A Technology-Driven Framework for Energy and Climate Policies

1. A Technology-Driven Framework for Energy and Climate Policies Robert Pritchard Energy Alliance of Australia APEC Energy Trade and Investment Task Force Brunei, November 22, 2010

2. The Swirling Energy / Climate Debate: How We Now See It • Energy security is economy-specific but climate applies equally to all • In the absence of a global climate framework, many economies are aligning domestic energy / climate policies • Next phase: global policy alignment is likely to be very gradual

3. The Swirling Debate Reduced dependency on Middle East oil  Increased use of coal, natural gas, nuclear energy, renewables Diversification of all sources of supply Investment in interchangeability Phasing out all fossil fuels  Use only renewables and nuclear energy  Mitigate all avoidable GHG emissions Capture & store all unavoidable emissions Energy Security Concerns Climate Change Concerns EDGING TOWARDS GLOBAL ALIGNMENT Achieving “sustainability” as fast as possible Increase in cross-border energy trade and investment Increase in energyefficiency / Decrease in energy wastage Increase in renewable and nuclear energy generation with natural gas as balancing fuel Identification and global deployment of all affordable technological solutions

4. Energy Security: Why Is It Still So Important? • Supply disruptions pose a national security risk • Affordable energy still remains: • essential to maintain our prosperity • the key enabler of economic growth • a prerequisite of sustainable development

5. Increased Energy Security Risk: What Explains It? • Energy use is a function of: • population growth • economic growth • industrialisation and urbanisation • Increase in energy use is occurring at the same time as oil importers are increasing their dependence on the Middle East

6. Growth in Oil Demand

7. Dependency of Major Economies on Oil Imports • Japan 100% • Korea 100% • India 76% • US 61% • China 56% Source: BP Statistical Review 2010

8. Climate Change: What Is the Real Issue? • The real issue is the build-up of the stock of global emissions – this continues to intensify • Communities everywhere express the need to “do something” but have almost zero power over this global environmental problem. Why?

9. Global Emissions: Linkage to Energy Use • 80% of global emissions are linked to energy use • We reiterate that energy use is a function of: • population growth • economic growth • industrialisation and urbanisation

10. Domestic Emission Reductions: Questions to Consider • To what extent will domestic emission reductions actually reduce the risk of global climate change? • To what extent will a carbon price be effective?

11. Domestic Emission Reductions: Questions to Consider contd. • How should a carbon price be fixed? • How should it be adjusted? • Should it apply in all sectors? • Should it also apply to exports?

12. APEC Energy and Climate Pathfinder Process • First outlined by Energy Alliance of Australia to EWG 39 in March 2010 • An ongoing 10-step process of policy formulation, monitoring, reporting and review • Greater emphasis should be placed on technology and sustainability

13. Significance of Sustainability • Sustainability can be the unifying global goal • Sustainability is not an end-state but a multi-dimensional process requiring ongoing review and adjustment • Low-carbon energy technologies are indispensable for sustainability

14. Low-Carbon Technologies: R & D + Global Deployment • What technologies will change global energy consumption patterns is the most significant issue • Without global deployment of these technologies, we will only tinker with the climate change problem • Domestic and international policies must therefore be aligned

15. UNFCCC / Kyoto Framework Kyoto Temperature Target Country Emissions Limits Global Carbon Trading

16. Technology-Driven Framework Cross-Border Bilateral, Multilateral, Scientific Collaboration Removal of Trade Barriers, Tariffs Domestic Incentives, Subsidies Global Technology Deployment R & D Low-Carbon Technologies

17. Importance of Removing Trade Barriers • Trade barriers must not be allowed to impede global deployment of low-carbon energy technologies • Tariffs on “Environmental Goods and Services” (EGS) could be eliminated by the Trans Pacific Partnership (TPP) agreement or by an EGS agreement under the WTO

18. Gains from Elimination of Tariffs on EGS • US Peterson Institute estimates increase in world exports by $5.9 billion, with major GDP gains • World Bank sees this providing win-win-win opportunities (trade, technologies, emissions reduction)

19. World Energy Council (WEC) Recommendation to WTO • WEC has recommended that tariffs be eliminated for all “Environmental Goods” (low-carbon technologies) • WEC has nominated 6 priority low-carbon categories to WTO

20. WEC’s WTO EG Categories (1) Energy efficiency (2) CCS (3) Renewables (4) Nuclear (5) Natural gas generation (6) Flare gas reduction

21. Environmental Goods: Main Examples • ‘Smart Grid’ meters, transformers and switching apparatus • Generators, boilers, turbines, compressors, pumps, tanks and plant components • Measuring and control systems and related instruments

22. Summary and Conclusions (1) Business welcomes a more practical approach to energy and climate issues in many economies (2) There are also positive signs of bottom-up policy alignment (eg APEC EMM 9 Declaration, June 2010) but global alignment is likely to be very gradual

23. Summary and Conclusions contd. (3) Business sees low-carbon technological solutions as absolutely vital (4) A technology-driven policy framework can both incentivise domestic R & D and accelerate global technology deployment

24. Summary and Conclusions contd. (5) By eliminating tariffs on EGS, the TPP and WTO can play an effective role in facilitating global deployment of low-carbon technologies (6) Low-carbon technology deployment provides the common policy thread for future global policy alignment – this is our key message to policymakers

25. About the Energy Alliance of Australia • The Energy Alliance is an Australian energy policy body • We are an apolitical NGO and do not lobby governments • We thank the APEC ETI Task Force for its invitation to discuss these important policy issues

26. Technology-Driven Framework Cross-Border Bilateral, Multilateral, Scientific Collaboration Removal of Trade Barriers, Tariffs Domestic Incentives, Subsidies Global Technology Deployment R & D Low-Carbon Technologies