Press Release 13 December 2007

Beyond Bali

Bringing the WTO to the Climate Change Table

The world energy industry believes the United Nations should work more closely with the World Trade Organization, to make sure the right rules and incentives are put in place to address climate change.

Climate change is a true planetary challenge - a challenge that affects energy companies very differently because our industry is highly capital intensive and has long investment timelines. As leading actors, energy companies have a major responsibility to invest wisely in the appropriate clean energy technologies.

Only through increased government engagement and global cooperation will we be able to achieve a low carbon economy and double world energy supplies by 2050, according to WEC's "Energy Policy Scenarios to 2050," a worldwide report to policymakers that we unveiled at our triennial World Energy Congress in Rome last month.

The UN has the mandate to set the objectives for climate change and a stable value for carbon. But the World Trade Organization should be put in the driver's seat to craft the energy rules of trade and investment. These rules are needed to support the emergence of a global price for carbon and to stimulate the massive financing and transfer of a wide range of clean technologies, we reported last May to the 15th UN Commission on Sustainable Development.

Energy companies need the right international framework to make huge investments - now. A global rulebook for energy trade and investment is needed urgently to close a technology gap that is widening between developed and developing countries. In so doing, we will speed the transfer of existing clean technologies to those countries in greatest need.

New global rules on trade and investment are also needed to stimulate construction of energy infrastructure in developed and developing countries, currently at a very low ebb in the emerging world. An estimated US$400 billion annually must be spent on energy infrastructure in developing countries to keep pace with the galloping energy demand projected for these parts of the world.

Even though the extent to which national and regional carbon trading systems are linked helps determine a global carbon price, a quilt of local and regional carbon price signals is inadequate for the world to construct the timetable of investments on the massive scale that is required, and ensure no country is left behind.

The global price of carbon determines the pace of investments in clean technologies. Energy companies need a predictable global carbon price so they can cost out these investments anywhere in the world.

For example, WEC estimates a carbon value of EUR20 per tonne of CO2 in 2005 would have added EUR8.0 per megawatt-hour to built a gas-fired power plant and as much as EUR18 per megawatt-hour for a coal-fired power station with carbon capture and storage.

In the current Doha round of multilateral trade negotiations, discussions are underway on energy services, including renewables.  These global trade talks are also aimed at liberalizing markets for environmental goods and services. Agricultural tariffs and disciplines for agricultural subsidies under discussion in the current Round will also impact on a global trading scheme for biofuels.

A recent proposal by the US and the EU made to the WTO calling for the elimination of tariffs on a list of 43 environmentally friendly products, such as wind turbines and solar panels, shows how support is building for a trade-based approach to climate change brokered within the WTO.

To help identify these key issues, WEC is seeking feedback from its membership of companies spanning all energy types and located in 96 countries. We have set up a task force to work with the WTO. WEC will also serve as a global clearinghouse of information on rules of trade in energy and environmental products and services from NGOs, the World Bank, international organizations, and the United Nations Conference on Trade and Development.

"Beyond Bali WEC will further provide much-needed sweep and momentum to the search for workable solutions that can ultimately be enshrined in the binding rules of the WTO", says Gerald Doucet Secretary General of the World Energy Council.

WEC Media contact:
Mathias Hocke: hocke@worldenergy.org
Tel: +44 (0) 20 7734 5996
Stephan Albrechtskirchinger: albrechtskirchinger@worldenergy.org
Tel: +44 (0) 20 7734 5996