TODAY’S STUDY: THE SOLUTIONS THE WORLD HAS BEEN LOOKING FOR

Worldwide engagement for sustainable energy strategies: Ensuring global energy supplies and economic growth, Building a cleaner, more efficient energy future globally, Promoting energy technologies to bridge the future, Tackling energy challenges together… without borders

March 2012 (International Energy Agency)

The IEA yesterday: prioritising reliable oil supplies

In the early 1970s, oil powered the global economy. The 24 industrialised member countries in the Organisation for Economic Co-operation and Development (OECD) accounted for 72% of world oil demand. The relatively new producer group, Organisation of Petroleum Exporting Countries (OPEC), produced 50% of the world’s oil. In 1974, when OAPEC (Organisation for Arab Petroleum Exporting Countries) implemented an embargo cutting oil su\pplies to major consumer countries, the International Energy Agency (IEA) was born.

The 16 founding members of the IEA had two primary objectives:

to secure access to reliable and ample supplies of oil;

to establish and maintain effective emergency response capabilities.

The founders set up a system that still works today. Under their 1974 accord, IEA member countries agreed to hold oil stocks equivalent to at least 90 days of each prior year’s net oil imports and – in the event of a major supply disruption – to release stocks, restrain demand and/or increase supply to restore oil market stability. Collective action is taken only when physical oil supplies are affected, not in response to rising prices.

Until now, the IEA emergency response system has been activated three times – in the run-up to the Gulf War in 1991; after Hurricanes Katrina and Rita destroyed oil infrastructure in the Gulf of Mexico in 2005; and as global demand picked up after civil war stopped Libyan production in 2011. In all cases, the rapid IEA response offset concerns about supply shortfalls and stabilised global markets. In other situations – such as the large oil disruption in the Gulf of Mexico after Hurricane Ike in 2008 – the IEA stood ready to act, but Agency analysis showed adequate excess capacity in global oil markets to ensure supplies and offset the loss. A market solution was found and no intervention required. In numerous other occasions, individual IEA member countries have used oil stocks to compensate for local supply disruptions.

Governments rely on the IEA to offer sound advice and recommend appropriate action, both day-to-day and in times of crisis.

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BUT the WORLD has CHANGED…

The IEA today: taking on new challenges

Almost four decades after the Agency’s founding, ensuring access to global oil supplies remains a core IEA mandate but new energy-related concerns have arisen. Energy security is no longer only about oil. And industrialised nations are no longer the only major consumers of energy. Climate change driven by greenhouse gas emissions – 70% of which derive from energy production or use – is a growing threat. So energy policy was tasked with a new objective: to cut greenhouse gas emissions while maintaining economic growth.

The Agency has grown to 28 member countries and its substantive focus has broadened, based on the adoption of new “Shared Goals” in 1993, to include the “3Es” of sound energy policy:

energy security to secure reliable access to supplies of all forms of energy, including oil, natural gas, electricity, coal, nuclear energy and renewables;

environmental protection, including a particular focus on reducing greenhouse gas emissions – especially CO2 – which lead to climate change; and

sustainable economic development which both relies on and contributes to long-term energy security.

As many countries outside the IEA have become major players in world energy markets, the Agency increasingly engages with key consumers and producers, including China, India and Russia.

The IEA also works closely with private sector and industry representatives to promote public-private partnerships, particularly through the IEA Energy Business Council.

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Respond promptly and effectively

World energy markets continue to be vulnerable to disruptions precipitated by events ranging from geo-political strife to natural disasters. As oil demand and imports continue to grow, the IEA emergency response capability will remain essential.

But energy security concerns go beyond oil. The Ukraine-Russia gas dispute in January 2009 caused the largest natural gas supply crisis in Europe’s history. With increasingly integrated electricity grids, blackouts can cascade and affect multiple economies simultaneously. The IEA is working to identify measures to prevent and react to supply disruptions across all sources of energy.

To provide better understanding of the dynamics and trends in energy markets in the past, present and future, the IEA offers the latest analysis in its reports, papers and publications, including:

monthly Oil Market Report;

World Energy Outlook; and

Medium-Term Market Reports for Oil, Gas, Coal, and Renewable Energy.

The IEA also compiles and provides comprehensive, timely and authoritative energy data and statistics to underpin the Agency’s work. As a founding partner of the Joint Organisations Data Initiative, the IEA co-operates with countries around the world to improve the quality, timeliness, transparency and coverage of energy information.

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The IEA in ACTION: BUILDING a CLEANER, more EFFICIENT energy FUTURE GLOBALLY

Improve energy efficiency

Meeting future energy demand while substantially reducing associated greenhouse gas emissions will require nothing short of an energy revolution. The energy sector currently accounts for approximately 65% of CO2 emissions, which directly contribute to climate change.

IEA findings show there is significant potential to decouple economic growth – and energy production and use, in particular – from its proven environmental impacts. The Agency continues to advise governments on developing effective policies to:

reduce energy demand;

choose cleaner energy sources; and

deploy the best available energy technologies and practices.

The first step is to improve energy efficiency. Such measures not only cut energy consumption and CO2 emissions, but are often low-cost, immediately available, and relatively easy to implement. IEA research shows that energy efficiency improvements in many countries lag below levels where they could and should be.

The IEA Secretariat has hosted the International Partnership for Energy Efficiency Co-operation (IPEEC) since 2009 to encourage greater uptake of energy efficiency policies worldwide.

Since 2008, the IEA has proposed 25 energy efficiency recommendations which could, if implemented globally and without delay, reduce worldwide CO2 emissions by 17% per year by 2030 – equivalent to roughly 1.5 times the amount of current US annual CO2 emissions. An update to these recommendations was endorsed at the 2011 IEA Ministerial Meeting.

Since 2011 the IEA has also provided an annual progress report to the Clean Energy Ministerial, tracking key technological developments and clean energy deployment progress among countries.

Work to deploy low-carbon technologies

Low-carbon technologies will have a crucial role to play to assure future energy supplies and offset energy’s environmental impact. In addition to energy efficiency, many types of renewable energy, carbon capture and storage (CCS), nuclear power and new transport technologies must be widely deployed to reach emission goals. Following a G8 request to translate policy objectives into action, the IEA scenarios in Energy Technology Perspectives and the World Energy Outlook set out the mix of technologies required to achieve specific climate change objectives. The most recent series of IEA technology roadmaps provides even greater detail for individual technologies and sectors.

For almost four decades, the IEA energy technology collaboration network of “Implementing Agreements” has enabled a pooling of resources among governments, academia, industry and other organisations to focus on research, development, demonstration and deployment of energy-related technologies. The 40 Implementing Agreements, which include industry and academic participants from both IEA member and non-member countries, cover topics ranging from concentrated solar power to carbon capture to wind energy to nuclear fusion.

More recent IEA technology initiatives include the Electric Vehicles Initiative, the Global Fuel Economy Initiative (with the International Transport Forum and the UN Environment Programme), and the International Smart Grid Action Network to accelerate the deployment of next-generation power grid technology.

The IEA Carbon Capture and Storage Unit works on the contribution that technologies for capturing and storing carbon dioxide can make to sustainability in fossil-fuel electrical power plants and industrial processes.

And since 2010, the Low-Carbon Energy Technology Platform brings together private and public sector stakeholders to share experience and compare progress on technological and deployment progress.

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The IEA TOMORROW: TACKLING energy CHALLENGES together... WITHOUT BORDERS

Seek global solutions

In a world where non-OECD countries will account for nearly 90% of the growth in energy demand and all growth of CO2 emissions to 2035 under currently pledged policies, the IEA can only find solutions to future energy challenges by engaging globally. Co-operation with non-member countries is not new to the Agency, as a number of activities and initiatives have required close collaboration, including:

energy technology collaboration through Implementing Agreements;

joint workshops, conferences and other co-ordinated projects;

training programmes and seminars;

global forums including IPEEC, the technology platform, etc.;

secondments of non-member government officials and experts to the IEA;

meetings with non-member government officials at all levels; and

further efforts to intensify on-going co-operation with key non-member countries, including joint studies, country and sectoral reviews.

Yet even greater engagement and co-operation will be needed in the future. The IEA World Energy Outlook shows that even if OECD member countries cut their CO2 emissions to zero, this reduction would not be sufficient to achieve the levels required to stop global warming. In short, climate change – and other pressing energy challenges – must be tackled globally, not separately or regionally.

While each country has its unique concerns, all are affected by shortages of supply, volatile prices, pollution and the threat of climate change.

Looking forward, the IEA will bring governments, industry, other international organisations, non-governmental organisations and individuals together from around the world to learn from each other’s experiences, to share expertise, to maximise resources and to find energy solutions.