Press Release 29 November 2010

The Energy Industry: Messages to COP16 in Cancun

According to the World Energy Council’s annual Issues Survey of energy ministers, energy company CEOs and energy policymakers, the climate framework ranks as the top critical uncertainty.

“To rise to this challenge, we must rely more than ever on cooperation and dialogue among all stakeholders – governments, businesses, researchers and NGOs. The process of UNFCC post-Kyoto discussion and debate is key, and Cancun is an important next step,” concludes Pierre Gadonneix, Chair of the World Energy Council.

While a global framework defining a clear and long-term carbon price path would be the most effective instrument to enhance energy security, it may be difficult to achieve. However, without a carbon price, energy infrastructure investments remain critically exposed, investment decisions are stalled and energy security is hampered.

Given the difficulty of achieving a global framework, a regionalised approach that reflects a globally coherent value of carbon and that provides continued growth opportunities for developing countries is a pragmatic way forward which can enable progress at COP16 and beyond.

Key Factors in Achieving a Climate Framework
The following must be considered in any discussion aimed at achieving a climate framework:

• Effective policies – including national policies that benefit from international convergence and linkage through international frameworks -- for long-term investments and technology options are essential for a sustainable energy future.

• Solutions developed in accordance with both the Millennium Development Goals (MDGs) and the climate change framework. Universal energy access, mainly through rural electrification, is necessary to achieve the MDGs; unless the access issue is addressed, many developing countries will be reluctant to join or continue negotiations toward a climate change framework.

• Energy efficiency, which is a key component of the climate change solution because it is the most effective way to manage limited energy supplies and curb CO2 emissions. However, consumers’ lack of knowledge and information and the shortage of initial investment capital are major barriers to the development and implementation of efficiency measures.

• Diversity in the generation mix by the energy industry to cope with likely regulatory impacts and commodity market volatility. The energy industry must also increase efforts to leverage competitive technologies in response to both global energy market developments and the sustainable growth ambitions of non-OECD countries.

The Importance of Energy and Climate Policies
To underscore the critical importance of sound, informed energy policies, the World Energy Council analysed 239 individual energy and climate policies in over 30 countries and released the results in its 2010 Assessment of Country Energy and Climate Policies.

Recommendations for Policymakers
On the eve of COP16, and based on its 2010 Assessment report, the World Energy Council makes the following specific recommendations to policymakers:

• Rebalance strategic ambitions in light of specific sustainability goals through a transparent consideration of policy trade-offs.

• Ensure that policy frameworks are flexible enough to respond to strategic market disruptions and tactical developments in fast-moving areas.

• Strengthen regulatory frameworks to reliably speed up the delivery of new infrastructure.

• Review and possibly reconsider incentives and subsidy regimes to stimulate priority investment.

• Enhance governance structures and decision-making processes to increase acceptance of major energy transitions.

The World Energy Council (WEC) is the only truly global and inclusive forum for thought leadership and tangible engagement committed to a sustainable energy future. Established in 1923, it has a network of over 90 National Member Committees and represents over 3,000 member organisations, including governments, industry and expert institutions. Its mission is to promote sustainable energy for the greatest benefit of all.

The World Energy Council contributes to global sustainable development by working on policy solutions to address climate change, facilitating universal energy access, looking at effective ways to handle the energy transition to 2030/2050 and managing risk. With its members, the World Energy Council develops energy-relevant strategic insights and works on global and regional agendas to facilitate action on the ground.

The World Energy Council shares its thinking during World Energy Congresses and via www.worldenergy.org/publications. The most recent Congress took place in September, 2010, in Montreal, Canada and gathered over 7,000 participants from more than 140 countries, including 60 energy ministers. The next Congress will be held in Daegu, Korea in October, 2013.