCGTs.The first one is linked with security of fuel supply.The more gas is used for power, the more security of electricity and gas systems is linked, with the risk of a domino effect in case of a gas supply disruption.This risk is aggravated in some importing countries which depend on one or few suppliers. Another concern is the current high level of gas prices which may undermine the cost competitiveness of CCGTs, notably compared to coal. Regulatory risks are also a major uncertainty. Stability of regulation is one requirement for energy investment. The pricing structure for gas-to-power is another major concern, as traditional contractual arrangements do not fit very well to the power sector. Finally, a major uncertainty lies in the possible taxation of energy sources and the price of CO2. In view of these uncertainties, the governments’ major responsibilities are to address and minimise these risks and provide a predictable, transparent and sustainable regulatory framework, which will lead to investment and efficient electricity and gas markets.

4

5

REFERENCES High-level Meeting on the Role of Gas for Power, IEA, Paris 2004 The Future of Gas for Power Generation Workshop, IEA, Paris 2004
23

ENERGY DIVERSIFICATION AND EFFICIENCY

1

POWER GENERATION INVESTMENT IN ELECTRICITY MARKETS
KEY MESSAGES
Governments have a crucial role in establishing the framework for markets but market intervention by governments can jeopardise the long term benefits. Electricity price fluctuations reflect the volatile nature of electricity and are intrinsic to wellfunctioning electricity markets. Demand response makes electricity markets work better. Abuse of market power and price manipulation remains a serious threat to well functioning electricity markets.

2

■ ■

3

SUMMARY
Electricity markets have been opened to competition in nearly all IEA countries.The introduction of competition in the generation and retail supply of electricity should improve the economic efficiency of the power sector.There is a great deal of evidence to suggest that market liberalisation has generally improved the productive efficiency of the sector. Furthermore, with many markets opened in the presence of surpluses of generating capacity, competitive pressures have reduced power prices. The key long-term question is whether efficient and timely power generation investment will emerge. This report examines three major issues associated with power generation investment in liberalised electricity markets.The first issue is how liberalisation and investment risks have affected technology choices in power generation. The second issue addressed is how power generation investors are adapting to investment risks. Financial hedges have not developed sufficiently to offer significant long-term hedging value to investors. Thirdly, the emergence of tighter electricity markets has led to increased electricity price volatility. This has put pressure on governments to intervene in electricity markets. The report reviews recent cases of electricity price volatility in Norway, Canada, Australia and New Zealand. Experiences show that markets are indeed effective tools to manage the inherent volatile nature of electricity – but sufficient political commitment is a crucial prerequisite.

4

5

REFERENCES Power Generation Investment in Electricity Markets, IEA/OECD, Paris 2003 Joint IEA/NEA Workshop on Power Generation Investment in Liberalised Electricity Markets, IEA, Paris 2003
24

ENERGY DIVERSIFICATION AND EFFICIENCY

DEMAND RESPONSE IN LIBERALISED ELECTRICITY MARKETS
KEY MESSAGES
■ ■ ■ ■

1

Liberalised electricity markets work better with a strong demand response capability. Current market designs do not sufficiently enable demand response. More innovative products and greater choice are needed to activate the demand-side. Significant investment in the appropriate technology and communications infrastructure is needed to get strong demand response. Governments and regulators have a key role to play.

2

3
SUMMARY
In effective electricity markets, tightening supply-demand conditions are reflected by price spikes. A relatively low level of response by consumers to price spikes will often be sufficient to significantly dampen these prices, thereby increasing efficiency and reducing costs and risks for all market participants. By clipping price peaks, demand response will also lead to lower wholesale prices on average and a more efficient market. Demand response presents a viable alternative to traditional supply-side remedies in constrained wholesale markets. It offers a highly flexible and naturally distributed resource to network operators, and reduces the need for investment in peak supply capacity. However, at present most buyers do not participate actively in the price-setting process in liberalised electricity markets. As a result, the ability of prices signals to moderate supply and demand movements can be muted. Concentration on the supply-side of the market and the abuse of market power continue to trouble the efficient operation of many liberalised electricity markets. Market power abuses can be reduced by increasing the elasticity of demand relative to price – and this is what demand response does. Demand response may also generate important environmental effects as it has been shown to deliver a net reduction in consumption.

4

5

REFERENCES The Power to Choose – Demand Response in Liberalised Electricity Markets, IEA/OECD, Paris 2003 Enhancing Demand Response in Liberalised Electricity Markets Workshop, IEA, Paris 2003
25

ENERGY DIVERSIFICATION AND EFFICIENCY

1

SAVING ELECTRICITY IN A HURRY
KEY MESSAGES

2

Temporary electricity shortages (from one day to a year) have occurred in IEA member countries and are caused by both unexpected losses in generation capacity or increases in demand. Campaigns to quickly reduce electricity demand, so as to avoid blackouts, have proven effective in many member countries. The campaigns rely heavily on short-term changes in behaviour and rapid installation of electricity conserving technologies. Savings range from 4% achieved in 3 days to 20% after 4 months. Quickly raising electricity prices is an important tool, but raising the price to make the market clear can be technically and politically unfeasible. Voluntary demand reduction campaigns are cheaper and cause less disruption to the economy than prolonged blackouts and curtailments.

3

■ ■

4

SUMMARY
Temporary shortfalls of electricity supply can occur as a result of a drought, a heat wave, a breakdown in a power plant or partial loss of transmission capacity. The traditional response has been to cut power to customers while trying to restore supplies. But prolonged blackouts may be economically and politically unacceptable if the shortage is expected to continue more than a few hours. An alternative approach is to launch an aggressive programme to quickly conserve electricity relying on a combination of measures to improve energy efficiency and change consumer behavior.

5

Several regions, including Sweden, Ontario, California, New Zealand and Norway have recently implemented such programmes. It is possible to quickly reduce electricity demand by 3-20%, sometimes with programmes started in only a few days. Moreover, the reductions in demand can be accomplished without major economic disruption or hardships. A combination of policies is necessary to achieve these savings. Higher electricity prices will be one component but technical and political barriers may prevent it from playing a large role. An existing infrastructure of continuing energy efficiency programmes can facilitate launching a programme to save electricity in a hurry.

REFERENCES Saving Electricity in a Hurry, IEA/OECD, Paris 2005 Saving Electricity in Hurry Workshop, IEA, Paris, June 2003
26

ENERGY DIVERSIFICATION AND EFFICIENCY

TOWARDS HYDROGEN
KEY MESSAGES
In the context of mid- to long-term energy scenarios, hydrogen technology and fuel cells might offer considerable advantages over existing energy systems in terms of supply security and diversification and reduction of greenhouse gas emissions. However, extensive R&D efforts and technology breakthroughs are needed to make cost effective hydrogen available from fossil fuels (with CO2 sequestration), nuclear and renewable sources and for fuel cells to be competitive in the energy market. The economic dimension of a possible transition to a hydrogen-fuelled society in the mid to long term deserves careful consideration with regard to energy policy, infrastructure, economic implications, opportunities and barriers for technology development and deployment.

1

2

SUMMARY
To respond to the growing interest in hydrogen and fuel cells and to improve co-operation and coordination of R&D programmes and policy strategies in the IEA countries, the IEA established the Hydrogen Co-ordination Group (HCG) in April 2003. Members of the Group are representatives from twenty-four IEA countries and the energy technology collaborative network.The IEA Secretariat has provided co-ordination and organisational support for the Group's activities. Several IEA Countries (Australia, Canada, France, Germany, Japan, the United Kingdom and the United States) have provided voluntary financial support for the Group's activities. Further contributions are being considered by other countries.The HCG's initial programme of work included four tasks, namely: ■ Review of R&D programmes and policy strategies in the IEA countries; ■ Review of ongoing IEA activities to identify needed work on critical-path technologies; ■ Recommending further collaborations within the IEA technology collaboration framework; ■ Identifying analyses and support to help guide the work of the IEA. The first outcome of the HCG activity was the publication Hydrogen & Fuel Cells - Review of National R&D Programs, a first-of-kind map of government R&D activities, budgets and policy strategies in the IEA countries. Released by the IEA at the UNFCCC COP 10 in December 2004, this book was very well received by the international R&D community. Outcomes from the second and third HCG tasks will be reported in a publication on R&D priorities and gaps relating to hydrogen and fuel cells, including hydrogen production, hydrogen storage and fuel cells. It will be issued by the Hydrogen and Advanced Fuel Cells Implementing Agreements in collaboration with the IEA Secretariat in June 2005. To accomplish the last task of the HCG programme of work, and with the financial support of some IEA countries, the Secretariat is carrying out an analytical study to investigate the potential of hydrogen and fuel cells in future energy scenarios and examine how government policies may foster market penetration. The study builds on IEA expertise and involves experts from member countries and the private sector.The outcomes of the analysis will be published in December 2005 in the book Prospects for Hydrogen & Fuel Cells. REFERENCE Hydrogen & Fuel Cells - Review of National R&D Programs, IEA/OECD, Paris 2004

3

4

5

27

ENERGY DIVERSIFICATION AND EFFICIENCY

1

COAL AND SUSTAINABLE DEVELOPMENT
KEY MESSAGES

2

Government policies can indirectly encourage private sustainable development measures. Government regulations, where they are competitively neutral and can be achieved costeffectively, are also readily taken up by coal producing and using companies. Coal mining is a high-volume, low-margin business and spending on other than core activities is likely to be limited as a consequence. There is nevertheless clear evidence that coal producing companies recognise that the future of their activities rests on the continuing use of coal in power generation (and blast furnace technology for steel-making), in turn depending on compliance with tightening environmental standards. Research along the whole coal chain is therefore seen as an essential activity to protect the future of coal, whether conducted privately or by governments. Although not limited to developing countries, many company activities illustrate the role of “good citizenship” in undertaking commercial activities in developing countries by assisting governments in achieving their development goals. Technology transfer can be entirely consistent with commercial goals. Often core commercial activities can have far-reaching implications for the countries purchasing consulting services or new plants. Some companies, usually larger ones, are anticipating the evolution of public policy and societal goals to ensure their commercial survival in the longer-term. But this option is not always available for smaller companies or for companies under greater commercial pressure, for whom short-term survival is the only goal. For companies it is crucial that governments and society in general are accurately informed of the implications of policy actions affecting the coal producing and using industries.

3

4

5
SUMMARY
Awareness in the coal industry of the importance of sustainable development is high. A clear majority of surveyed respondents see it as aligning with their commercial objectives. Reducing emissions from coal use is the key priority, but some companies have embarked on broad initiatives to better align their business practices to sustainable development priorities. Other frequently undertaken activities are stakeholder programmes; health, safety and environment programmes; public policy advocacy and technology transfer. The range of activities suggests an evolutionary process - one that commences with a sole internal focus on economic priorities for the business, and then broadens to include local environmental issues and the community. Leading companies are now moving to look more at global issues, to recognise and share the responsibility for the social and environmental impacts of producing and using their products and to better engage stakeholders. REFERENCES Coal and Sustainable Development - Attitudes and Activity, IEA/OECD, Paris 2003 A more detailed analysis of the findings are available on http://www.iea.org/ciab/index.asp
28

ENERGY DIVERSIFICATION AND EFFICIENCY

RESEARCH, DEVELOPMENT AND DEMONSTRATION TRENDS
KEY MESSAGES

1

Total government energy research, development and demonstration (RD&D) budgets in IEA member countries increased sharply after the oil price shocks in the 1970s.This is particularly valid for renewables, which spiked from no investment in 1973 to almost $2 billion in 1981. Energy R&D budgets declined to about half of their peak levels by 1987 and remained relatively level to 2002. However, budgets for renewables dropped by a greater margin. As a percentage of total RD&D funding, funding for renewables was higher from 1974 through 1986 than in the period since 1987.

2

3

SUMMARY
IEA analysis reveals that renewables RD&D has declined (about 9% lower since 1987). At the same time, market deployment funding has increased, but renewables’ market share has decreased from ca. 6 % of TPES (total primary energy supply) in 1992, to 5.5 % in 2001. The United States, Japan and Germany accounted for 70.4% of IEA government renewable energy RD&D funding in the period 1974-2002. From 1974 to 2002, IEA countries’ renewable energy RD&D budgets totalled about $23.55 billion, some 8% of total energy RD&D funding in that period. Expenditures grew rapidly in the late 1970s and peaked in 1980 at just under $2 billion.They declined in the early 1980s but have been relatively stable since the late 1980s. Germany, Japan and the United States accounted for about 66% of total renewables RD&D funding in the period 1990 to 2002. Italy,The Netherlands and Switzerland accounted for an additional 15%. The United States had the highest average renewables RD&D budget ($236.9 million per year). The average annual budget in Japan was $110.9 million. In Germany it averaged $82.8 million. Renewable energy RD&D funding priorities usually reflect resource endowments. For example, New Zealand and Turkey have major geothermal resources. 70% of RD&D funding in New Zealand and 45% in Turkey was allocated to geothermal during the period 1990-2002. About 43% of renewables RD&D in Denmark and 37% in the United Kingdom went to wind energy. Natural resource endowments, however, do not always dictate renewable energy RD&D priorities. Germany has limited solar resources, but its budget for PV (photovoltaics) represented 48% of its renewable energy RD&D budget from 1990 to 2002. It is difficult to determine the impact of private-sector spending on renewable energy markets, but general patterns can be discerned. However, the decreasing share of public funding appears to be inconsistent with presumed political intentions in many IEA countries to increase the share of renewables.

4

5

REFERENCE Renewable Energy Market and Policy Trends in IEA Countries, IEA/OECD, Paris 2004
29

ENERGY DIVERSIFICATION AND EFFICIENCY

1

A NEW METHODOLOGY MEASURES SOLAR COLLECTOR MARKET DATA
KEY MESSAGES
A new methodology, developed by the IEA Solar Heating and Cooling Programme in collaboration with other agencies and organisations, allows for the first time a comparison of solar heating and cooling markets with those for other renewables. The scale of solar heating and cooling markets is ~70,000 MWth, a much higher level than previously thought. Market growth rates are on a similar level as those for wind and photovoltaics, over 20% per year.

2

3

SUMMARY
At a September 2004 joint meeting in Austria, the IEA Solar Heating and Cooling Programme (SCH) and a number of solar thermal trade associations agreed upon a methodology to measure the installed capacity of solar collectors in GWth. Solar thermal experts from seven countries established this methodology, which converts installed collector area into solar thermal capacity. They agreed to use a factor of 0.7 kWth/m2 to derive the nominal capacity from the area of installed collectors. This factor is based largely on parameters referred to in the European standards for the testing of solar thermal collectors (EN 12975). It will now be possible to compare the installed capacity of solar thermal collectors with other renewable sources. The new data – expressed for the first time in GWth, rather than in square meters of installed collector area – shows the global installed capacity of solar thermal systems at the end of 2001 to be 70 GWth (70.000 MWth), or 100 million square meters of solar thermal collectors. Collectors in 26 IEA member countries represent some 85-90% of the world's solar thermal market. The data also shows that the leading countries for installed flat-plate and evacuated tube collectors are Israel, Greece and Austria. For swimming pool heating with unglazed plastic correctors,Australia, the United States and Austria lead. Market growth of 26% was achieved for hot-water and spaceheating plants between 2000 and 2001.The world’s most dynamic markets are in China and Europe. In 2001, the area of installed flat-plate and evacuated tube collectors per 1000 inhabitants was 6.4 square meters in China, 3.9 square meters in Europe, 2.8 square meters in Japan, and 0.08 square meters in the United States and Canada. Annual collector yield from the systems monitored, excluding air collectors, is calculated at approximately 41,795 GWh (150,463 TJ), representing 6.7 billion liters of oil equivalent and a CO2 avoidance of 18.2 million tons.

4

5

REFERENCES Technical Note: Solar Thermal Capacity, IEA Solar Heating and Cooling Programme Explanatory Note: Solar Thermal Capacity, IEA Solar Heating and Cooling Programme IEA Solar Heating and Cooling Programme Web site: http://www.iea-shc.org/
30

ENERGY DIVERSIFICATION AND EFFICIENCY

RENEWABLE ENERGY COST DEVELOPMENTS FOR ELECTRICITY GENERATION
KEY MESSAGES

1

Some renewables in very good locations are competitive with conventional energy sources, but in less optimal locations they are not as competitive. Supportive policies are needed to encourage further technological improvement, especially of “new” renewables in energy markets. Deployment support is an extension of R&D policy, as renewables' development is furthered through market experience.

2

SUMMARY
Except for large hydropower and combustible renewables and waste plants, the average costs of renewable electricity are not widely competitive with wholesale electricity prices. However, depending on the technology, application and site, costs can be competitive with grid electricity or commercial heat production in very good locations.To exploit market opportunities it is necessary to assess the competitiveness of specific applications and services in distinct locations and circumstances, be it largescale on-grid applications, niche markets on and off-grid, or other specific market situations. Under best conditions - optimised system design, siting and resource availability - electricity from biomass, small hydropower, wind and geothermal power plants can produce electricity at costs ranging from $0.02 to 0.05/kWh. Some biomass applications, as well as geothermal heat production, are competitive in specific sites. Solar thermal heat and hot water applications are competitive in some countries. In countries with supportive policy frameworks, solar technologies can compete with retail electricity. Some renewable electricity technologies have already gained a significant market share. However, they have not yet fully developed their world-wide potential. For example, small hydropower is well established, as are some segments of the biomass industry. Although the average costs of renewable electricity are not widely competitive with wholesale electricity, renewables can offer electricity and electric services at competitive rates. To support the market entry of new renewables, many policies have been established in IEA countries to offset their higher costs and to facilitate the market experience that will result in lower costs in the future. Such “market learning” approaches are especially relevant to some renewables with large cost-reduction potential. The number of countries that pursued aggressive policies to encourage renewable technology prior to 2000 was quite limited. But, thanks to significant investment in just a few countries, new renewables like wind, solar photovoltaics and solar thermal power showed strong growth up to 2001 and substantial cost reductions resulting from their market experience, thus indicating the success of government intervention. The policy context is changing, as many new policies have been implemented between 2000 and 2003, increasing the number of countries with supportive policy conditions. REFERENCE Energy Prices and Taxes, Fourth Quarter, IEA/OECD, Paris 2004

3

4

5

31

ENERGY DIVERSIFICATION AND EFFICIENCY

1

RENEWABLE ENERGY POLICIES IN IEA COUNTRIES
KEY MESSAGES
Over the past three decades, a combination of policies has resulted in market growth of emerging technologies, including advanced biomass, solar hot water, solar PV and wind. In no country is there evidence of strong market growth where only one policy is in place. Longevity and predictability of policy support is important to overall market success. The challenge is how to incorporate strong incentives for cost reduction and competition while ensuring longevity and predictability of policy support. National policies are strengthened when local, state or provincial governments have the authority to act independently of national governments.

2

3

SUMMARY
The evolution of policies for renewable energy sources shows a discernible pattern over the past three decades. Starting with investments in research, development and demonstration in the early 1970s, government support for market deployment of renewable energies reflected a variety of approaches. From 1978 to end-1984, countries employed guaranteed prices, investment incentives, voluntary programmes and tax measures. By the mid-1980s, virtually all IEA countries had RD&D policies in place. By the early 1990s, many more countries had adopted market deployment policies, and the first obligations were introduced. Almost all countries have established guaranteed prices at some point, with varying degrees of success. A few countries have moved to quotas and others have established tradable certificate systems or will soon do so. At the same time, several recent commitments point to future guaranteed price systems.While a clear evolution of overall policies and measures in IEA countries is evident, this does not necessarily denote a single trend. Each country has chosen policies and measures that best match domestic resource endowments, economic structure and market development objectives. In Japan, PV technology has been supported by RD&D, demonstration projects, financial incentives and net metering agreements. In Spain, wind technology has been supported by feed-in tariffs, low interest loans, capital grants and local support for turbine manufacturing. Most wind power growth is in areas where regional governments have supported development through administrative changes and financial support. In Italy and Germany, feed-in tariffs for renewable energy sources have an eight- to twenty-year time frame. Long-term support for biomass district heating plants in Austria provides another example. The erratic nature of support for renewable energy in the United States, in contrast, has undermined private-sector investment. Thirteen US states have established local renewable portfolio standards, however, and many more states offer their own financial incentives.

4

5

REFERENCE Renewable Energy - Market & Policy Trends in IEA Countries, IEA/OECD, Paris 2004
32

ENERGY DIVERSIFICATION AND EFFICIENCY

RENEWABLE ENERGY MARKETS
KEY MESSAGES

1

The share of renewables in total primary energy supply in IEA countries increased from 4.6% in 1970 to 5.5% in 2001. Most of the increase in the share of renewables occurred from 1970 to 1990, when renewables supply grew by 2.8% a year. The annual growth rate of renewables supply slowed to 1.2% from 1990 to 2001. Most first generation renewable energy technologies, including hydro, biomass combustion and geothermal power did not increase and even declined in the 1990s, in many IEA countries. Energy supply from second generation technologies, e.g. wind and solar, grew by 23% per year from 1980 to 2001. However, they started from a very low base. Although electricity generation from these “new” renewables have increased significantly, they are concentrated in just a few IEA countries.This highlights the challenge to create international markets for emerging technologies.

2

3

SUMMARY
Renewables growth in the 1970s and early 1980s was in large measure the result of RD&D and policy support in the aftermath of the oil price crisis. The renewables portfolio then consisted primarily of large hydropower, biomass combustion and geothermal technologies. Their growth in the 1970s was the result of their improved competitiveness in the aftermath of the oil price increases of the 1970s. Growth in hydropower production, biomass supply and geothermal slowed considerably in the 1990s, though. Albeit from a very low base, the second generation of renewables, solar electric, wind power and some advanced biomass technologies, have grown at impressive rates over the past two decades. This is the result of substantial investment by IEA governments in RD&D and support for market deployment policies. Three factors affect renewables cost and market growth: the intensity and availability of the natural energy resource; the maturity of each renewable technology and the market rules set by governments. Renewables’ share increased from 4.6% in 1970 to 5.98% in 1992. Then, due to reduced competitiveness caused by lower oil prices, the share of renewables in the IEA countries declined to 5.5% in 2001, from which it has started to rebound. Renewables accounted for 15.1% of electricity production in IEA countries in 2001, compared with coal (38%), nuclear (24.9%), natural gas (16.9%), and oil (5.1%). The share of renewables in IEA electricity production declined from 24.1% in 1970 to 15.1% in 2001. Hydropower contributed the majority of electricity generation from renewables at 86.3%, followed by combustible renewables and waste at 9.1%, solar, wind and ocean energy collectively at 2.7% and geothermal at 1.9%.

4

5

REFERENCE Renewable Energy - Market & Policy Trends in IEA Countries, IEA/OECD, Paris 2004
33

ENERGY DIVERSIFICATION AND EFFICIENCY

1

NATURAL CYCLES OF RENEWABLES AND THE CASE OF WIND INTERMITTENCY
KEY MESSAGES
Natural cycles of resource availability are inherent in all renewable energy technologies, causing random variations in output. However, for each technology, these cycles operate over different time ranges from yearly to seasonal, to hourly, and even minute-by-minute fluctuation. The intermittency of wind is part of this picture and thus a known phenomenon which poses new challenges in degree but not in kind. Technologies and policy options exist to manage short-term fluctuations in output from renewable energy technologies, even at high levels of market penetration. Imperfect markets often obscure the true economic cost of managing intermittency, so that barriers to the penetration of renewables are mainly a question of economics and policy.

2

3

SUMMARY
Natural cycles are an inherent aspect of all renewable resources. In the case of mature renewable energy technologies such as hydropower and biomass, they are well understood and managed. ‘New’ renewable energy technologies such as wind power or solar photovoltaics have recently become prominent in discussions among policy makers, researchers and the media. Although some fresh issues arise in the management of new renewable energy technologies, there are no insurmountable technological barriers prohibiting greater uptake of renewables. For example, the geographical aggregation of generators such as wind turbines reduces the volatility of output. Improved wind forecasting and modelling will improve predictability. Both geographical aggregation and forecasting are already widely used in electricity markets, but need to be reinforced. Significant further research is carried out on both issues. Furthermore, important developments in electricity market reform in many countries actually act in favour of better grid integration and management of natural cycles of renewables.This is especially the case with trends towards upgrades and inter-connection of electricity grids and with the implementation of new communication technologies. Finally, because each renewable energy technology fluctuates over a different time-scale, important gains from the complementarity of these cycles are possible through interlinked grids (for example by combining the use of wind and hydro power). The extent to which the intermittency of the natural resource will become a barrier to renewables is mainly a question of economics and policy. Transparent, inter-connected and well-regulated markets will minimise grid operation costs. In some cases, structural adaptation will be needed. Few countries rely on just one technology for their electricity needs. A portfolio of generating technologies, including a variety of renewable energy technologies, is likely to provide the most efficient trade-off to manage the costs of natural cycles of renewables. REFERENCE Natural Cycles of Renewables and the Case of Wind Intermittency – Status and Prospects for Market Penetration, IEA/ETO Papers, 2005
34

4

5

ENERGY DIVERSIFICATION AND EFFICIENCY

BIOFUELS FOR THE TRANSPORT SECTOR
KEY MESSAGES

1

Although liquid biofuels (ethanol and biodiesel) still account for only a small percentage of motor fuels in both North America and the EU (no more than 2% on an energy-basis in any country in these regions), their use is growing rapidly and could increase dramatically over the coming decade. Given the current commercial technologies available for producing liquid biofuels and the costs of growing the feedstocks in North America and the EU, it is not clear whether their benefits will outweigh the costs of production. If technology improvement goals can be achieved, however, the resource base for biofuels would increase and the net benefits of increased production could grow substantially.

2

3

SUMMARY
Biofuels provide a number of important benefits when blended with petroleum transportation fuels:
■ ■ ■ ■ ■

Octane enhancement (for gasoline) to meet vehicle performance requirements Reduction in emissions of a variety of pollutants (but also increases in some) Displacement of petroleum fuel and reductions in dependence on imported petroleum Reductions in total (“well-to-wheels”) greenhouse gas emissions associated with motor vehicles Expansion of markets for domestic agricultural products like grains and oil-seed crops

4

Given current and projected production of crops used as ethanol feedstocks (corn in North America; corn, wheat, barley and sugar beets in Europe) and current and expected near-term production and conversion technologies, it should be possible to substitute 5% of gasoline fuel with ethanol within 10 years. This should not require major disruptions to domestic crop markets or food supplies, although crop prices may increase. Going beyond this level may require significant reallocation of crops and cropland. For biodiesel, lower potential production volumes are foreseen, given the higher land requirements per unit production for its feedstocks (mainly soy in North America and rape in Europe). Research programmes under way, particularly in the United States, are developing a new generation of biofuel crops and conversion techniques, focused on cellulosic feedstocks for ethanol and on biomass gasification for biodiesel. If research goals can be achieved, relatively low cost cellulosic ethanol and moderate-cost biodiesel could be the result. This will dramatically increase the resource base and the net environmental and economic benefits of these fuels.

5

REFERENCE Biofuels for Transport - An International Perspective, IEA/OECD, Paris 2004
35

ENERGY DIVERSIFICATION AND EFFICIENCY

1
KEY MESSAGES

IEA ENERGY INDICATORS
Energy indicators are an important tool for analysing the interactions between economic/ human activity, energy use and CO2 emissions.They are particularly important when analysing progress of energy efficiency developments. Many IEA member countries already employ energy indicators, a set of disaggregated measures of how energy is used. The IEA’s role is to assist and internationalise these efforts through the maintenance of transparent international databases and through collaboration with other international organisations.

2

3

SUMMARY
Since 1997, the IEA has developed a series of energy indicators as tools for studying energy-use developments. The main purpose of this work is to assist member countries in analysing factors behind changes in energy use and CO2 emissions. Indicators (and the associated databases) also reveal key couplings between energy use, energy prices and economic activity.This insight is crucial for assessing and monitoring past and present energy efficiency policies and for designing effective future action. Data developed for the IEA indicators project are also used for IEA analytic activities, such as analysis for the World Energy Outlook and various energy efficiency and energy technology projects within the Secretariat. Important insights from the IEA project on indicators are highlighted in the recent IEA publication Oil Crises and Climate Challenges: 30 Years of Energy Use in IEA Countries. An important aim of the IEA’s work on indicators is to increase the transparency and quality of energy-use data. This provides a better basis for meaningful comparison of energy and emissions developments across countries, as well as a tool to measure progress in emissions reductions and efficiency improvements within one country over time. The IEA has worked with member countries and with the European Commission to ensure efficient collection of consistent data. The IEA is also assisting non-member countries with improving their energy statistics and establishing energy indicators.This effort includes work with other international organisations such as the Energy Charter Secretariat and the International Atomic Energy Agency (IAEA). An interagency publication Energy Indicators for Sustainable Development – Guidelines and Methodologies, prepared jointly by IEA, IAEA, UN-DESA, EUROSTAT and the European Environmental Agency, is being released during spring 2005.

4

5

REFERENCES Energy Indicators and Sustainable Development – Guidelines and Methodologies, IAEA/UN-DESA/EUROSTAT/EEA/IEA,Vienna, April 2005 Oil Crises and Climate Challenges - 30 Years of Energy Use in IEA Countries, IEA/OECD, Paris 2004

36

ENERGY DIVERSIFICATION AND EFFICIENCY

ENERGY EFFICIENT DOMESTIC APPLIANCES AND EQUIPMENT
KEY MESSAGES

1

By improving the energy efficiency of residential appliances, IEA member countries could reduce electricity demand and CO2 emissions by an additional 322 million tonnes (Mt) per year by 2010. These savings can be achieved at negative cost to society, since the extra costs are more than offset by savings in running costs over the life of the appliance. Additional policy action is required to achieve these benefits. Existing policies in IEA member countries do not capture many of the cost-effective savings available. Mandatory minimum energy performance standards and labelling, supported by an active and effective institutional framework, are the most effective way to achieve the potential savings. Without specific policy intervention, standby power waste in domestic equipment is likely to grow. Since it is easy to avoid, standby power offers the single largest source of energy savings in the residential sector. Set-top boxes deserve special attention because sales of very inefficient units are poised for rapid sales.

2

3

SUMMARY
Residential appliances and equipment use 30% of all electricity generated in OECD countries and produce 12% of all energy-related CO2 emissions. New sources of electricity demand growth include standby power and “set-top boxes” that are used to bring digital signals to televisions. Standby power alone now represents up to 11% of household electricity use although technologies exist to cut it by up to 2/3. Similarly, more than a billion set-top boxes will be purchased in the next decade, resulting in over 10 GW of new electrical demand. Better designs could cut this demand by at least 50%. Appliance policies to date have been effective and cost-effective, reducing IEA greenhouse gas emissions by some 37 Mt CO2/year by 2000, avoiding the need for at least 20 gas-fired power stations.And they will help to cut emissions by 126 Mt CO2/year by 2010 as more efficient equipment replaces less efficient equipment in the stock. But unless these policies are reinforced, appliance energy consumption in the OECD will grow by 14% from 2000 to 2010 and by 42% by 2020. This could be avoided with cost-effective policies that target the least life-cycle cost efficiency level for each appliance class. Up to 322 Mt of CO2 could be avoided by 2010 if such policies were adopted early and on a widespread basis. Existing policies in IEA member countries do not capture all the cost-effective savings available.There is much variation in the coverage, stringency and design and implementation of appliance policies.

4

5

REFERENCES Cool Appliances - Policy Strategies for Energy Efficient Homes, IEA/OECD, Paris 2003 Things that Go Blip in the Night - Standby Power and how to Limit it, IEA/OECD, Paris 2001
37

1

ENERGY TECHNOLOGY
2

ADVANCED ELECTRICITY NETWORKS CO2 CAPTURE AND STORAGE TECHNOLOGIES EXPERIENCE CURVES FOR ENERGY TECHNOLOGY POLICY TRENDS IN ENERGY USE AND EFFICIENCY IMPACT ON CO2 EMISSIONS BASIC SCIENCE AND FUTURE ENERGY TECHNOLOGIES ENERGY TECHNOLOGY INFORMATION INTERNATIONAL COLLABORATION IN ENERGY TECHNOLOGY OIL AND GAS SUPPLY TECHNOLOGIES AND ENERGY SECURITY IEA R&D COLLABORATION ON FUSION POWER AND ITER COAL TECHNOLOGY ROADMAPPING TRANSPORT TECHNOLOGIES TO REDUCE OIL CONSUMPTION AND EMISSIONS SAVING OIL IN A HURRY

3

4

5

39

ENERGY TECHNOLOGY

1

ADVANCED ELECTRICITY NETWORKS
KEY MESSAGES

2

Advanced electricity networks will be needed to provide reliable and secure electricity supply while meeting ever-steeper demands for power transfer, high-quality power and integration of complex generating sources. Today’s available technologies need to be more widely used. Much more advanced and sophisticated infrastructure, technologies and systems will have to be put into place for tomorrow, at both the transmission and distribution levels. Upgrades will need to address system-wide issues. But individual entities are unlikely to make such investments without incentives. Technology development will need to go hand-in-hand with supportive policy, economic and regulatory frameworks.

3

SUMMARY
Electricity system reliability is now seen as an important element in energy security in general. Yet many factors are creating challenges to the capacity and reliability of electricity transmission and distribution (T&D) systems, notably ageing equipment, increasing electricity trading, network congestion and difficulties in obtaining new transmission rights-of-way. Growing demand for the high-quality power needed to run a digital economy and for the integration of more distributed and intermittent generation sources will only pose further challenges. Electricity load is increasing at a higher rate than transmission capacity. Tomorrow’s electricity infrastructure and control systems will have to handle larger, more complex loads and rapidlyincreasing network interconnections.They will need to recognise and dispatch small-scale generating components. The performance of power systems decreases, however, as size and complexity of networks increase. New technologies, new information and control systems and new approaches to system management will be needed to modernise and enhance the reliability and security of existing electricity networks and provide the network architecture for a future energy system. Many promising technologies and systems are emerging that can meet these needs. They include large-scale devices for routing power flow on the grid, advanced information systems for observing and assessing grid behaviour and real-time controls and operating tools. Technology development is needed in such areas as superconducting cables and equipment, advanced sensors, advanced visualisation technologies and power flow and control technologies with rapid response capabilities. Existing technologies can play a more widespread role if costs are reduced. Long-term, system-wide investments will be needed to put these technologies into place, as well as incentives to mobilise those investments. Policy, economic and regulatory frameworks can create the incentives and speed progress towards a power delivery system worthy of the 21st-century.

4

5

REFERENCE Energy Technologies for a Sustainable Future - Advanced Electricity Networks, IEA/OECD, Paris 2005
40

ENERGY TECHNOLOGY

CO2 CAPTURE AND STORAGE TECHNOLOGIES
KEY MESSAGES

1

Capture and storage of carbon dioxide from fossil fuel use could become the largest single means of abating CO2 emissions and permitting the continued use of fossil fuels, especially coal, in a CO2-constrained world. Considerable private and public effort will be needed to bring carbon dioxide capture and storage (CCS) technologies to the stage of commercial application. Some $500 million per year in RD&D funding will be needed to finance demonstration projects. In addition, an enabling legal and regulatory environment for CCS projects should be created and various economic instruments for climate change mitigation should be adapted to include CCS.

2

SUMMARY
The frontier of current technology does not offer adequate solutions to reduce emissions at a cost compatible with economic growth and competitiveness. With appropriate development and deployment policies, new clean energy technologies could contribute substantially to the IEA's shared goals of environmental protection, energy security and economic growth. CO2 capture and storage (CCS) is one option. It involves separating CO2 produced during fossil fuel use, then transporting this CO2 and storing it in geological media or in the ocean. If CCS technologies are to become a feasible option for the power industry, they need further development and demonstration. Industry participation in technology demonstration and dissemination is essential. Several large corporations are already involved in CO2 capture and storage research and demonstration projects. But current efforts are insufficient to achieve rapid technology introduction and there is no clear incentive for industry to invest more. The IEA publication Prospects for CO2 Capture and Storage analyses the current state of CCS technology, its competitiveness with other emissions- mitigation options and the policies needed for its further development. This publication’s comparison of CCS with other emission mitigation options is based on the findings of the IEA’s Energy Technology Perspectives model. In February 2004, the IEA and its energy technology network organised three successful events focusing chiefly on CCS. The IEA Asia-Pacific Conference on Zero Emissions Technologies for Fossil Fuels in Queensland (Australia) was accompanied by a technical workshop on CCS and an Asia-Pacific Economic Co-operation (APEC) workshop on improving power plant efficiency in the APEC region. A workshop on legal aspects of storing CO2 was organised by the IEA in July 2004, in close cooperation with the IEA Working Party on Fossil Fuels and the Carbon Sequestration Leadership Forum. It addressed CO2 storage issues, both land-based and offshore, and helped to pinpoint the legal issues that need to be tackled before CCS can be widely applied. Finally, the September 2004 Greenhouse Gas Technologies 7 Conference, organised by the IEA GHG R&D Programme in Vancouver (Canada), covered both technology and policy issues and attracted over 600 participants. REFERENCES Prospects for CO2 Capture and Storage, IEA/OECD, Paris 2004 IEA Asia-Pacific Conference on Zero Emissions Technologies for Fossil Fuels, Queensland, Australia, February 2004 IEA/CSLF Joint Workshop on Legal Aspects of Storing Carbon Dioxide, Paris, July 2004 7th International Conference on Greenhouse Gas Control Technologies,Vancouver, Canada, September 2004

3

4

5

41

ENERGY TECHNOLOGY

1

EXPERIENCE CURVES FOR ENERGY TECHNOLOGY POLICY
KEY MESSAGES
Learning-by-doing experience through the deployment of new energy-efficient technologies helps to reduce technology costs and thus costs of controlling CO2 emissions. Government deployment schemes are one way to overcome initially high costs. IEA analysis points to the importance of technology learning for renewables.

2

■ ■

SUMMARY

3

The cumulative production of industrial goods or services progressively reduces their cost, which declines by a certain percentage for each doubling of installed capacity, a phenomenon known as the “experience curve”. The purpose of the IEA’s work in this area is to use experience curves as tools for energy technology policy analysis. Experience curves are tools for analysis and design of deployment programmes.They also help in estimating the long-term costs of controlling CO2 emissions. Such curves indicate that there are low-cost paths to CO2 stabilisation but also that following such paths may demand huge “learning investments”. Case studies show how government deployment programmes can initiate and accelerate progress along the experience curve for new pre-commercial technologies.These studies demonstrate the need for governments to adopt a two-pronged policy that combines research and development with deployment strategies. Support for R&D results in new, clean, energy-efficient technologies that have initially high costs. Deployment policies are needed in order to reduce the costs of these technologies for large-scale market deployment. This cost reduction is known as “technology learning” and experience curves measure this effect. The Energy Technology Perspectives model has been used to analyse deployment strategies for renewables. The analysis suggests that government deployment policies can make an important difference in terms of the future share of renewables. Furthermore, the costs of supporting early learning investment in a new technology can be more than offset by the long-term cost reductions that the deployment support results in. This underlines the importance of experience curves for the assessment of energy technology policies. Analysis of experience curves will therefore be expanded to other technology areas.

4

5

REFERENCE Technology learning in the ETP model, Paper for the 6th IAEE European Conference on Modelling in Energy Economics and Policy, Zurich, Switzerland, September 2004
42

ENERGY TECHNOLOGY

TRENDS IN ENERGY USE AND EFFICIENCY IMPACT ON CO2 EMISSIONS
KEY MESSAGES

1

IEA countries have achieved significant energy savings since the first oil price shock in 1973. Without these savings energy use in 1998 in a group of representative IEA countries would have been 50% higher. However, the rate of energy savings has slowed significantly since the late 1980s. As a consequence, the rate of decline in CO2 emissions relative to GDP has also slowed. These trends raise concerns because improved energy efficiency generally has been the most important factor moderating historic growth in CO2 emissions. Accelerating energy efficiency improvements is thus a crucial challenge for climate policies.

2

3

SUMMARY
The IEA publication Oil Crises and Climate Challenges - 30 Years of Energy Use in IEA Countries examines how energy efficiency and factors such as economic structure, income, lifestyle, climate, prices and fuel mix have shaped developments in energy use and CO2 emissions in IEA countries since the organisation was founded 30 years ago. It looks in detail at developments sector-by-sector and provides energy policy makers with data and insights pointing to ways of using energy efficiency and lower-carbon fuels to achieve a more sustainable future. One of the major findings of the report is that IEA countries have significantly reduced the need for energy to fuel economic growth. Compared with 1973, it now takes one-third less energy to produce one unit of GDP in IEA economies. An important reason for this development is that considerable energy savings have been achieved in the various branches of manufacturing, in different end-uses in households and commercial buildings and in different modes of passenger and freight transportation.The United States, Japan and the group of 8 European countries included in the study all achieved about the same level of economy-wide savings between 1973 and 1998. But there were important differences at sector level. The amount of energy saved among the eleven countries corresponds to more than the group’s total demand for oil in 1998. An alarming finding also emerges from the study: energy savings rates across all sectors and in almost all countries have slowed since the late 1980s. So has the decline in CO2 emissions relative to GDP. This indicates that the oil price shocks in the 1970s and the resulting energy policies did considerably more to control growth in energy demand and CO2 emissions than energy efficiency and climate policies implemented in the 1990s.

4

5

REFERENCE Oil Crises and Climate Challenges - 30 Years of Energy Use in IEA Countries, IEA/OECD, Paris 2004
43

ENERGY TECHNOLOGY

1

BASIC SCIENCE AND FUTURE ENERGY TECHNOLOGIES
KEY MESSAGES
The biggest single challenge for this century: energy is needed for 10 billion people worldwide and current technology will not provide it in a clean and sustainable way. The types of revolutionary and accelerated evolutionary advance that are needed will only be possible through increased focus on basic energy sciences and stronger linkages between science and technology programmes, including international co-operation. Despite progress in basic science and the successes in applied energy R&D programmes, the process of research integration between science and applied energy programmes has, to date, been unsuccessful and poorly understood. IEA is uniquely placed to exert leadership in this promising but difficult area, by bringing together nations and disparate communities, notably from the realms of science, policy, and technology, to rise to the challenges of accelerating long-term energy innovation.

2

3

SUMMARY

4

5

The importance of linkages between basic science and energy technology R&D was addressed at the IEA Conference “Linking Basic Science and the Development of New Energy Technologies” in Paris in April 2003. The Ad Hoc Group on Science and Energy Technologies (AHGSET) was established in March 2004 to reflect the IEA’s commitment to continued exploration of this important issue. One of the central activities of AHGSET is to sponsor workshops, bringing together key stakeholders from the scientific, energy technology and public policy domains to explore what energy technologists need from basic scientists (demand pull) and what the results of basic science can contribute to energy technologists’ needs (science mining). The AHGSET workshop “New Links Between Basic Research and Applied Energy R&D – the Computational Approach” took place in Berlin on 8-9 November 2004. Sponsored by Germany, it contributed greatly towards bridging the gap between scientists and engineers. The AHGSET workshop “Methodologies and Tools for Multicriteria Evaluation of Energy Chains and for Energy Technology Perspectives” took place in Paris on 3-4 March 2005. Sponsored by France, it characterised the scope and limits of existing decision-aiding processes. In the autumn of 2005, a planned workshop in the United States will focus on “Strengthening the Critical Connections between Science and Energy Technology Programmes”. It will build on findings to date and determine future orientation.

REFERENCES Linking Basic Science and the Development of New Energy Technologies Workshop, Paris, April 2003 New Links between Basic Research and Applied Energy R&D Workshop – The Computational Approach, Berlin, November 2004
44

ENERGY TECHNOLOGY

ENERGY TECHNOLOGY INFORMATION
KEY MESSAGES
Information dissemination maximises the impact of research and development by enhancing the effect of joint collaborative work. It speeds the rate at which new energy technologies are deployed.

1

SUMMARY
IEA international projects, known as "Implementing Agreements", produce and disseminate technological information. Some focus largely on collecting and disseminating technological data to a wider audience. ■ Energy and Environmental Technology Information Centres (EETIC) is the collective name for a network for information gathering, analysis and dissemination. It has two components. ● CADDET (Centre for the Analysis and Dissemination of Demonstrated Energy Technologies) offers information and technical literature on full-scale demonstrated energy-efficient and renewable energy technologies, including the InfoStore database covering some 1 600 projects. ● GREENTIE (Greenhouse Gas Technology Information Exchange) provides information on suppliers of greenhouse gas-mitigating goods and services. Its main output, the Directory of Suppliers, contains nearly 6 000 entries.The Project Broker Facility guides users to suppliers. ■ The Advanced Motor Fuels Information newsletter (AMFI), monitors developments in the entire field of automotive fuels, from the acquisition and transportation of raw materials, fuel production and distribution through to the use of fuels in vehicles. ■ The IEA Air Infiltration and Ventilation Centre (AIVC) offers technical support aimed at optimising ventilation technology with a comprehensive bibliographic database. ■ The Clean Coal Centre (CCC) maintains the Coal Abstracts database and eight databases which make up the CoalPower5 database. Coal Abstracts is a database of 200 000 abstracts on the world’s literature on coal. CoalPower5 contains details of the world’s coal-fired power plants. The CCC’s Clean Coal Compendium will shortly offer an encyclopaedia on topics related to coal use and the underlying science. ■ The Energy Technology Data Exchange (ETDE) provides governments, industry and the research community in member countries with access to the widest range of information on energy research, science and technology in the world. The ETDE World Energy Base, ETDEWEB, includes 3.4 million citations to energy-related research and literature. ■ The Heat Pump Centre (HPC) is a worldwide information service that includes topical and non-topical articles, news on general developments, technology and applications, working fluids, markets, recent published works, software and current events. All applications in buildings and industry are addressed, including heating-only, heating and cooling systems, air conditioning and refrigeration. ■ The on-line IEA OPEN Energy Technology Bulletin reports regularly on the activities, findings, events and publications of the IEA Implementing Agreements, and on those of the IEA energy technology community as a whole. The Bulletin is e-mailed to close to 5 000 subscribers worldwide. REFERENCES The IEA Energy Information Centre The IEA Technology Agreements The IEA OPEN Energy Technology Bulletin

2

3

4

5

45

ENERGY TECHNOLOGY

1

INTERNATIONAL COLLABORATION IN ENERGY TECHNOLOGY
KEY MESSAGES
For more than 30 years, IEA international energy technology co-operation has been a fundamental building block in facilitating progress of new or improved energy technologies.

2

SUMMARY
When the IEA was founded in 1974, the main objective of its member countries was to reduce dependence on imported oil through the development of alternative sources while improving energy efficiency. More recently, concerns such as greenhouse gas emissions and globalisation have underlined the need for international co-operation. To support these core issues, the IEA created international energy technology RD&D collaboration legal contracts – Implementing Agreements – and a system of standard rules and regulations that would allow interested member and non-member governments to share costs and research the development and deployment of particular technologies. Participants in Implementing Agreements benefit from greater project scale, reduced cost and duplication of work, accelerated development and deployment, harmonised standards, strengthened national RD&D capabilities, information sharing and networking. In 2005 there were 40 Implementing Agreements, with several thousand participants from 58 countries, organisations or companies:

3

4

5
■ ■

Fossil Fuels: Clean Coal Centre, Clean Coal Science, Enhanced Oil Recovery, Fluidised Bed Conversion, Greenhouse Gas, Multiphase Flow Sciences. Transport:Advanced Fuel Cells,Advanced Materials for Transportation,Advanced Motor Fuels, Hybrid and Electric Vehicles. Buildings: Buildings and Community Systems, Demand Side Management, District Heating and Cooling, Energy Storage, Heat Pumps. Industry: Emissions Reduction in Combustion, High-Temperature Superconductivity, Process Integration, Pulp and Paper. Fusion: Environmental Aspects Fusion Power, Fusion Materials, Large Tokamaks, Nuclear Technology Fusion Reactors, Plasma Wall Interaction in TEXTOR, Reversed Field Pinches, Stellarator, Poloidal Field Diverters (ASDEX Upgrade). Renewable Energies: Bioenergy, Geothermal, Hydrogen, Hydropower, Ocean Energy, Photovoltaics, SolarPACES, Solar Heating and Cooling,Wind. Cross-Sectional Activities: Climate Technology Initiative, Energy Technology Data Exchange, Energy Technology Systems Analysis Programme, Energy and Environmental Technology Information Centre.

Each of the 40 Implementing Agreements simultaneously undertakes several RD&D projects, disseminating the results through published work, seminars and web sites. REFERENCE IEA Technology Agreements Web Page: http://www.iea.org/techagr
46

ENERGY TECHNOLOGY

OIL AND GAS SUPPLY TECHNOLOGIES AND ENERGY SECURITY
KEY MESSAGES

1

Technology can make a significant contribution to sustaining adequate oil and gas supply at acceptable prices by enabling production cost reductions, increased oil reserves and regional supply diversification. Significant cost reductions and growth of reserves have resulted from new technology over the past 25 years. However, there is great potential for further improvements. Maximising the contribution of oil and gas supply technologies to energy security requires efforts with a near-term focus as well as work that will only yield results in the future. Both must start now and continue over time.They must involve governments and industry.

2

3

SUMMARY
Technology has a critical role to play in enhancing energy security in the medium and long term. It reduces actual production costs, helps to increase oil reserves and contributes to greater geographical diversity of supply. The development of deep offshore oil and gas production is an important trend, while unconventional oil production in Canada and enhanced oil recovery involve new technologies that also enhance security of supply. In gas production, the role of unconventional gases such as tight formation gas and coalbed methane is growing.The same is true for the use of CO2 to enhance fossil fuel production. The technological and economic characteristics of these technologies have been analysed and the resulting data has been documented and formatted for the IEA’s Energy Technology Perspectives (ETP) model.This model is used for global energy scenario analysis and will help to analyse the longterm role of fossil fuels from an energy security perspective. Given the resource depletion in certain regions of the world, efficient and cleaner technologies will provide only part of the solution for achieving sustained energy security over time. A strategy portfolio will be required and the role of oil and gas production technologies in this portfolio is being assessed, based on the ETP model. Only a continuing commitment to long-term R&D and support for deployment of new technologies will provide the substantial long-term cost reductions needed to sustain supply security. Governments have a role to play in co-operation with the private sector, in removing barriers to rapid and widespread deployment of clean and efficient energy technology.They can act decisively in creating and stimulating markets for new technology and in supporting “technology learning”. They can do this by direct investment and by setting market rules. REFERENCES Global Natural Gas Dialogue - Trends,Technologies and Investments Workshop, Houston, May 2004 Technology Issues for the Oil and Gas Sector Workshop, IEA, Paris, January 2005
47

4

5

ENERGY TECHNOLOGY

1

IEA R&D COLLABORATION ON FUSION POWER AND ITER
KEY MESSAGES
The international fusion community is now considering the construction of the first experimental reactor, ITER. With the participation of China, the European Union, Japan, Korea, Russia and the United States, the purpose of the project is to demonstrate that energy from fusion is scientifically and technically feasible. Through its Fusion Power Co-ordinating Committee (FPCC), the IEA co-ordinates nine international co-operation programmes (Implementing Agreements) dealing with fusion topics directly relevant to ITER and the fusion programme beyond ITER.

2

3
SUMMARY
Although declining in line with other energy R&D investments, nuclear fusion R&D has in the past ten years accounted for about 11% of the total government budgets for energy R&D.A number of experimental facilities such as JET, JT-60,TFTR and DIIID have been built and successfully operated in the EU, Japan, the United States and Russia to investigate the physics of the fusion process. Considerable efforts have been devoted to technology and materials R&D, safety and environmental issues and economic assessments.The IEA has a significant involvement in the fusion programme. The nine international co-operation programmes (Implementing Agreements) within the FPCC purview deal with a broad range of fusion topics directly relevant to ITER and beyond ITER (tokamak physics, alternative confinement approaches, technology, materials, safety, economic and environmental implications of fusion) Fusion energy has been demonstrated in experimental devices at levels of a few megawatts for short time spans.The scientific and technological knowledge is now available for the construction of ITER, the first 500 MW experimental plant. Successful operation of the facility would open the way to the first demonstration power plant. Power generation from fusion requires further R&D and advances, notably in materials however. Fusion promises inherent safety features and limited hazards to the public, even in the case of external events such as earthquakes. It produces no greenhouse gas and no radioactive or toxic products. Most neutron-induced radio-activated materials resulting from operation of fusion power plants can be disposed of as inert waste, recycled, or given shallow-land disposal a few decades after the operation. Public acceptance of fusion can be eased if the public is actively involved in the decision process at an early stage. The cost of fusion electricity is estimated by modelling and extrapolation with the support of industry.The fuels used for fusion, deuterium and lithium, are plentiful and cheap . ITER is crucial to demonstrate the feasibility of fusion power. According to current evaluations and planning, combining ITER with proper R&D and material development might bring a demonstration power plant on line in about 35 years. REFERENCE Technology Options: Fusion Power, IEA Energy Technology Policy and Collaboration Paper, Paris 2003

4

5

48

ENERGY TECHNOLOGY

COAL TECHNOLOGY ROADMAPPING
KEY MESSAGES

1

Coal-fired systems based on both pulverised coal combustion (PCC) and integrated gasification combined cycles (IGCC) will need to be included in a comprehensive Zero Emissions Technologies (ZETs) response to reducing CO2 emissions. ZETs based on PCC may be of particular importance in countries such as China and India, which have large and growing fleets of PCC-based power generation plants. ZETs systems based on IGCC technology have the advantage of capturing CO2 before combustion takes place, resulting in not only a smaller efficiency penalty but also the potential to supply large volumes of hydrogen. PCC-based ZETs could close the gap with IGCC-based systems if and when the technology for ultra-supercritical steam cycles, currently under development, comes into use.

2

3

SUMMARY
Coal will continue to play a major role in energy supply over the coming decades, with strong growth in developing countries. In order to reduce the environmental impact of its use, development and application of Clean Coal Technologies (CCTs), designed to minimise the emissions of various undesirable species from coal-fired power plants, should continue. Further development of CCTs will lead to a number of Zero or near-Zero Emissions Technologies that emit very low levels of all pollutants and CO2. At present, the state-of-the-art clean coal technologies most likely to provide the basis for ZETs are supercritical PCC and IGCC.With the clear need for more than one candidate ZET, there is a corresponding number of possible routes forward, some based on PCC and others on IGCC. In both cases, there are likely to be some distinct steps in taking forward today’s coal-based systems to achieve zero emissions. Only with effective RD&D programmes will it be possible, over the next few years, for these options to be developed and refined to the point where they can be adopted commercially as part of the solution to global warming and climate change.The publication Roadmapping Coal’s Future, from the IEA Coal Industry Advisory Board and the IEA Working Party on Fossil Fuels, brings more details on this strategic issue.

4

5

REFERENCE Roadmapping Coal’s Future, Brochure, IEA Coal Industry Advisory Board and IEA Working Party on Fossil Fuels, April 2005 (available on IEA Clean Coal Centre and www.iea.org)
49

ENERGY TECHNOLOGY

1

TRANSPORT TECHNOLOGIES TO REDUCE OIL CONSUMPTION AND EMISSIONS
KEY MESSAGES
The transport sector is responsible for almost 60% of oil consumption in OECD countries. It is a major source of pollution and greenhouse gas emissions. Transport is the chief sector driving future growth in world oil demand, particularly in developing countries, where oil consumption growth will soon outstrip that in OECD countries. Existing low-cost technologies for vehicle design, both on-board the vehicle and for transport systems, could reduce oil consumption in transport by 30-50% over the next 25 years.

2

3

SUMMARY
IEA’s cost and effectiveness analysis shows that, in both OECD and developing countries, fuel efficiency and emissions can be improved in the short and medium term (over the next 10-20 years) through cost-effective light vehicle technologies. These include: better streamlining to improve aerodynamics; greater use of lightweight materials; advanced engine lubricants and advanced tyre design; improved engine designs and configurations (including hybridisation) and improvements to drive-trains. A mix of such technologies could reduce fuel consumption by 30-40%. On-board vehicle technologies providing information can also be a low-cost way of improving fuel efficiency by enabling drivers to drive more efficiently. Diagnostic equipment indicating fuel consumption, optimal gear changes and engine revolutions and tyre pressure, or other equipment such as cruise controls, can together reduce average fuel consumption by 10%. In conjunction with the right fiscal incentives from highway tolls and access and parking charges, technologies such as telematics and electronic logistical systems can improve the overall logistics of travel and save drivers time, as well as reducing fuel consumption and emissions. However, while these various near-term technologies raise overall fuel efficiency, the savings thus achieved might be “spent” on heavier, more powerful vehicles or more air conditioning, so that net fuel savings might be reduced. Government policies, such as fiscal incentives, are necessary both to support the deployment of fuel-saving technologies and to discourage on-going increases in vehicle size, weight and power. In addition to vehicle technologies, new fuel technologies are being developed for the medium term. Natural gas, LPG and biofuels can all be used in existing conventional combustion engines (requiring varying degrees of engine modification), though biofuels are the most compatible with current gasoline and diesel vehicles. Other fuel carriers, namely electricity and hydrogen, can also power vehicles, but their relative cost and incompatibility with current vehicles places their widespread use at least 10 years off. Further development and cost reductions in fuel cell vehicles and related technologies are also needed, including fuel cell stack systems, controller systems, hydrogen storage on-board vehicles and battery systems. REFERENCE Energy Technologies for a Sustainable Future - Transport, IEA/OECD, Paris 2004

4

5

50

ENERGY TECHNOLOGY

SAVING OIL IN A HURRY
KEY MESSAGES

1

A variety of existing policy approaches could rapidly reduce oil demand in the transport sector, for example during a petroleum supply disruption. Available evidence suggests that some policies could rapidly cut oil demand at a modest implementation cost. On an IEA-wide basis, savings of at least one million barrels per day appear possible through well-conducted demand restraint programmes.This is enough to offset a fairly large reduction in world oil supplies. Measures that seem most promising, in terms of large potential oil savings and low cost, include: encouraging telecommuting; extending mass transit services, temporarily free of charge; encouraging car-pooling alongside rider “matching” services and lower speed limits (and/or tighter enforcement of existing limits). Restrictive measures like fuel rationing with coupons or “odd/even” licence plate days to limit vehicle use are nominally inexpensive, but may be costly to society in terms of lost mobility.

2

3

SUMMARY
During 2004, oil prices reached levels recently unprecedented. Many countries are concerned about oil costs and oil security and seek ways to improve their capability to handle market volatility. Energy supply security is a core mission of the International Energy Agency. Its founding treaty obliges member countries to maintain emergency oil reserves, but also to apply voluntary and mandatory measures for reducing oil consumption during an oil supply disruption at very short notice. In most OECD countries the prime consumer of oil is the transport sector, which should be a central focus of emergency oil demand restraint programmes. The IEA has completed a quantitative assessment of the potential impacts and costs of oil demand restraint measures in transport, under conditions such as supply disruptions or other oil-related emergencies.This shows that opportunities exist to substantially reduce transportation oil demand quickly and cheaply, if countries are prepared in advance. Most important, greater awareness is needed regarding the crucial role of transport demand response in dealing with oil supply disruptions. While oil demand in transport is indeed very “inelastic” in the short term, a number of measures can help to change that and provide an important tool for lowering the duration and cost of disruptions in petroleum supply and the accompanying price spikes.

4

5

REFERENCE Saving Oil in a Hurry, IEA/OECD, Paris 2005
51

1

ENVIRONMENT AND CLIMATE CHANGE

2

WORLD ALTERNATIVE POLICY SCENARIO CO2 EMISSIONS FROM FUEL COMBUSTION DEALING WITH CLIMATE CHANGE: DATABASE FOR POLICIES AND MEASURES GREENHOUSE GAS EMISSIONS TRADING: AN ENERGY VIEW COMPETITIVE IMPLICATIONS OF EUROPEAN CO2 EMISSIONS TRADING ENERGY SECURITY AND CLIMATE POLICY INTERACTIONS BEYOND KYOTO

3

4

5

TECHNOLOGIES AND CLIMATE POLICIES EMISSIONS REDUCTIONS THROUGH PROJECT-BASED ACTIVITIES

53

ENVIRONMENT AND CLIMATE CHANGE

1

WORLD ALTERNATIVE POLICY SCENARIO
KEY MESSAGES

2

The World Alternative Policy Scenario presented in the World Energy Outlook (WEO) 2004 analyses the global impact of environmental and energy-security policies that countries around the world are already considering, as well as the effects of faster deployment of energy-efficient technologies. Global primary energy demand is about 10% lower in 2030 than in the Reference Scenario whilst energy-related emissions of carbon dioxide would be reduced by some 16%. More efficient use of energy account for almost 60% of the reduction in CO2 emissions. A shift in the fuel mix for power generation accounts for most of the rest.

3
SUMMARY
The WEO 2004 presents a World Alternative Policy Scenario, which depicts a more efficient and more environment-friendly energy future than does the Reference Scenario. It analyses how global energy trends could evolve if countries around the world implemented a set of policies and measures that they are currently considering. In this scenario, global primary energy demand would be about 10% lower in 2030 than in the Reference Scenario. The reduction in demand for fossil fuels would be even bigger, thanks largely to policies that promote renewable energy sources. Demand for oil would be markedly lower than in the Reference Scenario. Global oil demand would be 11% lower in 2030 – an amount equal to the current combined production of Saudi Arabia, the United Arab Emirates and Nigeria. Stronger measures to improve fuel economy in OECD countries and the faster deployment of more efficient vehicles in non-OECD countries would contribute almost two-thirds of these savings in 2030. Oil-import dependence in the OECD countries and China would drop as a result. Coal demand would fall even more. The amount saved would be around the current coal consumption of China and India combined. World natural gas demand would be 10% lower. By 2030, energy-related emissions of carbon dioxide would be 16% lower than in the Reference Scenario.This is roughly equal to the combined current emissions of the United States and Canada. Almost 60% of the cumulative reduction of CO2 emissions would occur in non-OECD countries. In fact, OECD emissions would level off by the 2020s, and then begin to decline. More efficient use of energy in vehicles, electric appliances, lighting and industry account for more than half of the reduction in emissions. A shift in the power generation fuel mix in favour of renewables and nuclear power accounts for most of the rest. However, even in this Alternative Scenario carbon dioxide emissions at a global level would still be higher in 2030 than today.

4

5

REFERENCE World Energy Outlook 2004, IEA/OECD, Paris 2004
54

ENVIRONMENT AND CLIMATE CHANGE

CO2 EMISSIONS FROM FUEL COMBUSTION
KEY MESSAGES

1

Global emissions of CO2 from fossil fuel combustion increased from 20.7 billion tonnes (Gt) in 1990 to 24.1 Gt in 2002 (i.e. a 16.4% increase). In 2002 alone, global CO2 emissions rose by 2%. The regions that contributed most to the 1990-2002 increase in world energy-related CO2 emissions were China, OECD North America and Asia. In 2002, 80% of global energy-related CO2 emissions were emitted by 22 countries – 12 of which are OECD countries. These 22 countries also produced 80% of the world's 2002 economic output (GDP) and represented 78% of the world's TPES (total primary energy supply). Moreover, 65% of the world's population lived in these countries. The developed countries and countries with economies in transition, referred to as Annex I Parties to the U.N. Framework Convention on Climate Change, collectively exceeded their 1990 emissions level by 1.2% in 2000 and by 1.6% in 2002. However, if emissions of other gases are included,Annex I emission levels, collectively, are below the 1990 level.Yet that achievement masks great variations among the Annex I countries. Emissions in the economies in transition declined steeply between 1990 and 2002 (i.e. -31%), while collectively the other developed countries of Annex I have seen their emissions rise by 14%. The public electricity and heat production sector was the largest contributor (i.e. 35%) to world emissions in 2002 and its emissions have grown 33% since 1990. The transport sector has become the second largest source (i.e. 24%) of energy-related CO2 emissions worldwide, increasing 28% since 1990 as a result of rising demand for mobility as economies grow.

2

3

4

SUMMARY
The publication CO2 Emissions from Fuel Combustion contains statistics on CO2 emissions by sector and by fuel from 1971 to 2002 for more than 140 countries and regions. It provides comparisons between countries and regions made for selected indicators such as: CO2 emissions / GDP; CO2 emissions / population; CO2 emissions /total primary energy Supply; CO2 emissions / kWh from electricity and heat generation. It also presents the evolution of CO2 emissions over the last 31 years, highlights regional and sectoral trends, looks at Key Sources as defined by the IPCC Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories and provides summary data for CH4, N2O, HFC, PFC and SF6. A CD-ROM and an on-line service are available that provide the complete historical series from 1960 to 2002 for Annex II countries and from 1971 to 2002 for other countries.They also contain a detailed sectoral breakdown of CO2 emissions for individual fuels.

5

REFERENCES CO2 Emissions from Fuel Combustion, 1971-2002, IEA/OECD, Paris 2004 Energy Balances of OECD Countries, 2001-2002, IEA/OECD, Paris 2004 Energy Balances of Non-OECD Countries, 2001-2002, IEA/OECD, Paris 2004
55

ENVIRONMENT AND CLIMATE CHANGE

1

DEALING WITH CLIMATE CHANGE: DATABASE FOR POLICIES AND MEASURES
KEY MESSAGES
IEA member countries are multiplying initiatives to curb greenhouse gas emissions. Over 1000 energy-related policies and measures have been implemented or planned since 1999, when the IEA began to collect and compile information on such actions. While certain energy-related national climate change policies have been taken explicitly to meet Kyoto objectives, others are the result of domestic efforts, independent of Kyoto.

2

SUMMARY

3

4

Since energy production and use is responsible for over 80% of human induced greenhouse gas emissions, energy is at the heart of the climate change problem. “Dealing with Climate Change” is a project which started in 1999 with the aim to collect and classify (by type, energy source and sector) information on energy related policies and measures taken or planned to reduce greenhouse gas emissions in IEA member countries. The database now contains over 1000 records from 1999 to 2004. All policies listed have been reviewed and endorsed by IEA member countries. Policy trends from the database show that member countries are adopting a portfolio of actions in all economic sectors.These include fiscal measures and regulatory instruments, the development of tradable permits systems, the use of voluntary agreements, the funding and support of research, development and demonstration, as well as outreach measures.

5

With the recent entry into force of the Kyoto Protocol in February 2005, the database will continue to grow in importance as a tool for decision-makers and policy experts, researchers and scholars; but also as a source of comprehensive information to a broader public. This interactive service is a searchable database and is accessible online.

REFERENCE The database is accessible online at climate.iea.org
56

ENVIRONMENT AND CLIMATE CHANGE

GREENHOUSE GAS EMISSIONS TRADING: AN ENERGY VIEW
KEY MESSAGES

1

Emissions trading is a key element in international cooperation to limit greenhouse gas emissions as it seeks to lower the cost of achieving emission goals. Greenhouse gas emissions trading has been introduced to limit CO2 emissions from a range of large fossil fuel-users in the European Union and CO2 markets give already a credible price signal. Power generation accounts for more than 60% of emissions covered by the EU scheme. It should alter the operation of existing capacities and affect future investment choices. The impact of emissions trading on power generation and its overall cost-effectiveness hinge eventually on the structure of power markets.

2

3

SUMMARY
In 1999 and 2002, the IEA conducted market experiments (simulations) with electricity industry participants. They explored the implications of a CO2 “cap-and-trade” system on their business. These experiments helped identify how a price on CO2 emissions would affect the behaviour of power generators and how other policies (on renewables and nuclear) could influence generators' CO2 compliance strategies. A standard economic analysis indicates how merit order of power plants would change as a result of CO2 prices, as well as the level at which new investment in cleaner technology would supersede the operation of existing, more CO2-intensive, plants. A crucial element in this picture is the extent to which electricity prices will reflect the full cost of holding allowances allocated for free. The outcome hinges on the underlying structure of electricity markets - their level of development and the degree of competition that they achieve - and on conditions for entry of new producers under any CO2 cap-and-trade system. Uncertainty on future prices (coal, gas, electricity and CO2) must also be taken into account. These questions are relevant beyond the 25 countries of the EU: other regional initiatives seek to introduce emissions trading as a policy to limit growth in CO2 emissions in power generation. Eventually, linking these systems could broaden the cost-effectiveness potential of emissions trading.

4

5

REFERENCES 4th IEA-EPRI-IETA Annual Workshop on Greenhouse Gas Emissions Trading: Domestic and International Issues, Paris, 3-4 October 2004 Emissions Trading and its Possible Impacts on Investment Decisions in the Power Sector, IEA Paper, 2003 Towards International Emissions Trading: Design Implications for Linkages, IEA/ OECD Paper, October 2002 International Emission Trading - From Concept to Reality, IEA/OECD, Paris 2001 Trading Greenhouse Gases outside Kyoto, IEA Paper, October 2002
57

ENVIRONMENT AND CLIMATE CHANGE

1

COMPETITIVE IMPLICATIONS OF EUROPEAN CO2 EMISSIONS TRADING
KEY MESSAGES

2

The implementation of the EU Emissions Trading Scheme (ETS) could have modest impacts on the cost structure of most of the energy-intensive industries and power generators covered in the scheme – non-cost aspects of competitiveness are more difficult to address. Local circumstances, especially power prices, and openness to foreign competitors could of course alter these conclusions. While aluminium is not included in the Scheme, it would be affected through increasing electricity prices. The currently free allocation of emission allowances, known as grandfathering, does minimise the effects on companies' costs. As grandfathering is sometimes considered as a transitory measure, a careful balance would have to be found to maintain low impacts on international competitiveness, incentives to reduce CO2 emissions and to invest in innovative processes and international market openness. IEA analysis shows that foreign imports could increase their competitiveness in European markets for some steel products and aluminium, in spite of freight costs and border tariffs. Overall, industry's ability to pass on the carbon cost to consumers is a critical and much debated element in the assessment of the EU ETS effects on EU industry's competitiveness.

3

4

SUMMARY
The EU ETS is embedded in the broader regime created by the Kyoto Protocol, but applies only to a subset of countries and industrial activities whose products, in some cases, face competition from countries without emission constraints. Industrialists have been actively debating how much the EU ETS would affect their competitiveness vis-à-vis the rest of the world.The IEA conducted a study to shed light on the possible consequences of emissions trading for several industries – considering both the direct and indirect costs associated with emissions trading, based on the assumption of an average allowance price of €10 per tCO2 (which is in line with current price levels). Electricity may be the only sector in a position to reflect part or all of the opportunity cost of holding CO2 allowances – as opposed to the real financial cost. To what extent electricity prices will rise as a result will be a major factor of the competitiveness picture for EU industrial activities. This also has an effect on the Scheme's overall efficiency as a means to send a carbon price signal to other activities throughout the economy.

5

REFERENCES Industrial Competitiveness under the European Union Emissions Trading Scheme, IEA Paper, November 2004 Emissions Trading and its Possible Impacts on Investment Decisions in the Power Sector, IEA Paper, October 2003
58

ENVIRONMENT AND CLIMATE CHANGE

ENERGY SECURITY AND CLIMATE POLICY INTERACTIONS
KEY MESSAGES

1

As policy intervention progressively intensifies to address energy security and climate change concerns, the potential for significant policy interaction is also likely to increase, highlighting the need for greater policy integration. The IEA developed proxy measures for various aspects of energy security that allow to quantify the impact of other policy objectives, including climate change mitigation, on the evolution of countries' energy security situation, hence facilitating policy integration.

2

SUMMARY
Historically, energy security has been the main driver of government action in the energy field. Over the past two decades, climate change has progressively emerged as another important driver. This has brought governments to give more attention to the need to adopt integrated approaches to energy policy making, considering both security and climate concerns. Few efforts have gone beyond a qualitative assessment of interactions between these policy drivers. The IEA initiated work to assess whether a quantified approach can contribute to better understand interactions between various energy policy objectives and eventually, be useful to define policies that contribute effectively to multiple goals. The approach developed to quantify policy interactions avoids the difficulties involved in assessing policy objectives in economic terms. Rather, it relies on the observation of how proxy measures for energy security or climate change would evolve under various policy scenarios (e.g. changes in power generation mix, changes in transportation fuels, increasing diversity of international oil and gas supply, increase in domestic supply, stronger energy efficiency measures). Preliminary results show that such an approach allows a more systematic assessment of the linkages between national circumstances (access to various countries' fossil fuel output, structure of power generation) and the evolution of different policy drivers such as energy security and their sensitivity to various energy policy choices, which would not have been possible with a qualitative approach.

3

4

5

REFERENCE Energy Security and Climate Policy Interactions: An Assessment Framework, IEA Paper, December 2004
59

ENVIRONMENT AND CLIMATE CHANGE

1
KEY MESSAGES

BEYOND KYOTO
Stabilising greenhouse gas concentrations in the atmosphere will require deep, worldwide cuts in energy-related CO2 emissions. Global participation will be needed. Market mechanisms, including the emissions trading framework initiated by the Kyoto Protocol, provide financial incentives and improve the economic efficiency of countries' commitments. They can be supplemented by improvements in existing technologies and developments in new technologies to reduce emissions to acceptable levels. Future commitments must be flexible enough to allow uncertainties in costs and benefits to be incorporated into decisions on future emission pathways and concentration levels. Options such as dynamic targets and/or non-binding targets for developing countries and dynamic targets and/or “price caps” for industrialised countries could bring additional flexibility while ensuring sustained efforts to protect the climate system.

2

3

SUMMARY

4

Mitigating climate change will require profound changes in world energy production and use.While the full effects of climate change are not likely to be felt for decades, the need for action is more immediate; increasing greenhouse gas concentrations are almost irreversible. Solutions exist in the form of energy efficiency improvements, fuel switching to non-carbon sources and carbon capture and storage. But the long-term costs of mitigation and the precise extent and pace of climate damage remain uncertain. Policy-makers face the arduous task of conceiving and implementing measures under uncertainty and run the risk of taking either excessive or insufficient action. On-going work explores options for future climate policies by the countries that could drive the necessary changes in world energy production and use. New options building on the emissions trading framework initiated by the Kyoto Protocol could mitigate cost concerns arising from uncertainties. Dynamic targets would allow adapting emission allowances to actual economic performances. Non-binding targets would allow developing countries to sell emission allowances if their actual emissions do not exceed their assigned amounts. Price caps would allow industrialised countries to exceed their targets while help ensure that all reasonable efforts are made to abate emissions.These options could help reconcile concerns for climate change mitigation with the urgent and ongoing demand for the energy to fuel continued economic development.These approaches may also serve as suitably differentiated building blocks for a post-Kyoto Protocol regime in which all countries, both developed and developing, engage in next steps to combat the threat of global warming.

5

REFERENCES Beyond Kyoto - Energy Dynamics and Climate Stabilisation, IEA/OECD, Paris, 2002 Evolution of mitigation commitments: Some Key Issues, IEA/OECD Paper,2003 Lessons from the Kyoto Protocol: Implications for the Future, International Review for Environmental Strategies, 5.1, 2004
60

ENVIRONMENT AND CLIMATE CHANGE

TECHNOLOGY AND CLIMATE POLICIES
KEY MESSAGES

1

Stabilising greenhouse gas concentrations in the atmosphere will require deep, worldwide cuts in energy-related CO2 emissions.Technologies for a broad range of energy sources will be needed. Policies that integrate externalities can generate moves towards more climate-friendly technologies. Research, development and demonstration efforts play a crucial role in preparing new technologies for the market. Technology deployment programmes are important to accelerate market uptake and bring down costs.

■ ■

2

SUMMARY
Mitigating climate change and achieving stabilisation of greenhouse gas atmospheric concentrations – the objective of the United Nations Framework Convention on Climate Change (UNFCCC) – will require deep reductions in global energy-related carbon dioxide emissions.All technologies will be needed: end-use energy efficiency improvements; switches towards less carbon-intensive fuels and non-carbon emitting energy sources such as renewables and nuclear power; fossil fuel use with carbon dioxide capture and storage. Besides R&D efforts, adequate policies, regulations, legislation and economic tools will be needed. Policies specifically designed to promote technical change or “technology push” could play a critical role in making available and affordable new energy technologies. However, such policies would not be sufficient to achieve the Convention's objective in the absence of broader policies. First, because there is a large potential for cuts that could be achieved in the short run with existing technologies; and second, the development of new technologies requires a “market pull” as much as a technology push. Learning-by-doing processes linked to early deployment of not-yet fully mature technologies would speed their wide dissemination on the markets. International energy technology collaboration and transfer can play a prominent role in promoting technological change. Such collaboration is gaining increasing support. Advantages of collaboration may consist of lowering R&D costs and stimulating other countries to invest in R&D. A number of options might be considered to strengthen international energy technology collaboration. On-going work aims at investigating past and recent experiences in international technology collaboration, including transfer to developing countries, and draws lessons from successes and failures to better shape future international collaboration in this field. REFERENCES Technology Innovation, Development and Diffusion, IEA/OECD Paper, Paris 2003 International Energy Technology Collaboration and Climate Change Mitigation, Information Paper, Annex I Expert Group, Paris 2004 International Technology Collaboration Case Study: Concentrating Solar Power Technologies, IEA/OECD Paper, Paris 2004 Energy Technologies at the Cutting Edge, IEA/OECD, May 2005

3

4

5

61

ENVIRONMENT AND CLIMATE CHANGE

1

EMISSIONS REDUCTIONS THROUGH PROJECT-BASED ACTIVITIES
KEY MESSAGES

2

3

4

Project-based mechanisms, such as the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) as well as domestic offsets, are market-based instruments providing incentives to mitigate greenhouse gas (GHG) emissions from individual projects. They are voluntary in nature and contribute to increasing the supply of credits.They thus need to be linked to another instrument, such as an emissions trading scheme, which recognises the projects' credits towards compliance with a GHG objective. Such linking can enhance compliance options and improve market liquidity, but may require implementing accounting and compliance management solutions. The estimated market potential of the CDM in 2010 is a credit demand in the order of 250 Mt CO2e at a price of $11.00/tCO2e. Key factors affecting the market for CDM credits include Russia's and Ukraine's strategic behaviour in the GHG market, buyer governments' preferences for CDM credits, the capacity of the CDM institutions and, critically, a signal that post-2012 emission reductions have a market value. Guidelines for project-based mechanisms can be standardised. Standards can be set for baseline calculation methodologies which can promote consistency, limit the opportunities for gaming (selecting advantageous baselines) and reduce transaction costs.

SUMMARY
GHG emissions trading schemes typically do not cover all GHG emissions and sources. Projectbased mechanisms can provide additional incentives to look for more cost-effective GHG mitigation possibilities. The success of all credit trading regimes depends on clear rules: technical, methodological and administrative processes that ensure credits are awarded to projects in a fair, consistent and transparent manner. One of the principal challenges in awarding credits for GHG mitigation projects is setting emission baselines.These are the best estimates of what would have occurred in the absence of a project. Credits are then calculated as the difference between emissions of the project and its baseline. The IEA has studied a number of project-based activities in the energy sector (electricity, CO2 capture and storage, transport, upstream natural gas and energy efficiency).The findings contribute to the development of baseline guidance, which balance criteria of environmental integrity, low development cost, transparency and a reasonable degree of crediting certainty. REFERENCES Linking Project-based Mechanisms with Domestic Greenhouse Gas Emissions Trading Schemes, IEA/OECD Paper, 2004 Road-Testing Baselines for Greenhouse Gas Mitigation Projects in the Electric Power Sector, IEA/OECD Paper, 2002 Estimating the Market Potential for the Clean Development Mechanism – Review of Models and Lessons Learned,World Bank/IEA/International Emissions Trading Association Paper, 2004 Emissions Reductions in the Natural Gas Sector through Project-Based Mechanisms, IEA Paper, 2003
62

5

1

ENERGY IN THE WIDER WORLD

2

THE PRODUCER-CONSUMER DIALOGUE ENERGY AND DEVELOPMENT RUSSIAN ENERGY POLICY DEVELOPMENTS RUSSIAN ELECTRICITY REFORM ENERGY EFFICIENCY IN TRANSITION ECONOMIES DISTRICT HEATING POLICY IN TRANSITION ECONOMIES ENERGY REFORMS IN THE BLACK SEA/SOUTH EAST EUROPE REGION CHINA’S QUEST FOR ENERGY SECURITY CHINA’S CHALLENGES IN DEVELOPING ITS GAS MARKET INDIA’S QUEST FOR ENERGY SECURITY GAS IN INDIA WORKING WITH SOUTH EAST ASIA ON OIL SECURITY AND EMERGENCY PREPAREDNESS ELECTRICITY AND GAS SECTOR REFORMS IN BRAZIL TOWARDS AFRICAN ENERGY INFORMATION SYSTEMS AFRICAN ENERGY – IN-DEPTH REVIEW OF ANGOLA’S ENERGY SECTOR
63

3

4

5

ENERGY IN THE WIDER WORLD

1

THE PRODUCER-CONSUMER DIALOGUE
KEY MESSAGES
■ ■

The Producer-Consumer Dialogue remains an essential part of IEA outreach activity. The IEA played an important role in establishing the International Energy Forum Secretariat in Riyadh and will continue to support its development via its membership of the Executive Board. The Joint Oil Data Initiative (JODI) has been further commended by ministers at the 9th IEF Meeting (Amsterdam) and quoted as one of the best and most concrete examples of the achievement of the Producer-Consumer Dialogue. At the December 2004 meeting of the Executive Board of the IEFS, board members agreed that the IEFS should be more involved in the JODI. In January 2005, the IEFS organised an inter-organisational JODI meeting in Riyadh and took over the co-ordination of the initiative.

2

3

SUMMARY
The IEA has long fostered its involvement in the Producer-Consumer Dialogue and sees this as an essential part of its outreach activity. Interaction takes place at different levels.

4

Since its inception, the Dialogue has become increasingly successful in balancing the interests of both producing and consuming nations and allowing for a better exchange of views on all energyrelated issues. Part of the successfully resolved items is the recognition of stable and well-supplied oil markets and the need for transparency. One of the key achievements of the Dialogue is the JODI exercise, the co-ordination of which will be taken by the International Energy Forum Secretariat (IEFS). The IEA has been actively involved in the establishment of the IEFS and is a non-voting member of its Executive Board. On a more distributed level, the IEA-sponsored Energy Experts Group remains a platform for debate, addressing policy issues at the academic, technical and policy development level. It continues to be an essential link in the Dialogue as it explores topics of immediate consequence and maximises direct interaction among participants. Typically, no press representatives are admitted and discussions remain off-the-record under “Chatham House” rules. Both the Joint Oil Data Initiative and the future role of the International Energy Forum and its new Secretariat have become an intrinsic part of a formal Dialogue. The last experts meeting was held on the 5th and 6th February 2004 in Bangkok, Royal Kingdom of Thailand.The Secretariat decided to take the 2-day meeting to Asia in co-operation with the Royal Government of Thailand in order to ensure a broader turnout of Asian representatives and bring global focus to some of the key energy issues affecting this fast developing region.

5

64

ENERGY IN THE WIDER WORLD

ENERGY AND DEVELOPMENT
KEY MESSAGES

1

Many countries have established a virtuous circle of improvements in energy infrastructure and economic growth. But in the world’s poorest countries, the process has barely got off the ground. Almost 1.6 billion people in developing countries did not have access to electricity in their homes in 2002, representing a little over one-third of world population. The World Energy Outlook 2004 concluded that the total number of people still without electricity will fall only slightly, to just under 1.4 billion in 2030. It is unlikely that the UN’s Millennium Development Goal for poverty-reduction will be achieved unless access to electricity is dramatically increased.

2

3

SUMMARY
Energy is a prerequisite to economic development and also helps to meet such basic human needs as food and shelter. It contributes to social development by improving education and public health. Electricity plays a particularly important role in human development. Most developed countries have found ways to harness energy to create a virtuous circle of economic growth and human development. But in the world’s poorest countries, the process has barely got off the ground. The World Energy Outlook 2004 found that electrification rates are set to rise, but the total number of people still without electricity will fall only slightly, from 1.6 billion in 2002 to just under 1.4 billion in 2030.The ranks of the electricity-deprived will fall in Asia, but will continue to swell in Africa. The number of people using only traditional biomass for cooking and heating in unsustainable ways will continue to grow. IEA analysis suggests the UN’s Millennium Development Goals aim to reduce by 50% the proportion of people living on less than a dollar a day between 2000 and 2015 will not be met unless access to electricity can be provided to more than half-a-billion people who, according to our Reference Scenario, will still lack it in 2015. Governments must act decisively to accelerate the transition to modern fuels and to break the vicious circle of energy poverty and human under-development in the world’s poorest countries. This will require increasing the availability and affordability of commercial energy, particularly in rural areas. Good governance in the energy sector will be critical to improving both the quantity and quality of energy services. The rich industrialised countries have economic and security interests in helping developing countries along the energy-development path.

4

5

REFERENCES World Energy Outlook 2004, IEA/OECD, Paris 2004 (Chapter 10: Energy and Development) The Developing World and the Electricity Challenge Workshop, IEA, Paris, January 2005
65

ENERGY IN THE WIDER WORLD

1

RUSSIAN ENERGY POLICY DEVELOPMENTS
KEY MESSAGES

The IEA monitors Russian energy developments and is concerned about increasing state control through inefficient state monopolies. Recent events raise questions about the nature of the Russian commitment to competition and market reform of the energy sector. Whether Russia plays a significant role in the future as a key oil and gas exporter depends on the political will to pursue reforms to attract the necessary investment and ensure competition. Improving energy efficiency will be a critical step towards coping with increasing energy demand in Russia. Removing energy subsidies and raising internal prices so that they cover costs is a key to enhancing energy security within Russia and beyond its borders.

2

3

SUMMARY
After five years as the centerpiece of growth in non-OPEC oil, the outlook for Russian oil production growth is dimming. Investors become wary and the outlook for medium term export capacity constraints begin to bind. Although Russia has kept increasing export capacity in line with production growth, private oil companies are becoming more vocal as to the lack of efficient location of this new capacity – and the need to diversify export markets. A final decision on new major export capacity to the North or East is hotly debated within the Russian government. The need to ensure that an eastern pipeline will be filled to ensure its economic return will demand improvements in Russia’s legal, fiscal and regulatory regimes to be able to attract investment to ensure exploration and greenfield development in Eastern Siberia. On the natural gas side, instead of seeking to enhance upstream competition in Russia, the government has used its monopoly position to extract favourable gas supply from Central Asian countries. It thus stifled competition between independent gas producers through its control of pipeline infrastructure and expanding into the downstream sectors of Central and Eastern Europe. The IEA doubts that this strategy is compatible with reform and greater competition in European energy markets and ultimately whether it is in the best interest of European energy security. It is obvious that growing European imports of Russian oil and gas are counter-balanced by Russian reliance on oil and gas revenues. Both sides would be better served by market reforms within the Russian energy sector that would ensure timely investments and diversity of suppliers. The IEA believes that the only way forward for an energy-secure future for both Russia and OECD Europe is through meaningful market reform and real competition across Eurasian markets. In the interim, public policy makers need to be alert to the market power of Russian state monopolies.

4

5

REFERENCES Russia Energy Survey 2002, IEA/OECD, Paris 2002 World Energy Outlook 2004: Russia - An In-depth Study, IEA/OECD, Paris 2004 Energy Sector Reform and Investment Needs to Secure the Russian-European Energy Partnership, EuroFuture, p. 91, Spring 2005
66

ENERGY IN THE WIDER WORLD

RUSSIAN ELECTRICITY REFORM
KEY MESSAGES

1

The Russian government is pursuing a strategy of high economic growth and recognises the central role the electricity sector has to play. It has embarked on an ambitious programme of electricity reform, which will have to create market structures and market rules to succeed and a regulatory framework that will foster competitive wholesale and retail electricity markets. It will also have to deal with sensitive social issues related to the removal of cross subsidies. A key to the success of competitive markets will be strong and independent regulators.

2

SUMMARY
In spring 2005, the IEA released its book Russian Electricity Reform: Emerging Challenges and Opportunities. The book focuses on key aspects of the proposed reform. It also raises concerns about the need for complementary reforms in the Russian natural gas sector. Only competitive markets based on transparent prices that reflect costs can deliver the efficient, reliable and internationally competitive performance needed to meet the government’s economic targets. Such markets are essential to attract new investment required to ensure security of electricity supply after 2010. A competitive market structure with diverse ownership and a strong transmission network linking major centers of generation and load will provide the best means of ensuring efficient market outcomes. Russia’s costly experience in privatising its oil sector during the early 1990s provides a sharp reminder of the potential dangers of this process. A key to the success of competitive markets in electricity and eventually other parts of Russia’s energy sector will be strong and independent regulators that can establish access to monopoly products and services on fair and reasonable terms for all market players.The IEA is concerned about the lack of resources and independence of regulatory bodies in Russia, given their crucial role to avoid market power abuse in the face of powerful vested interests and dominant players such as Gazprom. The Russian government’s recognition that tariff rebalancing and removal of cross-subsidies are necessary pre-conditions for the successful introduction of market reforms is reassuring. It plans to use this period to gradually raise regulated tariffs to levels consistent with the delivered price of electricity sourced through the competitive market. The recent public backlash against charging for certain public services demonstrates the importance of getting this balance right. The IEA commends the Russian government on its efforts to embrace this electricity reform – a key element critical to meeting the challenges of strengthening economic performance and energy security. REFERENCES Russian Electricity Reform - Emerging Challenges and Opportunities, IEA/OECD, Paris 2005 OECD Regulatory Reform Review of Russia, OECD, Paris 2005 (Electricity Chapter produced by the IEA) Energy Sector Reform and Investment Needs to Secure the Russian-European Energy Partnership, EuroFuture, p. 91, Spring 2005

3

4

5

67

ENERGY IN THE WIDER WORLD

1

ENERGY EFFICIENCY IN TRANSITION ECONOMIES
KEY MESSAGES

The energy efficiency potential in Transition Economies remains significant despite intense economic restructuring and energy reforms. High energy intensity and consumption, combined with energy price increases, impose high burdens on households and businesses. Governments should make energy efficiency a higher policy priority and allocate adequate resources to energy agencies and action plans. This effort will pay for itself thanks to the large and multiple benefits of energy efficiency.

2

3

SUMMARY
Energy intensity (tonne of oil equivalent per unit of GDP) and unit consumption ratio (toe/t of product) in Transition Economies (TE) are, despite clear progress during the last decade, still much higher than the Western Europe average.This, combined with energy price increases towards energy cost recovery, has imposed a heavy burden on household revenues (15-20% in Central Europe and the Baltics and 25-50% in South East Europe and in the Commonwealth of Independent States). The economic potential for energy savings in these regions exceeds 20% and 30-50%, respectively. In district heating alone, savings in natural gas per year through better heat generation could save the amount of gas consumed in Germany. Even more savings are available through improvements in distribution and buildings. If TE governments wish to reach their objectives of energy performance convergence with Western Europe, they should make energy efficiency a higher policy priority in energy and other state policies (e.g. housing, transport), develop robust multi-sectoral action plans and allocate sufficient resources to energy agencies.This win-win strategy will improve business competitiveness, increase consumers’ welfare, create value and local jobs and increase energy security. It will also generate environmental benefits through reduced emissions of greenhouse gases and local air pollutants and reduces the need for investment in energy infrastructure, shifting activities to more sustainable directions. REFERENCES Energy Efficiency in Transition Economies: A Policy Priority, IEA/OECD Paper, December 2004 Central and Eastern European Countries Appliance Policy Workshop,Turin, September 2003 (www.ceecap.org) Policy Initiative on District Heating in EITs: Coming in from the Cold - Improving District Heating Policy in Transition Economies, IEA/OECD, Paris 2004 (also available in Russian) Regional Round Table Workshop, IEA, Paris, December 2002 District Heating Policy in Transition Economies Workshop, Prague, February 2004 Oil Crises & Climate Challenges - 30 Years of Energy Use in IEA Countries, IEA/OECD, Paris 2004 IEA Demand-Side Management Programme (http://dsm.iea.org/)

4

5

68

ENERGY IN THE WIDER WORLD

DISTRICT HEATING POLICY IN TRANSITION ECONOMIES
KEY MESSAGES

1

District heating is a critical energy source for economies in transition as it covers about sixty percent of their heating and hot water needs. If properly managed, district heating can have significant environmental, economic and social benefits for consumers and substantial efficiencies for governments. Well-designed policies can help to improve the quality and efficiency of district heating services, simultaneously enhancing their long-term sustainability.

2

SUMMARY
The IEA launched a District Heating Initiative for transition economies in 2002, which involved two international conferences, discussions and briefs on national district heating policy and the publication Coming in from the Cold - Improving District Heating Policy in Transition Countries in English and Russian. District heating can play a significant role in improving energy security and reducing or stabilising carbon emissions in Central Europe and the former Soviet Union.With a stronger policy framework, improvements in heat generation using available technology could save 80 billion cubic meters (bcm) of natural gas per year. This nearly equals the annual gas consumption of Germany. Improved efficiency in distribution systems and buildings would yield even greater savings. Reforming district heating in major energy producer or transit nations like Russia and the Ukraine can therefore have broad benefits for energy security in the region and Western Europe. Nevertheless, many district heating systems in transition economies face serious problems because of inadequate policy frameworks. Key challenges are the imbalance between supply and demand, inefficiency, the lack of customer focus, the loss of market share and huge investment needs. To address them, clear and coherent policy is needed. There are two policy approaches for balancing supply and demand and addressing other problems of district heating: introducing competition or improving regulation.There are, however, important prerequisites, such as social support programmes, eliminating producer subsidies, enforcing payment discipline, installing meters and controls and promoting demand-side energy efficiency. To make district heating sustainable, governments need to integrate it not only into their energy policies, but also into their general national policy agendas because there are important links between district heating and economic, environmental, social, housing and privatisation policies. Well-designed and implemented district heating policies can help unleash reforms in many sectors, from electricity to natural gas to social welfare. REFERENCES Coming in from the Cold - Improving District Heating Policy in Transition Economies, IEA/OECD, Paris 2004 (also available in Russian) Conference on District Heating Policy in Transition Economies, Prague, 22-23 February 2004 Workshop on District Heating Policy in Transition Economies, Paris, 16-17 December 2002

3

4

5

69

ENERGY IN THE WIDER WORLD

1

ENERGY REFORMS IN THE BLACK SEA/SOUTH EAST EUROPE REGION
KEY MESSAGES

2

3

An efficient energy infrastructure is vital for economic recovery and for the stability of the Black Sea/South East Europe region. Based on the experience of Central Europe and the Baltics, South East European governments must devise sound new energy and environmental policies and progressively separate their policy functions from regulatory enforcement and the operation of energy companies. They need to establish the necessary institutions to design, implement and monitor policies and promote good governance, essential to effective reform. The donor community should continue to support market reforms, especially through institutional capacity building and should only fund large rehabilitation projects once economic assessment instruments are operational.

SUMMARY
In the transition process of Central Europe and the Baltics, the role of governments has proved to be essential in developing energy policies and long-term strategies and in creating the appropriate institutions to implement sustained and gradual market reforms and sectoral policies for energy security and efficiency. Unfortunately, this process has not yet spread into the Black Sea region and South East Europe, in particular in the Western Balkans and South Caucasus.To date, international donors have focused mainly on large-scale electricity infrastructure projects, early market liberalisation and integration and cross-border projects with insufficient commercial support. A comprehensive country strategy is needed to achieve effective reform. It must include energy demand forecasts based on reliable data and least-cost plans for investment. Regulatory reforms and a demand-side approach by independent and strong institutions are needed to address the imbalances and high energy intensity of the final consuming sectors and create market conditions. The restructuring of the energy sector should orientate companies towards customer services and prepare conditions for competition. Regional co-operation and country ownership of the reform process are vital to ensuring effective and sustained reforms as well as convergence among these countries to permit regional integration in the medium term and to develop new oil and gas routes from the Caspian and Gulf regions to Europe. REFERENCES Natural Gas in South East Europe - Investment,Transit,Trade Seminar, Istanbul, May 2004 Energy Policies and Statistics in Transition Economies Seminar, Sofia, October 2003 Caspian Oil and Gas Scenarios Seminar, Florence, April 2003 Institutional Aspects of Energy Market Reforms - New Energy Policies for South East Europe Seminar, Rome, March 2003 Oil and Gas Transit Projects in Economies in Transition - Overview of the Black Sea Region, IEA Paper, 2003 Energy Policy in South East Europe: Developments and IEA Contribution, IEA Paper, 2003 Regulatory Authorities in South East Europe, IEA/ OECD Paper, 2003 What Energy Policy for South East Europe? - Article in Public Service Review, EU 2003
70

4

5

ENERGY IN THE WIDER WORLD

CHINA'S QUEST FOR ENERGY SECURITY
KEY MESSAGES

1

China is the world's second largest energy consumer and became the second largest oil consumer in 2003. It is the largest oil importer outside the IEA, and relies on imports for 40 % of total demand. A strengthened energy security co-operation benefits both China and IEA member countries. Energy security is at the top of China's energy policy agenda. In addition to its worldwide effort to diversify its sources of oil and to acquire upstream interests, the Chinese government decided in 2001 to build emergency oil stocks. Energy security co-operation is at the core of the IEA's relationship with China.

2

3
SUMMARY
China is the world's second largest consumer of oil after the United States.A net oil importer since 1993, China now imports 40% of its oil, of which some 60% comes from the Middle East. IEA data show that Chinese oil demand has grown by an average 13% a year in 2003 and 2004.This, together with its economic growth rate, ranks China as the fastest growing oil consumer in the world. The IEA projects China's total oil demand will more than double from 6.4 million barrels per day (mb/d) in 2004 to over 13 mb/d in 2030. Most of China's additional oil will have to be imported and net imports under this scenario would rise from 2.3 mb/d in 2004 to 4.5 mb/d in 2010 and 10.5 mb/d in 2030. This would increase China's dependency on imported oil from the current level of 40% to about 75% within the next twenty five years. Although Chinese projections of future oil import dependency are lower than those of the IEA, Chinese policy-makers and researchers recognise that the country's oil import dependency will rise irreversibly.And this will occur within the regional context of Northeast Asia, where Japan and Korea already import virtually all their oil, mainly from the Middle East. Consequently, oil supply security has become a top energy policy issue. In March 2001, the Chinese government decided to build emergency oil stocks under the country's 10th Five-year plan for the period 2001-2005.Work on this has begun. China also recognises that no country, however powerful, can ensure its energy security alone and acknowledges the importance of international co-operation. Energy security is at the core of the IEA's co-operative relationship with China.A number of activities have been successfully completed, aimed at assisting China to develop its emergency oil stock systems and eventually developing links between China's energy security system and the IEA's global scheme. REFERENCES Joint IEA-China Seminar on Energy Modelling and Statistics, Beijing, 20-21 October 2003 Oil Stockpile Site Visits (France,The Netherlands, Germany) with a delegation of 10 Chinese experts, October 2004 Emergency Response Simulation Exercise (ERE3), with participation of 4 Chinese experts, November 2004
71

4

5

ENERGY IN THE WIDER WORLD

1

CHINA'S CHALLENGES IN DEVELOPING ITS GAS MARKET
KEY MESSAGES

2

3

China has developed an ambitious plan to grow its gas market. It faces a number of important challenges that go far beyond the gas sector; they require policies affecting the national energy sector as a whole. China has taken significant steps to expand gas use. The West-East pipeline is now operating commercially (one year ahead of schedule) and 2 LNG import terminals are under construction, with a host of others under consideration. The bottleneck lies downstream. In most parts of China, gas will find it hard to compete against coal in power generation. In local gas distribution, much needs to be done to create a gas distribution network, to improve the financial health of local distribution companies and to introduce commercial marketing and management. Strong policy drivers will be needed. They include reform of gas pricing and taxation policy, strong application of environmental regulations and the associated economic instruments, a favourable legal and regulatory framework, effective mobilisation of financing sources and a clear gas policy statement.

4
SUMMARY
Natural gas is increasingly viewed as the fuel of choice in China, as coal, which provides 70% of the country's energy needs, causes serious local air pollution. The target is to double the share of natural gas in China's total primary energy supply by 2010 from the current level of 3%, and to build a well-interconnected national gas supply network by 2020 from today's fragmented system. Some major gas infrastructure projects have been launched to support ambitious gas growth targets in the country for the next five years and beyond. But meeting these targets is problematic: China is not endowed with abundant gas reserves. Its available gas reserves are located far from demand centres, requiring the construction of longdistance pipelines. Gas prices are relatively high compared to international prices and China does not have any domestic manufacturing capacity for gas turbines or combined-cycle gas turbines (CCGT).The skills and knowledge on how best to develop the gas market are also missing. On the contrary, coal is cheap as China has abundant coal reserves. It also has considerable manufacturing capacity in coal-burning technologies such as coal-fired industrial boilers or power plants. To develop a sizeable gas market, China must take some strong energy policy actions, starting with the reform of gas pricing and taxation policies. It also needs to establish a set of indispensable elements for the development of a modern gas industry. These include technical norms, standards for health, safety and environment, training of technical and commercial gas professionals and gas technology research and development ability. Financing sources must be mobilised, a legal framework established, foreign investment is needed, environmental protection must become a real driver for gas market development and China needs to develop a coherent gas policy within the country's energy policy. REFERENCE Developing China's Natural Gas Market - The Energy Policy Challenges, IEA/OECD, Paris 2002
72

5

ENERGY IN THE WIDER WORLD

INDIA'S QUEST FOR ENERGY SECURITY
KEY MESSAGES

1

India is becoming a major player in the international oil and gas industry and is willing to take on the political and financial risks inherent in overseas investments. Even with equity-oil contribution towards meeting domestic demand by 2020, India will remain an influential force on the international oil market. Strategic oil stocks for 15 days of import coverage are supposed to be in place by late 2007.

2

SUMMARY
India currently imports 70% of its oil and this share is expected to pass 90% by 2030. India began importing gas in 2004 and is projected to reach an import dependency of almost 40% in 2030. India has adopted a four pronged approach to energy security. It comprises import source diversification and acquisition of equity oil, strategic oil stocks, increased domestic exploration and production and fuel diversification. Since 2002 several major gas finds have been made that have the potential to fundamentally alter India’s gas supply and demand balance and to supplement the countries dwindling oil reserves.At the same time, Indian oil and gas companies are encouraged to invest overseas and to build strong relations with strategically important countries. India aims to produce 20 million tons of equity oil by 2010 and 60 million tons by 2025 when domestic consumption could reach 250 million tons. Since 2001 India has closed 14 overseas upstream deals in nine countries, seven of which in 2004 alone. In addition, India has agreements on energy cooperation with several countries, and a number of mega-deals are under discussion.The country apparently seeks niche markets where it can leverage its expertise and where global oil companies more sensitive to political considerations fear to tread. Energy security is also emerging as a new cornerstone of India’s foreign policy. By improving ties with resource rich countries, India hopes to enhance its energy security while at the same time cementing its status as a regional economic powerhouse and its standing in the global political landscape. In early 2004, the Indian cabinet approved a plan for the establishment of strategic oil stocks to provide an emergency response mechanism against short-term supply disruptions.The government had consulted with the IEA since 2000 in preparation of its proposal and has declared its intention to adopt IEA standards for strategic oil stock deployment.

3

4

5

REFERENCES IEA-India Joint Workshop on Emergency Oil stocks, New Delhi, India, January 2004 Asian Oil Outlook and Challenges at the Roundtable of Asian Ministers on Regional Cooperation in the Oil Economy, Presentation by IEA Deputy Executive Director, New Delhi, India, January 2005
73

ENERGY IN THE WIDER WORLD

1
KEY MESSAGES

GAS IN INDIA
Gas has emerged as the most dynamic energy sector in India, and the medium to long-term outlook is positive. Significant challenges lie ahead to translate the huge potential of India’s gas sector into reality. The challenges faced require a strong commitment by all sector players.

2

■ ■

SUMMARY

3

India has recently entered a new era in its gas industry with large discoveries of indigenous gas and the arrival of the first liquefied natural gas (LNG) tanker in 2004.The importance of gas in India’s energy mix is expected to increase sharply from 7% of total primary energy supply (TPES) in 2000 to 13% by 2030. In the same year, import dependency on gas will reach almost 40%. In order to meet the projected consumption, investment needs of about $44 billion between 2001-2030 are projected. Over 60% of India’s gas will be consumed by the power and fertilizer sectors. Compressed natural gas (CNG) consumption for vehicles is expected to reach 5% of total consumption in 2010 and India has ambitious plans for a city gas project. India will continue to depend on importing LNG in the short- to medium term to close its demand gap. Capacity of India’s only operating LNG terminal is expected to double in 2005 and two more LNG terminals are expected to become operational within the next two years. India is theoretically well placed to import gas via pipeline from either its Eastern or Western border. Initial negotiations are underway for two pipelines, one from Iran via Pakistan and the second from Myanmar via Bangladesh. India needs to almost triple its existing pipeline capacity over the next five years in order to connect the new LNG terminals with consumers and to allow gas transport from the recently discovered sites. India is facing three major challenges on its way to become a sophisticated gas economy: lack of sufficient transmission infrastructure, lack of a coherent legal and regulatory framework, and questions about the affordability of gas. This could be an obstacle to stimulate further private investment and to move ahead with cross-border gas deals. Questions about the ability-to-pay for gas in different sectors of the economy and the urgent need for pricing reform in the gas and power sector are major concerns. The key challenge for rapid development of the gas sector is the capacity of Indian power generators to pay market-based gas prices which in turn depends on vigorous implementation of power sector reform. REFERENCES World Energy Outlook 2002, IEA/OECD, Paris 2002 World Energy Investment Outlook 2003, IEA/OECD, Paris 2003 Special Address: Inaugural Session delivered by IEA Executive Director at Second Asia Gas Buyers’ Summit, Mumbai, India, February 2004

4

5

74

ENERGY IN THE WIDER WORLD

WORKING WITH SOUTH EAST ASIA ON OIL SECURITY AND EMERGENCY PREPAREDNESS
KEY MESSAGES
■ ■

1

SE Asia is becoming increasingly dependent on oil imports, predominantly of Middle East origin. ASEAN’s reliance on tortuous and congested transit routes such as the Straits of Malacca and the highly contentious South China Sea, compounded with the region’s limited oil emergency preparedness makes it particularly vulnerable to oil supply disruptions. Some ASEAN nations are institutionalising comprehensive oil emergency response systems. Others are moving slowly in this direction. ASEAN interaction with the IEA is positive and close.The IEA recognises the long term nature of this work.

2

3

SUMMARY
Having engaged with the 10 countries of the Association of SE Asian Nations (ASEAN) on oil security and emergency response since 2000, the IEA undertook an intensive three part programme with ASEAN and the ASEAN Council on Petroleum (ASCOPE) over 2003-2004, with very positive results. The intensive engagement and hands-on interaction resulted in close exchanges on response systems and strategic stockpiling, and hands-on ASEAN visits to European emergency operations centres.ASEAN is active in the Joint Oil Data Initiative, and the foundations are laid for ASEAN statistician’s training and IEA-ASEAN crisis consultation. ASEAN recognises the risks of oil supply disruptions and is fully aware of the negative impacts they could have on its fast developing economies.This realisation has resulted in policy changes in some countries. In Cambodia, a ‘Law on Petroleum’ is being formulated which will likely include mandatory emergency supply provisions, and the Philippines and Thailand are implementing comprehensive strategies involving central operations centres, mandatory company stocks and feasibility studies of strategic stockholding options.ASEAN is also developing an interim Standard Operating Procedure for regional crisis consultation and co-ordination and an Energy Security Communication System. Furthermore, feasibility studies into strategic stockpiling options for Myanmar and Vietnam and possibly others are planned. While some ASEAN countries may not emulate the IEA response systems, they have close interaction with the IEA and will enhance their systems as their economic development and import vulnerability increases. An ongoing programme of IEA-ASEAN engagement is being developed, including an “International energy data and emergency oil data methodologies” statisticians’ training programme and a network for crisis information exchange and response harmonisation. Other activities include bilateral/regional workshops addressing specific ASEAN priorities and ASEAN participation in the IEA’s “Emergency Response Exercise 4”, 2006. REFERENCES Oil Security and Emergency Preparedness Workshop and Associated Site Visits, Paris, September 2003 Oil Supply Disruption Management Workshop, Siem Reap, April 2004 Emergency Response Exercise 3, Paris, October 2004 See: http://www.iea.org/Textbase/subjectqueries/nmc/southeastasia.asp
75

4

5

ENERGY IN THE WIDER WORLD

1

ELECTRICITY AND GAS SECTOR REFORMS IN BRAZIL
KEY MESSAGES
Over the past 15 years, energy policy reforms in key Latin American countries have achieved mixed success, often influenced directly by domestic political, social and economic instability. In Brazil, enormous challenges remain to ensure secure, clean and affordable energy access. The creation of a stable investment environment is important to guarantee the expansion of Brazil’s energy sector, as well as the implementation of demand-side policy measures to promote an efficient use of energy.

2

■ ■

3

SUMMARY
In the 1990s, the Cardoso administration introduced liberal reforms including privatisation, unbundling and the establishment of independent regulators. At the same time, however, the Cardoso administration had to face macroeconomic instability, implementation delays and a prolonged drought leading to an electricity crisis in 2001.

4

In March 2004, Brazil’s Lula da Silva administration approved the New Electricity Model in its attempt to strengthen supply security, increase competition and rationalise regulation in order to attract more investment. This model requires the total unbundling of generation and distribution and establishes two contracting environments: one is regulated (a “Pool”) and the other one free. Furthermore, the New Electricity Model tries to clearly define the attributions and responsibilities of the existent institutional agents. It restores planning and granting powers to the Ministry of Mines and Energy; and it creates three new bodies: the Energy Research Enterprise, the Power Energy Trading Chamber, and the Electricity Sector Monitoring Committee. The Brazilian government is working on a New Natural Gas Model. However, its main features are still unknown. Currently, there is no specific Natural Gas Law. Despite controversy, a reform of the regulatory agencies is also underway. This reform involves sectors such as oil, natural gas, water, telecommunications and transport, and the respective law would require the conclusion of management contracts between the regulator and its relevant ministry. The Public-Private Partnership Law was published in December 2004. This makes joint publicprivate investments in infrastructure possible, in sectors such as energy, telecommunications or transport.

5

REFERENCES Energy Policies of IEA Countries - 2004 Review, IEA/OECD, Paris 2004 Electricity and Gas Sector Reforms in Brazil Seminar, Rio de Janeiro, Brazil, September 2004
76

ENERGY IN THE WIDER WORLD

TOWARDS AFRICAN ENERGY INFORMATION SYSTEMS
KEY MESSAGES

1

In July 2001, African Heads of State agreed in Lusaka, Zambia, to create the African Energy Commission (AFREC). In 2004, although AFREC has still to be formally ratified, the Commission was established in Algiers. One of the priority missions of AFREC is to build an African energy information system to feed the analysis of the energy situation in Africa. To complement the top-down approach of AFREC, several bottom-up programmes on national energy information systems have been launched. One of the programmes, supported by the Institute of Energy of Francophonie (IEPF), has now entered a second phase in which three additional countries have been selected for the establishment of a national energy information system.

2

■ ■

3

SUMMARY
Regional energy networks around the world are helping to integrate gas and electricity, harmonise prices and regulatory regimes and to improve investment regimes in order to attract foreign capital. These networks are underpinned by well-functioning and effective energy information systems. Africa is the only region with no such regional network. This is even more significant for Africa, given the size of national markets and the need for regional co-operation to ensure energy security and to attract needed investment. Recognising the importance for a region to have well established information in order to sustain development, the IEA has supported several initiatives whose aim is to ease the implementation of energy reporting systems at the national, sub-regional and regional levels. The IEA, together with the WEC, have extended their 2002 data collecting to 2003 and to 2004. The data have been processed and filed in a database on Africa.The IEA has trained statisticians of AFREC who should take over the database on Africa.The database prepared by the IEA will be used as a starting point towards a comprehensive energy information source on Africa. The IEA is also associated with the IEPF’s initiative to establish a national energy information system in selected countries. After the success encountered in phase 1 of the initiative, the IEPF has launched phase 2, covering Niger, Senegal and Togo.The aim of phase 2 is to have information systems up and running by 2006. Initial discussions for a phase 3 with up to ten additional countries have started. On a sub-regional basis, the IEA has trained statisticians for the Union Economique et Monétaire de l’Ouest Africain (UEMOA). UEMOA would like to establish a sub-regional energy information system, a mid-way between the top-down approach of AFREC and the bottom-up approach of the IEPF.

4

5

REFERENCES IEA-WEC energy database on Africa
77

ENERGY IN THE WIDER WORLD

1

AFRICAN ENERGY - IN-DEPTH REVIEW OF ANGOLA'S ENERGY SECTOR
KEY MESSAGES
Greater access to affordable, clean and modern energy in Africa will help alleviate poverty, underpin economic development and promote political stability. The IEA can play a vital role in promoting sustainable energy strategies and policies in developing Africa to facilitate both the development of domestic energy markets, and to provide stable conditions for optimising the exploitation of indigenous natural resources. Angola is a unique country, new territory for the IEA and an excellent starting point for the IEA to realise some of these objectives.

2

3

SUMMARY
The Deputy Prime Minister of Angola has shown strong enthusiasm for the IEA to conduct an indepth review of its energy sector.With his political backing and a mandate from key IEA member countries, the IEA intends to help the government of Angola to formulate a resilient energy strategy and implement an energy policy framework that will move the country towards realising its economic ambitions. To kick-start such a process the review will aim to identify some immediate short-term energy targets for development assistance and provide a long term energy strategy consistent with IEA shared goals and international energy security. The IEA completed an analysis in 2002 showing the inextricable links between energy use and poverty which clearly demonstrates that affordable, secure access to electricity and other modern energy sources are a necessary ingredients for economic and social development. Such a study would identify a strategy to achieve global rewards benefiting Angola and its people that could be extended to other African countries. It would also strengthen international energy security by encouraging economic growth and political stability in a major energy producing country. This study will reinforce the thrust of the G8 Heads of State meeting in Gleneagles, Scotland, hosted by Prime Minister Blair later this year, where climate change and Africa will feature prominently. A successful study in Angola could be used as a blueprint to work with other African states facing similar challenges and go some way towards addressing these aims. The IEA published an energy policy review in 1996 Energy Policies of South Africa and intends to use some of South Africa's successful policy experiences as appropriate to Angola.

4

5

REFERENCES Energy Policies of South Africa, IEA/OECD, Paris 1996 In-depth Review of Angola's Energy Sector, IEA/OECD, Paris 2005
78

The Online BookshopInternational Energy Agency
All IEA publications can be bought online on the IEA Web site: w w w. i e a . o r g / b o o k s You can also obtain PDFs of all IEA books at 20% discount.
Books published in 2003 and before - with the exception of the statistics publications can be downloaded in PDF, free of charge, on the IEA website.

IEA BOOKS
Tel: +33 (0)1 40 57 66 90 Fax: +33 (0)1 40 57 67 75 E-mail: books@iea.org International Energy Agency 9, rue de la Fédération 75739 Paris Cedex 15, France

CUSTOMERS IN NORTH AMERICA Extenza-Turpin Distribution 56 Industrial Park Drive Pembroke, MA 02359, USA Toll free: +1 (800) 456 6323 Fax: +1 (781) 829 9052 oecdna@extenza-turpin.com www.extenza-turpin.com

You can also send your order to your nearest OECD sales point or through the OECD online services: www.oecd.org/ bookshop

CUSTOMERS IN THE REST OF THE WORLD Extenza-Turpin Stratton Business Park, Pegasus Drive, Biggleswade, Bedfordshire SG18 8QB, UK Tel.: +44 (0) 1767 604960 Fax: +44 (0) 1767 601640 oecdrow@extenza-turpin.com www.extenza-turpin.com

IEA Publications, 9 rue de la Fédération, 75739 Paris Cedex 15 Printed in France by Chirat April 2005

You're Reading a Free Preview

Descarregar
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->