Understanding International Energy Initiatives: APEC view

1
Understanding International Energy Initiatives
APEC view
Serguei Popov
6th International Conference on Asian Energy
Cooperation Forecasts and Realities Irkutsk,
September 9-11, 2008
2
Outline

• APEC energy issues
• IEI and it elements
• drivers for cooperation
• Case study analysis
• factors affecting the progress of IEI
• Implications

3
What is APEC?
Established in 1989, APEC is 21
economy non-binding initiative with goal of free
and open trade and investment in the region

• 42 percent of the worlds population
• 55 percent of the worlds GDP
• 57 percent of the worlds energy consumption.

North America
Northeast Asia
Southeast Asia
Latin America
Oceania
4
What is APEC as energy consumers
Six of ten top energy consumers in the World are
APEC members
Source BP statistical Review of World Energy,
June 2008
5
What is APEC as net energy exporters
Three of top ten energy exporters in the World
are APEC members
Source BP statistical Review of World Energy,
June 2008
6
What APEC Energy Ministers talk about at their
meetings?
From the 8th EMM Darwin Declaration (May 2007)

• Energy security (oil security in particular), is
  fundamentally linked to economic, social, and
  environmental well-being
• Challenges of meeting rapidly growing energy
  demand
• Strengthen emergency preparedness for short-term
  energy supply disruptions
• Addressing the challenges of energy security
  sustainable development should be based on
  well-functioning markets

7
Darwin Declaration of the 8th EMM (2)

• Environmental challenges, in particular air
  quality and climate change objectives
• Concerned response to promote energy efficiency
  and conservation
• Development deployment of cleaner and more
  efficient technologies
• Addressing barriers to energy investments and
  facilitating cross-border energy trade

8
Conventional wisdom

• Collaborative energy-related initiatives
  ongoing in the APEC region are numerous, often
  inter-linked, and innately difficult to
  comprehend
• People are generally dissatisfied with
  initiative progress

9
How this issues are being addressed ?
Understanding International Energy
Initiatives APERC project was undertaken in
2006-2007

• Energy-related cooperative activity within APEC
  region
• Unilateral, bilateral multilateral approaches
• First phase scope and elements
• Second phase looking forward

10
Elements of IEI Phase I
11
Initiatives Database

• Major and representative initiatives
• Indicators for purposes, actors, and modes
• Short mission, objectives, and mechanisms
  descriptions
• References to responsible entities and
  information source

12
Understanding by introducing working definition
What are Initiatives?
We see an initiative as a coordinated
multilateral strategy with explicit goals,
which is voluntarily undertaken to address the
market-external needs or ambitions of diverse
partners. An initiative often evolves over time
as such needs or ambitions change.
13
Energy issues and initiatives major purposes

• Secure energy supply/export
• energy demand growing steadily (ex. Japan)
• increasing net energy import dependency

• Minimise environmental footprints
• energy- related pollution and damage
• climate change concerns over GHG emissions

14
Structuring the Initiatives
15
Actors
APEC, ASEAN, UN Family (IAEA, UNFCCC), OECD,
WB, ADB, Energy Charter Treaty, G8,
APEC member economies
Business
Non-Profit Organisations (professional,
academic , funds, etc)
16
Initiatives life cycle Responsibility
Goals reached!
Inception
Launch
implementation stage (institutional phase)
Partnership building
Refining mission, objectives, mechanisms
Amendment of objectives and mechanisms
New initiatives started
No support obtained
No consensus reached
No goals achieved
Working level
Secretariat management and evaluation
Policy level
monitoring and decision making
initiative
Actors/parties/stockholders
17
IEI drivers for cooperation
18
Infrastructure

• Driving forces
• Continuously increasing energy demand, net
  imports
• Insecurity of oil supply (little stockpiling)
• Environmental footprint of energy consumption
• Insufficient penetration of NRE technologies
• High project costs for single economy
• Weak oversight of nuclear fuel cycle
  (proliferation issue)
• Appealing synergistic effects of larger gas and
  power networks
• redistribution of environmental impact
• reduction of OM cost
• economies of scale
• increased reliability of supply
• domestic access to international gas pipelines

19
Financial Mechanisms

• Driving forces
• High transaction costs
• Insufficient capital (start-up) funding
• Low and slow rate of return
• Market is unstable for investment

20
Regulatory framework

• Driving Forces
• 1 -desire to improve relations
• with neighbours
• (peace dividend)
• -prospect of development
• through macro-level synergies
• in trade
• (harmonising standards)
• 2 -abuse of commons
• -lack of international accountability
• -limited reach of own policy goals

21
Regulatory framework

• Driving Forces
• 3 Vary by actor, but generally
• analogous to government
• motivations.
• Manifestations include
• -lobbying (unidirectional)
• -formations of partnerships
• for a united front or to exploit
• comparative advantages

22
Research and Development

• Driving forces
• Import dependency (new energy sources/technologies
  )
• Energy efficiency
• Global consensus on an international issue that
  requires the integration of the international
  scientific community to solve ( i.e. nuclear
  energy, climate change)

23
Information Sharing

• Driving forces saving money and time
• Inaccurate data and information on both domestic
  and international levels
• Lack of transparency in market signals
• Language barriers
• Inconsistent energy units

24
Education and Capacity Building

• Driving forces
• Shortage of qualified human resources in
  governance, management, and the workforce
• Need for continued awareness of new ideas and
  upcoming issues on the international energy stage
  
• Poor communication with general public concerning
  energy issues

25
SummaryPhase I
26
Key factorsaffecting success of initiatives

• Political consensus/will
• Commercial viability
• Social support/acceptance

Initiatives both change (consequences of) and
reflect (prerequisites for) the factors strengths
27
Two levels different tasks

• Policy level
• goals and approaches are proclaimed
• positive results expected soon

• Working level
• clear problem understanding, negotiating costs
  and benefits for each party
• dual responsibility (to parties and to the policy
  level)

28
Challenges free riding, sensitivity

• Cost/benefit sharing vs. cherry picking
• Intellectual property (technology
  commercialisation and transfer)
• Commercially/nationally sensitive information
  (data confidentiality)

29
Challenges human resources

• Conflicts
• policy makers needs fast results vs. long process
  of discussions to reach consensus
• capacity building vs. staff fluidity and
  rotation organisation management
• Personality importance
• personal characteristics (moral principles,
  philosophy, etc.) are important as initiatives
  are creative by nature and operate at the
  frontier of international cooperation
  globalisation

30
The first rule of theInternational Energy
Initiative

• Hardness of the initiatives approach is in
  direct proportion to the trust built among
  parties

Education Capacity Building
Research Development
Infrastructure
Information Data Sharing
Regulatory framework
soft approach
hard approach
31
The second rule of the International Energy
Initiative

• Quantity of IEIs is in inverse proportion to
  the hardness of the initiatives approach

32
Case study analysis Phase II
33
Case Study Analysis Methodology

• Background of IEI
• Mission
• Milestones/Development
• Factors affecting the progress of IEI
• Political
• Economic
• Business (private / public)
• Social
• Organisational (management of IEI)

34
Case studies selection

• Purposes of IEIs
• Enhance security of energy supply
• Minimise the negative environmental impact of
  energy consumption

35
Implications
36
1. Implications

• Cooperation of energy business and government is
  particular important for IEIs which deal with
  energy infrastructure, regulation , or finance
  while their expected costs and benefits are often
  asymmetric.
• Much of perception on redundancy among IEIs stems
  from failure to understand and broadcast their
  own identity.
• Complex long-term IEIs can benefit from built-in
  facilities to amend ineffective mechanisms or
  objectives became irrelevant.

37
2. Implications

• Bold organisational management of IEI include (1)
  strong senior-level commitment, (2) access to
  sufficient financial resources, and (3) effective
  coordination.
• Disconnect between mission/objectives and
  mechanisms implemented to address those goals
  lead to unsatisfactory progress for the IEI.
• Some areas of energy development are better
  suited to IEI activity than others. Nuclear power
  development and nuclear fuel cycle regulatory
  framework to address infrastructure investments
  are the most promising issues for international
  energy cooperation.

38
The tale presented is based on APERC reports
published in 2007 and 2008. These (and other)
reports are available at www.ieej.or.jp/aperc
www.ieej.or.jp/aperc
Thank youfor your attention!
39
??????????/?????????/??????? ?
???????????? ???????? ?????? (???), ???????? ?
En Group, ? ???????? ???????????? ?????????? ??
?????, ???? ? ???????? (JOGMEC) ?????????
?????????? ? ???????? ?????????? ???????? ???
?????????? ???????? ? ????? ??????????????
????????, ???????? ? ?????? ??????????????? ?????
?? ?????????? ??. ????????????? ????????? ???
???????????? ??????????? ???????? ????????
???????????? ????, ????????? ??????? ? ??????????
???? ??????, ? ? ?????????? ????????????????
?????????? ???????????? ? ??????, ?????????
?????????????? ??????? ????????? ?????? - ?????
?????. En Group ???????? ???????? ??????????
???????????? ???????? "?????", ?????????????
???????? "?????????????" ???????? ????????????
?????????? ?? ?????, ???? ? ???????? (JOGMEC) -
??????????????? ??????????, ????????? ? ???????
2004 ????. JOGMEC ???????????? ?? ???????????
?????????? ???????? ?????, ?????????? ????,
??????? ???????? ? ?????? ??????????? ???????? ?
??????. ?? ''??? ???'' 01.09.2008