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© World Energy Council 2013
World Energy TrilemmaTime to get real – the agenda for change
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© World Energy Council 2013
Table of contents
► The World Energy Trilemma
► The Energy Sustainability Index
► Public and private stakeholder dialogue
► Agenda for Change
© World Energy Council 2013© World Energy Council 2013
The World Energy Trilemma
© World Energy Council 2013
The world is far away from achieving sustainable energy systems
• 1.2 billion people live without access to electricity• 2.8 billion people lack access to clean cooking facilities• Population growth from 7 to 9.3 billion people by 2050• Energy demand is expected to increase between 27%
and 61% by 2050• CO2 emissions continue to grow
• Cumulative investment needed:• US$ 19.3 to US$ 26.7 trillion by 2050 in electricity
infrastructure alone
© World Energy Council 2013 5
Balancing the‘Energy Trilemma’
ENERGYEQUITY
ENVIRONMENTALSUSTAINABILITY
ENERGYSECURITY
© World Energy Council 2013 6
Policy review and analysis (deep dives)
Energy Sustainability Index
Call for increased dialogue
2012 report captured the views of more than 40 senior energy executives on what they need from policy
2013 report captured the response of more than 50 governments, multilateral organisations and development banks
Work culminated at World Energy Congress in Daegu in October 2013 and in the Agenda for Change
World Energy Trilemma Report
© World Energy Council 2013© World Energy Council 2013
Energy Sustainability Index
© World Energy Council 2013 8
The diversity of energy profiles among the top performers illustrates the importance of policy
2013 Rank Country
1 Switzerland
2 Denmark
3 Sweden
4 Austria
5 United Kingdom
6 Canada
7 Norway
8 New Zealand
9 Spain
10 France
Key Similarities Key Differences
Higher-income countries(GDP per capita greaterthan USD 25,500)
Large discrepancy inuse of nuclear energy
OECD members Low and high fossil fuelreserves
Post-industrial, service-based economies
Net energy importersand exporters
High (>25%) use of low-and zero-carbon energysources in electricity mix
V
© World Energy Council 2013 9
Five profiles of the energy trilemma highlight common challenges
Illustrative members Key strengths Core Challenges
Pack Leaders Switzerland, Denmark
Overall performance and balance
Ensuring achievement of 2020 climate targets
Fossil-fuelledUnited Arab Emirates, Malaysia, Saudi Arabia
Affordability and security of energy
Energy and emission intensity challenges
Highly-industrialised India, Mexico Energy security and strong GDP growth
Rapid industrial growth and impacts
Hydro-powered Brazil, Colombia
Use of renewables leads to low emissions and higher electrification rates
Improve energy access and affordability
Back of the Pack Zimbabwe, Nicaragua
Not yet locked in to fossil fuel heavy development path
Investment challenges
© World Energy Council 2013 10
The 2013 Index highlights an opportunity for developing countries
1 2 3 4 5 6 7 8 9 10
1
2
3
4
5
6
7
8
9
10
2a
1
2**2b
3
4
Environmental sustainability dimension performance
En
erg
yeq
uity
dim
ens
ion
perf
orm
ance
Post-industrial countries
Most emerging,industrialisingcountries
Pre-industrialcountries
Some emerging“Hydro-powered”countries
Emerging pathway toenergy sustainability
Potential pathway toenergy sustainability
Potential dimensionalperformance
Existing pathway toenergy sustainability
Actual 2013 dimensionalperformance
© World Energy Council 2013
Public and private stakeholder dialogue
© World Energy Council 2013 12
Develop a clear vision that encompasses a mix of energy sources and technologies
Public andprivateinitiativesthat enableRD&D andinnovation
Coherentandpredictableenergy policy
Stableregulatoryand legalframework forlong-terminvestment
© World Energy Council 2013 13
In 2013 public decision makers agree with energy industry`s recommendations but point to an increasing policy complexity
1. Lack of global consensus on target profile of future energy system
2. Dynamics of changing energy supply and demand
3. Inherent difficulties in translating policy into effective regulations
© World Energy Council 2013 14
To meet the complexity, public stakeholders ask energy industry to help
1. Improve energy policy and regulation through greater dialogue, sharing knowledge and experiences
2. Increase energy investments and R&D through better risk alignment
3. Support least-developed and developing economies on a new path to energy sustainability
© World Energy Council 2013© World Energy Council 2013
Agenda for Change
© World Energy Council 2013
The World EnergyCouncil’s WorldEnergy Trilemma2012–2013 researchprogramme capturedthe insights of morethan 100 globalenergy leaders andled to the identificationof a 10-point agendato address threebroad policy areas.
10-POINTAGENDAFORCHANGE
Connect energytrilemma to the broadernational agenda1
Minimise policyand regulatory riskand ensure optimalrisk allocation
Drive (green) tradeliberalisation
Increaseengagement with thefinancial community
Provide leadershipto build consensus –nationally andglobally
Improve policy-maker andindustry dialogue
Market-basedapproaches tocarbon pricing todrive investments5
Design transparent,flexible anddynamic pricingframeworks6
7
8
4
Meet the need for moreresearch, developmentand demonstration (RD&D)
9
Encourage jointpre-commercial industryinitiatives, including earlylarge-scale demonstrationand deployment
10
2
3
© World Energy Council 2013 17
“We must accept that we have to make
hard choices in this generation to
bring about real changes for
future generations and the
planet. Politicians and the
industry must get real.”
© World Energy Council 2013© World Energy Council 2013
www.worldenergy.org@WECouncil
© World Energy Council 2013© World Energy Council 2013
Back up
© World Energy Council 2013 20
Recommendation 1:Define a coherent and predictable energy policy
Dialogue with industry
• Increase understandingof energy business
•
Dialogue with general public
• Generate social license forsustainable energy targetsand mechanisms
• Increase awareness of costof energy
• Reduce energy demandgrowth curve
Consistent, clear, and simple regulations
• Reduce complexity
• Detach politics from policies
Establish a coherent and predictable energy policy
• Develop predictable, long-term, accessible, and transparent policy
Think regionally
• Harmonise regulations across markets
• Develop multi-national energy markets tostimulate investment
Support mechanisms
Level playing field for all energy technologies
Critical fundamentals
Establish robust feedbackloop on emerging issues
• Integrate with adjacent policy areas (for example, environment, industry, finance, and transportation)
© World Energy Council 2013 21
Recommendation 2:Enable market conditions that attract long-term investments
Green banks
• Provide low-cost financing to cleanenergy projects
• Fill gaps that markets, commercialbanks, and other classical financialinstitutions cannot effectively serve
Green bond market
• Enable institutional investors to bea greater source of debt financing
Public private partnerships (PPP)
• Apply public finance to leverageprivate sector investments bymitigating risks
Careful application of subsidies
• Reduce regulatory and political risk of new andemerging technologies
Investment framework and policy stability to reduce political and regulatory risk and increase attractivenessof investments
• coherent energy policies and frameworks
• predictable and transparent legal system
• macroeconomic growth and social inclusion
• fair and reliable tax schemes
• safe business and working conditions
• Align financial instruments
Market based pricing instruments for emissions trading
• carbon pricing and an effective carbon market• Ensure that low-carbon investmentsare offering same level
risk-adjusted of returnsas high-carbon ones
Support mechanisms
Level playing field for all energy technologies
Critical fundamentals
Establish
Promote
Support a
Foster
© World Energy Council 2013 22
Recommendation 3:Encourage public and private initiatives that foster R&D
Foster RD&D
• Prioritise research efforts to allow industry tocompete sucessfully in a global market
• Establish and support research institutions
• Promote collaborative research
• Support large-scale demonstration projects
Develop technology-neutral frameworks
• Allow market place to identify successful technologies
• Credibly signal technology openness
Give private sector clarity
• Have a long-term, stable vision, strategy, and targets
• Implement goal-driven policies versus prescriptive policies
Maintain strong intellectual property rights
• Support strong IPR to provide companies and
knowledge and know-how
• Be cautious when adding or taking awaymandates; IPR is sufficiently well regulated
Support mechanisms
Level playing field for all energy technologies
Critical fundamentals
© World Energy Council 2013
Recommendation 1Industry should proactively help improve energy policies and regulation
Industry
General Public
Government
Inform and engage public
Politically achievability?
Help policymakers through energy / technology expertise
© World Energy Council 2013
Recommendation 2: Increasing energy investment through better risk alignment
Policymakers agree it is their role to reduce political and regulatory risk…
…but call on industry to be less risk averse
Energy and infrastructure investments
Industry lead role in energy technology development and reducing costs
Form coalitions to align their research plans and long-term goalsRisks to investor Ways to mitigate
Lack of
transparency
Regulatory &
policy risk
Country
risk
Working with
development banks
Political risk
insurance
© World Energy Council 2013 25
Recommendation 3: The new path to sustainability: an opportunity for developing countries
Support to government in four areas:
1. Creating attractive policy and regulatory frameworks
2. Generating opportunities for investment in “technically good projects”
3. Developing local human capital needed to establish and maintain an energy sector
4. Developing a path that recognizes the knowledge gap and sticks to locally adapting proven technology
© World Energy Council 2013 26
United States on rank 40
2011 2012 2013 Trend Score
Energy security 19 17 12 h A
Energy equity 1 1 1 g A
Environmental sustainability 90 88 86 h C
Overall rank and score 16 16 15 h AAC
Signs of progress► Total primary energy intensity improved
continuously over the past years and is better than world average
► Emission intensity improved even more in the same timeframe and is close to world average.
► Further improvements are to be expected in the near future, e.g., coal replaced by gas, GHG and fuel efficiency standards and so on
© World Energy Council 2013
Energy sustainability balance Asia
High-GDP countries
Low-GDP countries
All Asia
Low-GDP countries High-GDP countriesArmenia AustraliaAzerbaijan Hong Kong, ChinaBangladesh JapanCambodia Korea (Rep.)China MalaysiaGeorgia New ZealandIndia SingaporeIndonesia Taiwan, ChinaKazakhstanMongoliaNepalPakistanPhilippinesSri LankaTajikistanThailandVietnam
© World Energy Council 2013
Energy sustainability balance Europe
Western Europe Eastern EuropeAustria Luxembourg AlbaniaBelgium Malta BulgariaCyprus Netherlands CroatiaDenmark Norway Czech Rep.Finland PortugalFrance SpainGermany SwedenGreece SwitzerlandIceland TurkeyIreland United KingdomItaly
EstoniaHungary
Macedonia
Latvia
Poland
Lithuania
RomaniaRussia
Moldova
Serbia
Montenegro
Slovakia
Western Europe
Eastern Europe
All Europe
UkraineSlovenia
© World Energy Council 2013
Energy sustainability balance Latin America and the Caribbean
LAC countriesArgentinaBarbadosBolivia
ChileBrazil
Costa RicaColombia
Dominican Republic
Paraguay
Ecuador
Peru
El SalvadorGuatemala
Uruguay
Honduras
JamaicaNicaraguaPanama
Venezuela
© World Energy Council 2013
Energy sustainability balance Middle East and North Africa
Non-GCC countries
GCC countries
All MENA
GCC countries Non-GCC countriesBahrain
Libya
Oman
Morocco
Yemen
Egypt
QatarIran
Saudi ArabiaIsrael
Syria
Jordan
TunisiaKuwait
United Arab Emirates Lebanon
Algeria
© World Energy Council 2013
Energy sustainability balance North America
North American countries
CanadaMexicoUnited States
© World Energy Council 2013 32
Sub-Saharan African countries
Botswana
Namibia
Angola
Cameroon
Niger
Benin
Chad
Nigeria
Madagascar
Congo (Dem. Rep.)
Senegal
Malawi
Côte d’Ivoire
South Africa
Mauritania
Ethiopia
Swaziland
Mauritius
Gabon
Tanzania
Mozambique
Ghana
ZimbabweZambia
Kenya
Energy sustainability balance Sub-Saharan Africa