Energy Policy Scenarios to 2050
1.2. Two Axes - Government Engagement and Cooperation/Integration
WEC Member Committees represent a large and diverse global community in terms of geographic, political, social, environmental, and economic conditions. While achieving the 3 A's is largely determined by the social, political, and economic environment - and the extent to which these factors facilitate or hinder sustainable energy development - the study group members investigated choices that can be made by key decision makers in countries and regions around the world.
In Figure 1-2 , the two axes lead to four overlapping scenarios or plausible storylines (remembering that all scenarios are a priori equally possible):
Government Engagement. Between two extremes of no government or a dictatorship, there is clearly a continuous spectrum of "government engagement." On the one hand, the policy environment may support competition in the private sector, unleashing the power of the markets. Or, governments can compensate for a lack of private enterprise capacity. This study has reflected on three key aspects of the government role in energy development: engagement, involvement, and interference. Engagement occurs when government is fully aware of what is going on, what the issues are, and what is required of it. It is doing what is necessary to ensure that energy systems function optimally. Involvement occurs when the government is carrying out a number of functions, possibly in competition with other providers. This may distort the market due to inequity of power. Interference occurs when the government's actions or regulations are so obtrusive as to affect the market negatively; energy systems are not developed as effectively and efficiently as they could otherwise be.
Cooperation and Integration. Alliances and cooperative initiatives between people allow them to survive and prosper. In some cases, cooperation is driven by mutual need to deal with a common problem; in other cases, it is driven by the need to share complementary resources and wisdom for mutual benefit. Whatever the underlying reason, some degree of cooperation and integration in energy development has always existed, sometimes only bilaterally, often regionally, and in some cases internationally, and on a global scale. This study has reflected on three forms of cooperation and integration: first, there is government to government collaboration in the form of treaties or international agreements, for example on standards or rules of trade; second, there are private-public partnerships to design specific programmes or regulations to achieve specific policy goals; and third, there are company to company agreements, for example on the development of new technology or voluntary agreements to address specific business goals.
The nations of the world do not enjoy equal shares of available primary energy resources, know-how and technology, financial resources, human capacity, and raw materials. This inequality means there is always a dynamic for some degree of redistribution. Ideally, this happens through a process of mutually beneficial cooperation between countries. While cooperation can occur naturally, driven by market forces, this is by no means true in all cases. There are numerous examples throughout history where countries went to war to gain or deny access to resources.
A nation poor in natural and financial resources has little to offer and is unlikely to attract support from the rich. The private sector will not invest there because it cannot earn returns commensurate with the risks, and the country is too poor to pay appropriate returns to attract investors. There is no transfer of know-how and technology and no development of human capacity. A poverty spiral often results unless there is some form of goodwill (e.g., Development Agencies) that bridges the gap and supports cooperation.
Many countries have entered into cooperative agreements to their mutual benefit. Exchanges of goods and services and international trade agreements are examples. In some cases, cooperative agreements are driven by a need to share common resources, such as the case with the development of hydropower (the river being the common element). The development of international power pools is another example where parties have come together for mutual benefit. Such arrangements often require specific international treaties or agreements to enable them. However, there are also cases of little or no cooperation. In some cases, opposing political ideologies prevent cooperation.
Cooperation and integration also has a broad enough spectrum to embrace the aspirations and ideologies of all the WEC Member Committees and is material to the achievement of the 3 A's.
The core of this report is the assessment of the four policy scenarios within the context of these two axes. It details the policy choices and actions necessary to advance the achievement of the 3 A's.