Publications

Energy Policy Scenarios to 2050

5.5. Regional Policy Recommendations

The regions have considered a range of specific policy actions that might be used to mitigate the impacts of the different scenarios. These are listed here and are elaborated in the regional reports, which are accessible as described in Appendix A, Section 10.1.

5.5.1. Africa

Africa has a number of challenges to ensure its smooth energy development. In all scenarios, even with mitigation options, it is unlikely that the 3 A's will be completely achieved. The private sector will grow to take a more substantive role; however, the role of governments is unlikely to decline as they will always be required to facilitate growth, and more likely promote, energy services.

In all of the scenarios, there are a number of common mitigation options, particularly a need to:

Improve economic performance through better governance, raising productivity, and enhancing capacity development.
Develop local and regional industries for manufacturing electrical equipment adapted to the countries' energy needs as well as energy service companies.
Develop better state and corporate governance to create an attractive investment climate and a favourable business environment that encourages foreign and private finance through multilateral Institutions and investments funds. This needs to be complemented through the mobilisation of domestic financial markets to account for potential reductions, or complement international aid budgets.
Foster a better investment climate for investors and improve the conditions for attracting private investments in the energy sector, in particular through actions to reduce investment risks, including sound institutions and appropriate regulations and policies. This climate needs to allow for the development of energy infrastructure and facilities.
Encourage innovative solutions for energy efficiency on the supply and demand side through national and regional programmes (supported by legislation), starting with simple initiatives, such as driving less to save energy and eliminating the import of old and inefficient cars. A key element is raising awareness.
Initiate or maintain energy subsidies where required (e.g., expanding electricity access for the poor); limit their damage by appropriate measures.
Provide stimuli to energy trade within neighbouring countries and inside the countries' sub-regions through power pools and cross-border pipelines, and share the benefits of exchanging surplus of petroleum products and natural gas, particularly for the 15 land-locked African countries.
Support energy technology innovation and a wider and accelerated deployment and dissemination of sustainable and proven energy technologies by incentives so that technologies can penetrate at a faster rate. This may include feed-in type arrangements, but these must be backed by appropriate regulatory reform and rigor.
Build human capacity in sustainable energy and promoting knowledge, as well as organising energy education and training seminars to inject entrepreneurial and technical skills, particularly among youth and women.
Ensure appropriate market reform that allows a slow move to market operations, resulting in pricing through markets and phasing out subsidies for conventional energy supply and use.

5.5.2. Asia

To ensure progress toward achieving the 3 A's within the scenarios, there is a clear need in the Asian region to balance its complexities - particularly those of regional/national interests and those of the public and private sectors. Technological and financial features of the options need to be analysed as indispensable factors for policy implementation. Following are some, albeit not exhaustive, examples of recommendations of policy options; these include the need to:

Establish multilateral schemes for energy security, including APEC, ASEAN+3, Gulf States, India, Russia, as well as the Middle East region, strengthening ties between energy-producing regions/countries and energy-importing regions/countries.
Strengthen regional partnerships for energy security through broader cooperation in resource exploitation, installations of trans-border gas pipelines or transmission grids, or stockpiles for emergencies.
Enhance technology transfer/cooperation for resource exploitation and energy efficiency as well as climate change mitigation/adaptation technologies, including those through the CDM/Joint Implementation processes.
Focus on international collaborations and agreements for information exchange and cost sharing for promotion of technology innovation and Research Development, Demonstration, and Deployment (RDD&D) of energy-related technologies, such as Asia-Pacific Partnership, the South Asian Association for Regional Cooperation (SAARC).
Form global collaborative networks of research for accelerating clean coal technologies, both resources and commitment.

To implement these recommendations, it is clear that:

Governments should accept responsibilities to establish clear, long-term energy policies, frameworks for healthy markets, the enhancement of private sector capabilities, proper and sound environments for investment in energy networks, infrastructure, etc.
Governments should reduce energy poverty to improve Accessibility.
Directly or indirectly, governments should have investment policies for energy-related technology RDD&D.
Governments should formulate international schemes for cooperation on technology and information exchanges, emergency measures, and mitigation of climate change.
Governments should promote partnerships between regions and countries, public and private sectors, and among consumers in terms of energy savings, etc.
Standards, benchmarks, or performance criteria might stimulate energy savings, etc., according to the situation.
Internalising costs would enhance sustainability of energy supply-demand chains.
Governments should enhance public awareness of saving energy.

5.5.3. Europe

The scenarios and the corresponding data show much remains to be done to achieve the 3 A's, therefore, additional measures are needed. The following recommendations yield 'no regret' policy options in all of the scenarios:

A substantial increase in energy efficiency could and should be realised. A huge range of technical and other options can achieve this. Strong policy measures are required based on price incentives and on regulation.
In the case of transportation, unconventional measures are necessary. Pricing of externalities along with regulatory approaches is unavoidable.
Whatever the energy mix, a strong long-term infrastructure investment policy, especially for energy transmission, is required. The flexibility of grid systems should be substantially improved to service the effects of the required large-scale transformations in power generation.
There is a need for global energy producer-consumer dialogue. Massive investment efforts do require security of both supply and stability of demand. These mechanisms should be complemented by (sub-) regional consultative facilities providing frameworks for review.
All energy supply options should be pursued, coupled with guaranteed long-term carbon pricing. A market-oriented pricing mechanism building on the European Emissions Trading Scheme (ETS) is a good starting point, including for air transport. Attention should be devoted to further developing the international preconditions for nuclear power.
Looking at the unprecedented challenges ahead, and also being aware of the existing promises in RDD&D, it is important that governments, national and regional, and private industry increase their level of funding of energy and climate RDD&D, and especially increase their efforts to deploy results commercially.
Energy and climate RDD&D cooperation between governments and industry, nationally and internationally, should be strengthened and improved to make it more effective by sharing costs and decreasing the duplication of work within and between countries. Attention should be focused on options such as ITER, carbon capture and treatment, and electricity storage.

5.5.4. Latin America and the Caribbean

As with other regions, a number of actions need to be taken to enhance progress toward achieving the 3 A's:

Long lead times and the duration of investments require clear prices and stable political and regulatory environments. Such action will ensure private sector participation, particularly where project financing of infrastructure is required.
Ensure local capital markets are involved appropriately. In doing so, clarity is gained, helping to ensure that foreign investment is forthcoming.
Prices must reflect cost and not be subsidised. This needs to be balanced to ensure that the population is not driven to poverty, but this can be achieved with careful support and targeting of investments.
Development of management capabilities, and wider economic development, must be encouraged to allow for effective world trade in energy services and products, as well as reinforcing and strengthening the wider economic base in the region.
Effective contracts are essential in ensuring investment (through mitigating risk) and for protecting security of supply.
Major infrastructure needs better planning, prioritising beneficial projects.
Improvements in the efficiency of state-owned entities must be a goal, saving resources and improving economic potential. This is a lengthy and difficult process, usually requiring support from across the political spectrum (thus ensuring long-term progress). Such change will contribute to the wider ability to attract foreign direct investment (FDI).
Training is paramount to improve management capabilities and drive development to "best-in-class."
The region must exploit its generous resource endowment, such as mineral deposits, land, forestry, biodiversity, climate and soil conditions favourable to agriculture, and water and hydroelectric potential. The benefit of using these resources should be shared among local communities and bring wider economic and social benefit.
International agreements and supply contracts, diversification of supply sources, and efficient supply logistics should create sufficiently reliable supplies.
Regional energy companies, such as ARPEL or CIER, and government-sponsored entities, like OLADE, may be instrumental in improving the region's energy security.
Diversification of energy sources by increasing the share and improving the overall efficiency of renewable energy (as well as hydropower, nuclear power, and biofuels) will reduce greenhouse gas emissions and to improve energy supply security. A number of other environmental barriers also need to be overcome, though in this context not least of which is the acceptability of hydropower.
There is a need to reduce traditional biomass usage, particularly charcoal.
The region should foster the efficient use of agricultural byproducts for energy.
Energy efficiency should be a major goal because it will reduce primary energy needs, reduce environmental effects, and improve overall competitiveness of the economy. Energy efficiency should be evaluated on a life-cycle basis. This should indicate the most appropriate primary sources and secondary energies to serve end-users.

5.5.5. North America

North America has identified the most important areas for developing energy policy. Most of the policies apply to each of the three countries in the region and also to the four scenarios:

Decision makers clearly need to balance current and long-term considerations in energy policy. It is important that energy-policy development is based on a clear, long-term vision, in-depth understanding of consequences over the full economic life of any associated developments, and full appreciation of inherent complexities. Certain improvements are desirable:
- There is a need to strengthen integrated policy development for North America, building on the North America Energy Working Group, and the subsequent Security and Prosperity Partnership Agreement.
- There is a need for ongoing reviews of the respective roles of the public and private sector entities in the stewardship, development, and management of energy resources and systems.
A clear need to develop relationships in and outside of North America to ensure continued supply of fossil fuels, particularly oil, coal, and natural gas. This may take the form of relationships with, say, oil-exporting countries, relationships focused on alternate oil sources, e.g., oil sands, or relationships to promote technology development such as carbon capture and storage. Specific actions focus on:
- RD&D for projects including coal to liquids, advanced oil recovery techniques, use of oil shales, and methane hydrates.
- Policy reviews of current exploration and production activity, particularly focused on environmentally sensitive areas.
- Streamlining of licensing for hydropower, uranium mining, and nuclear power.
- The use of tax incentives to encourage renewables and biofuels.
Energy efficiency in all aspects of supply and end-use is important. New and changing systems, approaches, and technologies are required to ensure that viable options are developed and implemented. In addition, public education is necessary. Specifically this may manifest as:
- RD&D support for new technologies.
- Changes to energy efficiency regulations, e.g., building codes, labelling, etc.
- Raising of public awareness.
Higher efficiency of transport systems, especially land-based transportation systems, is required. The development of efficient transport technology alternatives; expanding urban and inter-urban transportation systems; a focus on urban development planning and densification to reduce commuting time and distances are among critical areas of research and development.
Technology is key to achieving sustainable growth. Close collaboration between public and private sectors is therefore important, with transparency of funding into the long-term. Managing innovation necessitates a systems approach.