© World Energy Council 2013 World Energy Trilemma Time to get real – the agenda for change INSERT...

© World Energy Council 2013

World Energy TrilemmaTime to get real – the agenda for change

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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


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


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


Energy Sustainability Index


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


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


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


Public and private stakeholder dialogue


Develop a clear vision that encompasses a mix of energy sources and technologies

Public andprivateinitiativesthat enableRD&D andinnovation

Coherentandpredictableenergy policy

Stableregulatoryand legalframework forlong-terminvestment


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


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


Agenda for Change


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


“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.”


www.worldenergy.org@WECouncil


Back up


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)


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



Establish

Promote

Support a

Foster


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




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


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


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


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


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


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


Energy sustainability balance Latin America and the Caribbean

LAC countriesArgentinaBarbadosBolivia

ChileBrazil

Costa RicaColombia

Dominican Republic

Paraguay

Ecuador

Peru

El SalvadorGuatemala

Uruguay

Honduras

JamaicaNicaraguaPanama

Venezuela


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


Energy sustainability balance North America

North American countries

CanadaMexicoUnited States


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

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