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A Technology-Driven Framework for Energy and Climate Policies

APEC Energy Trade and Investment Task Force

Brunei, November 22, 2010

Robert Pritchard

Energy Alliance of Australia

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The Swirling Energy / Climate Debate: How We Now See It

Energy security is economy-specific but climate applies equally to all

In the absence of a global climate framework, many economies are aligning domestic energy / climate policies

Next phase: global policy alignment is likely to be very gradual

3 Phasing out all fossil fuels

Use only renewables and nuclear energy

Mitigate all avoidable GHG emissions

Capture & store all unavoidable emissions

The Swirling Debate

EDGING TOWARDS GLOBAL ALIGNMENT

Achieving “sustainability” as fast as possible

Increase in cross-border energy trade and investment

Increase in energy efficiency / Decrease in energy wastage Increase in renewable and nuclear energy generation with natural gas as balancing fuel

Identification and global deployment of all affordable technological solutions

Reduced dependency on Middle East oil

Increased use of coal, natural gas, nuclear energy, renewables

Diversification of all sources of supply

Investment in interchangeability

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Energy Security: Why Is It Still So Important?

Supply disruptions pose a national security risk

Affordable energy still remains:essential to maintain our prosperitythe key enabler of economic growth a prerequisite of sustainable

development

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Increased Energy Security Risk: What Explains It?

Energy use is a function of:population growtheconomic growthindustrialisation and urbanisation

Increase in energy use is occurring at the same time as oil importers are increasing their dependence on the Middle East

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Growth in Oil Demand

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Dependency of Major Economies on Oil Imports

Japan 100% Korea 100% India 76% US 61% China 56%

Source: BP Statistical Review 2010

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Climate Change: What Is the Real Issue?

The real issue is the build-up of the stock of global emissions – this continues to intensify

Communities everywhere express the need to “do something” but have almost zero power over this global environmental problem. Why?

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Global Emissions: Linkage to Energy Use

80% of global emissions are linked to energy use

We reiterate that energy use is a function of:population growtheconomic growthindustrialisation and urbanisation

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Domestic Emission Reductions: Questions to Consider

To what extent will domestic emission reductions actually reduce the risk of global climate change?

To what extent will a carbon price be effective?

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Domestic Emission Reductions: Questions to Consider contd.

How should a carbon price be fixed? How should it be adjusted? Should it apply in all sectors? Should it also apply to exports?

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APEC Energy and Climate Pathfinder Process

First outlined by Energy Alliance of Australia to EWG 39 in March 2010

An ongoing 10-step process of policy formulation, monitoring, reporting and review

Greater emphasis should be placed on technology and sustainability

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Significance of Sustainability

Sustainability can be the unifying global goal

Sustainability is not an end-state but a multi-dimensional process requiring ongoing review and adjustment

Low-carbon energy technologies are indispensable for sustainability

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Low-Carbon Technologies: R & D + Global Deployment

What technologies will change global energy consumption patterns is the most significant issue

Without global deployment of these technologies, we will only tinker with the climate change problem

Domestic and international policies must therefore be aligned

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UNFCCC / Kyoto Framework

Kyoto Temperature Target

Country Emissions Limits

Global Carbon Trading

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Technology-Driven Framework

Domestic Incentives,Subsidies

Cross-Border Bilateral,

Multilateral, Scientific

Collaboration

Removal of Trade Barriers, Tariffs

R & D Low-Carbon

Technologies

Global Technology Deployment

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Importance of Removing Trade Barriers

Trade barriers must not be allowed to impede global deployment of low-carbon energy technologies

Tariffs on “Environmental Goods and Services” (EGS) could be eliminated by the Trans Pacific Partnership (TPP) agreement or by an EGS agreement under the WTO

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Gains from Elimination of Tariffs on EGS

US Peterson Institute estimates increase in world exports by $5.9 billion, with major GDP gains

World Bank sees this providing win-win-win opportunities (trade, technologies, emissions reduction)

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World Energy Council (WEC) Recommendation to WTO

WEC has recommended that tariffs be eliminated for all “Environmental Goods” (low-carbon technologies)

WEC has nominated 6 priority low-carbon categories to WTO

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WEC’s WTO EG Categories

(1) Energy efficiency

(2) CCS

(3) Renewables

(4) Nuclear

(5) Natural gas generation

(6) Flare gas reduction

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Environmental Goods: Main Examples

‘Smart Grid’ meters, transformers and switching apparatus

Generators, boilers, turbines, compressors, pumps, tanks and plant components

Measuring and control systems and related instruments

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Summary and Conclusions

(1) Business welcomes a more practical approach to energy and climate issues in many economies

(2) There are also positive signs of bottom-up policy alignment (eg APEC EMM 9 Declaration, June 2010) but global alignment is likely to be very gradual

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Summary and Conclusions contd.

(3) Business sees low-carbon technological solutions as absolutely vital

(4) A technology-driven policy framework can both incentivise domestic R & D and accelerate global technology deployment

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Summary and Conclusions contd.

(5) By eliminating tariffs on EGS, the TPP and WTO can play an effective role in facilitating global deployment of low-carbon technologies

(6) Low-carbon technology deployment provides the common policy thread for future global policy alignment – this is our key message to policymakers

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About the Energy Alliance of Australia

The Energy Alliance is an Australian energy policy body

We are an apolitical NGO and do not lobby governments

We thank the APEC ETI Task Force for its invitation to discuss these important policy issues

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Technology-Driven Framework

Domestic Incentives,Subsidies

Cross-Border Bilateral,

Multilateral, Scientific

Collaboration

Removal of Trade Barriers, Tariffs

R & D Low-Carbon

Technologies

Global Technology Deployment