The United States Energy Association (USEA) is a private, nongovernmental organization that functions as the U.S. member committee of the World Energy Council (WEC), the foremost international organization focused on the production and utilization of energy. With members in more than 100 countries, the mission of the WEC, and correspondingly the USEA, has been to promote the sustainable supply and use of energy for the greatest benefit of all people.
The World Energy Council’s flagship is the WEC Congress, which meets every three years. The Congress helps establish how the global energy community looks at the world as well as how we impact that world. When the United States had the privilege of hosting the global energy community 10 years ago in Houston, it promoted the following theme: “Energy and Technology: Sustaining Global Development into the Next Millennium.” The most recent Congress, which took place in Italy in November of last year, centered on “The Energy Future in an Interdependent World.” One can easily see how the WEC’s combined objectives of energy efficiency and energy security – particularly in the context of collaborative action to mitigate climate change – have become critical global issues.
Efficiency, security and climate are being emphasized in WEC scenarios that project key global energy concerns to the year 2050. The critical factors that will drive energy issues into the future will include the following:
- Sustainability; and
It’s clear that we need to advance research into and development of energy sources; however, it’s even more urgent that we support the demonstration and deployment of advanced clean energy technologies. Currently, policymakers are paying considerable attention to consumer use of energy in buildings and transportation, and they are evaluating alternative technologies to meet these consumer demands. Equally important but often overlooked are the advances our industry has made, and hopefully will continue to make, in energy efficiency through technological improvements in production.
Research from the Electric Power Research Institute indicates that coal-fired electric power plants that achieve a 2 percent gain in efficiency can yield a carbon dioxide (CO2) reduction of 5 percent. Hence, if we can move the rating of the global coal-fired power fleet from about 30 percent efficiency to 40 percent, we can realize a CO2 reduction of 25 percent. And this is without carbon capture and storage.
It’s also critically important for energy technology deployment to address the nontechnical barriers to advancing clean energy technologies. Barriers to energy efficiency and energy services trade need to be discussed by the World Trade Organization, since robust trade is essential to ensuring that energy-efficiency technologies cross borders freely. Trade barriers such as tariffs, taxes, customs and import fees need to be eliminated. As World Energy Council Secretary General Gerald Doucet recently pointed out in the International Herald Tribune, “A recent U.S. and EU proposal calling for the elimination of tariffs on a list of 43 environmentally friendly products shows how support is building for a trade-based approach to climate mitigation.”
Perhaps most importantly, the global community must address the issue of the cost of advanced, clean energy technology. Trade barriers, capacity building, tariff reform and other issues can be overcome. However, if we refuse to recognize that advanced clean energy technology will cost more and make energy prices rise for the end-user, we’re refusing to address the real issues – namely, who will pay the incremental cost of advanced technology, and will it be the economically deprived end-user in a developing country?
This is not to say that the non-financial barriers to sustainable energy development are unimportant. Collectively, we still need increased focus on enforcement of contracts, protection of intellectual property, rule of law, protection of assets from seizure and the range of requirements needed to provide incentives for capital, especially foreign investment.
however, markets can only do so much; markets are imperfect, and market failures occur. Coordinated global cooperation – among governments and between governments and the private sector – is critical, particularly to address efficiency, security and climate concerns.
Sustainability remains an elusive goal for many, because it’s not particularly clear how to go about both growing economies and protecting the planet for future generations. What is clear is that climate change must be addressed in an approach that is practical, economic and achievable. For our industry, achievable policy includes political realities. All industries are affected by domestic politics, but in most countries, the energy industry is dramatically influenced by local political concerns.
The move toward sustainability will also have an impact on the 1.5 billion people without access to commercial energy and the 1.5 billion with inadequate access. hopefully, no one believes that sustainability means denying the benefits of modern society to those who are unserved or under-served today. We must find ways to work toward ending economic and energy poverty for hundreds of millions of people around the globe. This calls for new approaches that continue to allow economic development while addressing both local environmental issues and global issues such as climate change.
AN INTERDEPENDENT WORLD
The concept of energy interdependence helps us recognize that very few nations are today – or ever will be – truly “energy independent.” Much of the rhetoric regarding the energy independence of the United States and other nations is, in fact, vague and not based on reality. Thus, it’s critical to expose this fantasy for what it is: wishful thinking. Interdependence is the ally, not the enemy, of energy security.
As Rex Tillerson, chairman and CEO of Exxon-Mobil, pointed out in his keynote address to the World Energy Congress in Rome in November 2007, the world needs to avoid “the danger of resources nationalism.” he also stressed the need to “ensure that the global energy markets and international partnerships do not fall apart.” In the United States in 2008, domestic consumption will continue to exceed domestic production. We will import more petroleum (about 60 percent of our petroleum is now imported) and increasingly more natural gas.
WORKING TOWARD A SUSTAINABLE FUTURE
Construction of critical energy supply infrastructure presents a huge challenge. As we begin 2008 in the United States, it’s critical that we recognize that all energy supply options – coal, nuclear, natural gas, petroleum and renewable – have severe constraints. This recognition must lead us to declare energy efficiency as Priority No. 1 for energy and economic security, and climate mitigation.
While we have done much in the United States to pursue efficiency, we still need to do more, including:
- Increasing the utilization of combined heat and power applications;
- Further improving efficiency standards;
- Improving land use and transportation planning;
- Providing incentives for efficiency investments; and
- Decoupling regulated utility returns from sales.
On an international level, we must continue to:
- Pursue energy efficiency in both supply and demand (increasing both end-use efficiency and production efficiency);
- Decarbonize electricity (moving toward emissions-free power by mid-century);
- Contain growth in transportation emissions and develop carbon-free alternatives; and
- Support major collaborative efforts on technology development and deployment such as Asia-Pacific Partnership on Clean Development and Climate, International Partnership for the hydrogen Economy, Carbon Sequestration Leadership Forum, and Major Economies Process for Energy Security and Climate Change.
The trilateral issues of energy efficiency, energy security and climate change are reflected in all of our international partnerships. Nevertheless, much more international collaboration will be needed to speed the deployment of energy efficiency technologies.
As we think about energy efficiency, security and climate, it’s critical for us to remember the following:
- No single source, technology, policy or strategy can meet the challenges we face. All energy options should be left on the table. No “one size fits all” solution exists.
- No single approach will work everywhere. Different measures will be useful, and each economy or nation will consider the options that work for them. A range of measures is available, and actions must be selected that are appropriate to each circumstance.
The key for the global community will be to encourage each sovereign economy to put in place policies that support longterm investment in clean energy technology. International cooperation among governments, and between governments and the private sector, is essential. The focal points of international cooperation should stress energy efficiency (in both supply and demand), decarbonizing electric power (while recognizing that the world will continue to rely on fossil fuels, particularly coal for power generation) and reducing the growth – and eventually the level – of emissions from transportation.
Finally, but perhaps most importantly, we must continue to push for a coordinated, international effort in advanced technology demonstration and deployment. The international partnerships cited early are useful tools, but we can and must do more.