World Energy Issues Monitor by ENG2 Solutions

For sustainable energy.

2013 World Energy Issues Monitor World Energy Council

2013 World Energy Issues Monitor Officers of the World Energy Council Pierre Gadonneix Chair Abubakar Sambo Vice Chair, Africa Liu, Tie’nan Vice Chair, Asia Arup Roy Choudhury Vice Chair, Asia Pacific/South Asia Younghoon David Kim Acting Chair, 2013 Congress, Daegu Leonhard Birnbaum Vice Chair, Europe José Antonio Vargas Lleras Vice Chair, Latin America/Caribbean Taha M. Zatari Vice Chair, Special Responsibility for Middle East & Gulf States Kevin Meyers Vice Chair, North America Marie-José Nadeau Chair, Communications & Outreach Committee Graham Ward, CBE Chair, Finance José da Costa Carvalho Neto Chair, Programme Committee Brian Statham Chair, Studies Committee Christoph Frei Secretary General

2013 World Energy Issues Monitor World Energy Council Copyright © 2013 World Energy Council All rights reserved. All or part of this publication may be used or reproduced as long as the following citation is included on each copy or transmission: ‘Used by permission of the World Energy Council, London, www.worldenergy.org’ Published 2013 by: World Energy Council Regency House, 1–4 Warwick Street London W1B 5LT, United Kingdom ISBN: 978 0 946121 20 5

2013 World Energy Issues Monitor

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Contents

Introduction

Assessing the Global Energy Agenda Analysis by Christoph Frei, PhD, Secretary General, World Energy Council

Assessing the Regional Energy Agenda Analysis of WEC’s Six Regions for Issues Maps

3.1 3.2 3.3 3.4 3.4 3.6 4.

Assessing Countries’ Energy Agenda Analysis of six selected countries 4.1 4.2 4.3 4.4 4.5 4.6

Africa’s Critical Agenda Asia’s Critical Agenda Europe’s Critical Agenda Latin America and the Caribbean’s Critical Agenda Middle East and North Africa’s Critical Agenda North America’s Critical Agenda

Colombia’s Critical Agenda Germany’s Critical Agenda India’s Critical Agenda Indonesia’s Critical Agenda South Africa’s Critical Agenda Switzerland’s Critical Agenda

Assessing the Global Agenda Feedback from our Future Energy Leaders (FELs)

Project Participation

9 11 13 15 17 19 22 22 23 24 25 26 27 29 31 33

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1 Introduction

Introduction Even with improvements in energy efficiency we expect global energy demand to double by 2050. This is the inevitable consequence of global population growth, global economic growth, continued urbanisation, as well as the resulting increased demand on mobility and other energy dependent services. During the same period we will need to reduce global greenhouse gas emissions by half if we want to keep a global temperature increase below two degrees Celsius. And, there are still 1.3 billion people without access to electricity. What seemed unimaginable two decades ago has become reality: energy is again on the top of the political agenda in many countries such as Japan, Russia and Germany, now becoming a priority for prime ministers and presidents. The post Fukushima nuclear future, the game changing shale gas, supply uncertainty and price volatility related to the “Arab Decade”, the shift of demand to East, tumbling solar cell prices and related trade disputes between Europe and China or the US and China, climate framework uncertainty, and global recession are rocking the foundation of what many believed two decades ago to be a steady roadmap into our energy future.

The global energy sector will need to invest half of current world GDP over the next two decades in order to address these challenges and expand, transform and adapt the energy infrastructure. In the absence of global agreements and regulations on energy or climate policy that would guide such a transition, the main policy decisions remain in the hands of national and sub-national policy makers. The World Energy Council supports policymakers around the world in their efforts to develop adequate energy policy frameworks capable of attracting the needed investments and balancing between the conflicting objectives. By developing our World Energy Trilemma framework, supported by our annual Energy Sustainability Index, we are able to provide a coherent framework to help address the challenges of what we call the “World Energy Trilemma”. The World Energy Council’s definition of energy sustainability is based on three core dimensions - energy security, social equity, and environmental impact mitigation. We translate the Energy Trilemma to national contexts and benchmark progress towards the Trilemma objectives over time to enable policymakers to deliver a sustainable energy system for the greatest benefit of all.

2013 World Energy Issues Monitor

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Decision makers face a multitude of choices and possible actions, some of which will succeed through sheer market forces while others require coordination between market signals and policy frameworks. The breakthrough of shale gas in the US exemplifies the market forces driver and the slow progress of energy efficiency measures, in a context where energy prices are subsidised, illustrates the potential role of policy drivers, or what can happen when the signals are not strong enough. We can only advance a meaningful dialogue among the Global Energy Leaders Community if we focus on a set of clearly identified priorities. WECâ&#x20AC;&#x2122;s World Energy Issues Monitor provides a snapshot on what keeps Energy Ministers, CEOs and leading experts in over 90 countries awake at night and therefore defines the World Energy Agenda and its evolution over time.

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Figure 1 Figure Issues Monitor: highlighting most rapidly moving Global Map 1 – WEC’s 2013 World Energy World Energy Issues Monitor

issues (CCS, nuclear, unconventionals) and most robust action issues Global, 2012

uncertainty

Middle East dynamics

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large scale accidents Middle East

regional energy dynamics nuclear innovativeinterconnection subsidies regulation ccs renewable trade barriers smart biofuels EU cohesion energies sustainable grids capital business electric cities markets US policy cycle commodity storageenergy water large scale unconventionals nexus hydro prices large

hydrogen economy

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climate recession framework

vehicles terrorism currency uncertainty

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World Energy Issues Monitor Global, 2012

electric energy

energy prices

Global China India

recession

scale accidents

energy energy efficiency prices

need for regional energy China India action nuclear innovativeinterconnection subsidies regulation corruption renewable trade barriers smart biofuels EU cohesion energies sustainable grids capital business cities energy markets US policy cycle energy water efficiency large scale macro geopolitics business vision & impact nexus hydro economic & regional environment technology Russia energy need for energy affordability poverty vehicles terrorism poverty currency uncertainty

energy affordability

talent

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talent

corruption World Energy Issues Monitor Global, 2012

impact

macro economic

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high >> UNCERTAINTY << low

business critical vision & environment technology uncertainties

geopolitics & regional

climate framework

Middle East

Global dynamics “action issues”). The low impact/low recessionuncertainty How to read the issue map issues include these of perceived lesser The maps are developed from an annual survey electric energy commodity importance which also include the storage prices “weak of our global membership network, which electric unconventionals prices large scale signals”. These may be issues that are still accidents vehicles terrorism includes thirty-six issues covering regional currency energy badly understood and need further investigation. China India nuclear innovativeinterconnection uncertainty subsidies macroeconomic risks, geopolitics, business hydrogen regulation The smart urgency of anrenewable issue is proportional to the economy trade barriers environment as well as energy vision to EUprovide biofuels energies sustainable cohesion size grids of itscities bubble. Finally, capital issues are grouped in energy markets a high-level “helicopter perspective”. USItpolicy reflectsbusiness cycle energy water efficiency four different categories, which are represented large scale nexus the views and insights of Ministers, CEOs, and hydro in different colours: macroeconomic risks Russia energy energy affordability leading experts in over countries thatpoverty Brazil 90 need for (orange), geopolitics and regional issues action represent the WEC community. The responses talent (purple), business environment (blue), and corruption are translated into issue monitors with the three energy vision & technology (green). In addition weak assessed dimensions as its axes (see Figure 1). signals to the critical uncertainties, issues of particular The three dimensions are the impact of an issue macro include interest for dialogue these with geopolitics business vision &rapid impact economic & regional environment technology on the energy sector, the degree of uncertainty evolution over time and these with large related to its impact, and the urgency with which differences across regions. we need to address the specific issue. ccs

Issues with high uncertainty and high impact (in the north-eastern quadrant) are the “critical uncertainties” which keep Energy Leaders most awake at night as there is no clear path of action. These issues need to be part of the Energy Leaders’ dialogue and scenario analysis. The issues on the high-impact/low uncertainty side are issues that keep Energy Leaders most busy (south-eastern quadrant,

The arrows in fig. 3 illustrate the evolution of The illustrate the evolution of selected issues and issues clusters over three years. selected issues and issues clusters over three Regionalised issuesissues mapping shows years. Regionalised mapping in fig. 2the difference in regional perceptions with the global show the difference in regional perceptions with perception in the centre. the global perception in the centre.

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2 Assessing the Global Energy Agenda by Christoph Frei

This years’ issues survey has been conducted in the context of a global recession that is symbolised by the lowest GDP growth in China for a decade, only 2% real growth in Brazil and, the Euro-crisis and related currency uncertainty. The geopolitical interests were focused on continued tensions and conflict in the MENA region, a new government in Egypt, a new old President in Russia, US elections and a new Chinese government, as well as the accentuated trade disputes regarding renewables and airline emissions. Closer to the energy business there were ample headlines related to the continued boom of unconventionals, numerous reports on companies (solar in particular) struggling for survival or going into insolvency. One year after the Fukushima accident the public debate continues on the nuclear front. The Doha Conference of Parties has prolonged the Kyoto protocol until 2020, but in absence of the largest emitters. Finally, UN Secretary General Ban Ki-moon has called energy “the golden thread that runs through development” in the UN declared year of sustainable energy for all, bringing energy back to the centre of the development discussion, 20 years after the Rio Earth Summit.

WEC’s latest Issues Monitor reflects the impacts of this backdrop on the leadership of the energy sector. The four top insomnia issues are the continued uncertainty towards a future climate framework, the fear of a lack of political stability in the Middle East / North Africa region, the high energy price volatility, as well as the global recessionary context, which has replaced post-Fukushima nuclear that was among the key critical uncertainties. It is worth noting that energy price volatility is much more than just the question of low natural gas prices and high differentials between regions that highlight transport bottlenecks, particularly to Asia. The coal to gas substitution in the US electricity mix has resulted in a higher gas than coal share for the first time in US history, with the consequence that US greenhouse gas emissions have decreased. This development has led to a push of discountpriced coal from the US to Europe where it has changed the competitiveness of the companies who took advantage of the changing dynamics compared to those who were locked into natural gas at European prices. This development has however pushed up Europe’s greenhouse gas emissions further away from previously reducing levels. Meanwhile,

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Australia, on the way to become one of the worldâ&#x20AC;&#x2122;s largest LNG exporters, has redirected its interest from North America to Asia and Canadaâ&#x20AC;&#x2122;s infrastructure companies have also started watching out for Asian customers. Price volatility is also about solar, where module costs have collapsed since 2008 from over 4.5 $/Wp to as low as 0.6 $/Wp. This is largely driven by low-cost production in China but has been accentuated by the fact that 2012 demand has not kept up with expectations and absorbed less than half of the global manufacturing capacity of about 100 GWp.

Where Energy Leaders have changed their views most radically The issue with the most dynamic change over the past years is carbon capture, utilisation and storage (CCS/CCUS) which is almost flying off the map: without a formal price for CO2 emission avoidance this technology is at risk of simply being seen as adding cost and bringing down energy efficiency. This must be of highest concern as we lock ourselves into a high CO2 emission future for the next 40 to 50 years with every new coal and other carbon emitting plant that is built. Only a combination of CCS/CCUS and, possibly,

a partial substitution of coal input with solid biomass can mitigate CO2 emissions of existing plants. The issue that is most clearly identified as a game changer, with its solid trend towards the action space, is unconventionals. This is about unconventional oil (shale oil, tight oil, beyond Canadian oil sands or Venezuelan heavy or extra-heavy oil) as much as it is about the still-hot topic of shale gas. The technology revolution is continuing and while further progress is needed to address the energy-water nexus and the costs associated with mitigating greenhouse gas emissions, production volumes continue to increase. This has given rise to North American energy supply independence becoming a possibility within less than a decade. Such supply independence is however put into perspective as crude markets, and therefore prices are global and US prices will continue to depend on international developments. Meanwhile, we do not see other regions replicate the US success at the same speed for a number of reasons including geological, legal, logistical, financial and issues related to the water nexus. However, projects are being developed around the world which will eventually change the global supply map.

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Figure 2

World Energy Issues Monitor Map –Monitor geographical-tracking 2013 WorldGlobal Energy Issues Global, 2012

Figure 2 – Global Map Geographical Tracking climate framework issues tracking color: climate framework energy water nexus

World Energy Issues Monitor Global, 2012

uncertainty

MENA

NAm G20

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Africa Europe MENA

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weak weak signals signals

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critical framework gas prices make climate nuclear more expensive Post Fukushima nuclear remains a closely NonOECD issues tracking color: uncertainties and therefore not an attractive option and observed and issue. Last year’s map climatedebated framework energy water nexus GermanyLatAm is continuingG20to implement its saw nuclear jump into the high uncertainty decision of the Energiewende, with space. This year’s position of nuclear on the Europe OECD Asia MENA increasing concern that the transition could monitor shows that uncertainty is almost back NAm Africa fail if it comes at too high a cost. to where it was before Fukushima. However, a slightly lower perceived impact indicates that Africa What Asiakeeps Energy Leaders the nuclear renaissance has been slowed LatAm down – a message that also came out of most busy WEC’s World Energy Perspective: Nuclear NonOECD NAm G20 Renewable energies and energy efficiency Energy One Year After Fukushima report. have stayed dominant MENAissues in the action OECDa reRecent signals from Japan suggest need for energy water nexus space. Renewables are not only drivenaction by evaluation of the role for nuclear in the Europe climate policy as shown by the weak country’s energy mix, even though only two out regional correlation between climate of fifty-four plants have resumed operation. weak signals framework uncertainty and renewables. China has cancelled 2nd generation impact plants that Renewables are seen as a contribution to are not already under construction and is diversity and security of supply as well as a concentrating on 3rd generation along the critical enabler to enhancing access for the coastline. In India we see continued local 1.3 billion without access to energy. Large manifestations against nuclear and there are hydro is moving into the action space, active discussions about the right share of explained by huge un-used potential in nuclear in both France and South Korea. central Africa, Latin America, Russia and Meanwhile, more supportive signals for nuclear Canada. Regional interconnection, which come from countries including the UAE and is often the feasibility basis for large Saudi Arabia, with recently announced energy projects, is also robust in the action ambitious 2030 objectives. In the US the low space.

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World Energy Issues Monitor Global, 2012

uncertainty uncertainty

issues tracking color: ccs energy efficiency

UNCERTAINTY

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Figure 3 World Energy Issues Monitor Global Map – time-tracking Global,Monitor: 2012 Figure 3 – WEC’s 2013 World Energy Issues illustration of regional differences

renewable energies issues tracking color: unconventionals ccs

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2009

energy efficiency nuclear

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What should make us think issues tracking color: ccs further… energy efficiency

In summary, many of the issuescritical that were emerging over the past years uncertaintieshave stabilised their position or confirmed their trend, both up and down: 2011

renewable energies

2009 unconventionals Last but not least, it is interesting to note that nuclear 2011 concerns for climate and water ccs issues seem not to be shared by the same people. Many of the regions that are mostly concerned about 2011 the energy-water nexus are among the least concerned when it comes to climate framework uncertainty. This should make us think, acknowledging the IPCC’s statement that the first thing that we will see from a changing climate is a changing availability of water. Or, does it simply mean that the regions most weak concerned about water and less about climate signals framework uncertainty have simply accepted impact that it is all about adaptation?

Climate framework uncertainty

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CCS/CCUS

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Renewables or energy efficiency

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Unconventionals

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Among the big question marks that hasn’t settled yet remains what will happen to nuclear post Fukushima. unconventionals 2011

Making sense of the energy 2011 sector is renewable fundamentalenergies to the wealth of nations and 2010 energy this report is 2009 one of the only2009tools available 2010 efficiency to policymakers to enable them to understand the global, regional and need for national trends affecting their decisions. I action pledge the support of the World Energy Council to those tasked with taking the hard decisions required to transition to a better future.

nuclear

2009

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3 Assessing Regions’ Critical Energy Agenda – Analysis of WEC’s six Regions for Issues Maps 3.1

Africa’s Critical Agenda While global recession has affected Africa heavily, the economic growth and energy poverty/access issues remain major concerns. They have been affecting the continent because its electricity demand has grown, and energy security has tightened as the result of the lack of the required investment and increasing power shortages across the continent. In addition to this, with economic cooperation with China and India intensifying, more exploration activities in a number of countries, particularly in Southern, West and Central Africa are turning out positively and have unveiled huge potential of hydrocarbon prospects and new potential markets. In contrast climate change issues have been considered as a lower priority on the overall agenda. Middle East dynamics and global recession issues are coming as high critical uncertain issues to Africa as a continent. The continent has seen trade barriers and terrorism as similarly uncertain issues as both of them have been strongly affecting the sustainable development of the African economy as a whole.

Large scale hydro and regional interconnection are the issues that are highly uncertain and have seen significant changes recently. Large scale hydro is considered as the most inexpensive, efficient and affordable form of renewable energy, with a large potential yet to develop in Africa (only 7% potential developed – the lowest rate of the world’s regions). While uncertain it seems many policymakers and energy experts have voiced the importance of large scale hydro development, along with taking a realistic approach to forming and developing projects, to build necessary capacity and infrastructure, and to implement them as timely as possible. Otherwise it would take such a long time before coming on stream, whilst energy demand is catching up much faster than expected leading to a widening gap between supply and demand for electric energy. In addition to large scale hydro, regional interconnection is gaining ground with the development maturity of the five power pools. Moreover, with huge gas reserves and its new discoveries, further development and prospects of LNG markets and cross-border pipelines are anticipated. Energy efficiency, renewable energy, energy prices and energy poverty are also viewed as requiring bold immediate actions in the issues map. Energy poverty, in particular,

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4 10Figure Regional Map â&#x20AC;&#x201C; Africa

World Energy Issues Monitor Africa, 2012

critical uncertainties

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Figure 4 Regional Maps - Africa World Energy Issues Monitor Africa, 2012 US policy currency uncertainty

EU cohesion

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interconnection energy terrorism energy water efficiency China global recession nexus India innovative regulation large scale energy hydro poverty commodity prices energy need foraffordability energy capital renewable action prices markets energies sustainable cities energy efficiency

corruption macro economic

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World Energy Issues Monitor talent Africa, 2012

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has been an immediate priority for Africa as ccs electric vehicles the population with access to electricity is no Brazil large scale electric accidents more than 30% in Sub-Saharan Africa. EU cohesion storage

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trade barriers regional interconnection terrorism energy water China global recession nexus India innovative regulation large scale energy hydro poverty commodity prices energy affordability East energy capitalMiddle trade renewable dynamics prices regional markets barriers sustainable energies

climate framework

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Middle East trade dynamics regional barriers business geopolitics vision & climatemacro interconnection economic & regional framework environment technology terrorism energy water China global recession nexus India innovative regulation large scale energy hydro poverty commodity prices energy affordability energy capital renewable prices markets energies sustainable cities

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Figure 5 Regional Map – Asia

Figure 5 – Regional Map - Asia World Energy Issues Monitor Asia, 2012

critical uncertainties

World Energy Issues Monitor Asia, 2012

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UNCERTAINTY

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electric storage

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ccs

climate framework critical climate

global uncertainties framework recession global

electric storage

recession currency uncertainty Middle East currency renewable biofuels uncertainty dynamics Middle East nuclear energies renewable biofuels dynamics nuclear vehicles energiesCommodity energy electric Commodity prices terrorism energy electric vehicles subsidies energy water prices terrorism subsidies energy water China large scale nexus large scale unconventionals China accidents nexus innovative trade India unconventionals accidents innovative trade India regulation barriers regulation barriers energy Sustainable energy regional regional Sustainable poverty poverty interconnection talent talent cities interconnection cities

hydrogen economy

ccs

large scale largecapital scale capital energyenergy markets hydro hydro markets affordability affordability

energy prices energy prices

energy energy efficiency efficiency

smartsmart gridsgrids

US policy US policy BusinessBusiness cycle cycle

EU CohesionEU Cohesion Russiaweak corruption corruption

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World Energy Issues Monitor Asia, 2012

3.2 Asia’s Critical Agenda

macro

geopolitics

business

vision &

economic & regional macro environment technology geopolitics business vision & economic & regional environment technology

critical uncertainties

viewed as critical, as Saudi Arabia climate like may export more oil to states electric framework storage The region has witnessed strong China and India whereglobal there would recession and rapid economic growth in be expected much demand for currency energy uncertainty prices East renewable some of its states, including China those resources. AsMiddle a result, biofuels hydrogen dynamics nuclear energies economy Commodity energy and India. Such rapid growthterrorism has electric vehiclesSaudi Arabia might be shifting its prices subsidies energy water scale created some problems like energy away from European China large nexusexports unconventionals ccs accidents innovative trade India regulation barriers shortages and energy gapsenergy states, and also Japan and Korea regional Sustainable between “the haves” and “thepoverty interconnection may talent be importing cities more LNG from large scale capital energy have-nots.” The renewable energy hydro markets energy overseas like Qatar.efficiency To smartsources grids affordability growth, pilot Emission Trading meet the energy demand of their US policy Business System (ETS) and cycle energy continuously growing economies, EU Cohesion Russia efficiency targetscorruption in China, as well India and China need will forfurther as India’s Perform Achieve Trade increase the share ofaction imported Brazil (PAT) Energy Efficiency coal and hence rely on cheap weak Certificates Trading Scheme may energy sources to fuel their own signals also have someimpact influence over economicmacrodevelopment. Thisvisionin& geopolitics business economic & regional environment technology their future energy policy and turn, has negative impacts on economy in this part of the world. climate change although both countries have set their targets. Energy prices, climate framework, global recession and Middle East dynamics are considered as the most critical uncertainty issues for the region. Recent developments in the Middle East are certainly uncertainty

<< low

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India has mandated the early retirement of inefficient coal-fired power plant in their National Action Plan on Climate Change, while in China, according to U.S. EIA statistics & analysis, the government's 12th Five-Year Plan calls for a production ceiling of 4.4 billion short tons 3.9 billion metric tons and capacity ceiling of 4.1 billion metric tons by 2015 in an attempt to control the production growth of coal. In this part of the world, issues that have seen the highest changes are electric storage and smart grids which have gained ground as people may expect that technology to solve electricity shortage of some states. This is followed by currency uncertainty and global recession, both of which have been quite affected by the European economic crises. CCS, on the contrary, has continued to lose its ground and as a result, its importance on the overall issues map. Energy subsidies and energy efficiency are issues that are viewed by politicians and energy leaders in the region to require action. Some countries have experienced rapid electricity demand growth under their distorted energy price structures where the electricity tariff has been kept low, below its production cost,

and therefore does not properly reflect the cost of all energy resources for electricity. This is basically due to government regulation. Even worse, the incentive for enhancing energy efficiency of the high energy intensive industries does not work well under such electricity price regulation schemes, with subsidised and hence cheap electricity prices, as it creates disincentives for investment. To overcome this dilemma, governments in the region should build up a cost-reflective energy price policy to attract voluntary energy saving from consumers which in turn could lead to a reduction of imports of primary energy sources. In addition to energy efficiency, the two issues requiring action are smart grids and sustainable cities models as they may deal with increasing demand for electricity and shortage of electricity supply issues more effectively. While not strongly represented on the issue map for its actions, energy poverty in the South Asia and Pacific region needs to be dealt with most immediately.

2013 World Energy Issues Monitor

Figure 6 Regional Map – Europe

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Figure 6 – Regional Map – Europe World Energy Issues Monitor WorldEurope, Energy 2012 Issues Monitor Europe, 2012

innovative innovative regulation regulation

currency

energy

scale scalehydro

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Brazil energy energy poverty poverty energy water

large largescale scale accidents accidents Russia

Russia

renewable renewable energies

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energies

China India

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signals trade barriers barriers nexus corruption energy water nexus corruption

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energy affordabilityUS policy large affordability large

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nuclear nuclear energy energy subsidies regional subsidies smart grids regional smart grids interconnection interconnection capital markets capital markets

currency uncertainty uncertainty biofuels

energy energy efficiency efficiency

electric Cohesionelectric EUEU Cohesion storage storage

electric electric vehicles vehicles

Business Business cycle cycle

terrorism

trade

energy energy Middle MiddleEast East prices prices global global dynamics dynamics recession recession unconventionals unconventionals

commodity commodity pricesprices

hydrogenhydrogen economy economy terrorism

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3.3

Europe’s Critical Agenda ccs

Energy consumption has been shrinking in Europe in particular in the energy commodity intensive industries. This has led to an prices over-supply of energy, and a weakening of the profitability of investments already Business undertaken. Climate framework cycle is quite hydrogen an economy uncertainty, since currency no significant terrorism uncertainty progress has been made with the ETS US policy energy which has not sufficient biofuels provided affordability large scale incentives forBrazil investors with no goals hydro energy trade beyond 2020. poverty A low carbon price does barriers water not supportenergy the long-term goals of GHG nexus corruption gas emissions, making CCS or more weak signals efficient gas power plants “lessinvestable.” The increasing impact share of renewables in the total electricity production also fuelled a debate about electric system’s upgrading and ancillary cost due to increasing technical and market integration. Shale as development in Europe is much contested out of environmental concerns underlining the uncertainty

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critical potential importance of and dependency uncertainties on gas imports in the future. climate framework

energy The two top Middle critical uncertainties in East prices global dynamics Europe are the climate framework and recession unconventionals energy efficiency. The climate roadmap innovative energy electric CohesionEurope to describe the future regulation2050EU efficiency helps storage nuclear large scale electric obligations moreenergy precisely. However, the accidents vehicles subsidies smart grids regional uncertainty is still high as the 2012 EUinterconnection Russia capital markets (*1) Energy efficiency Directive does not renewable sustainable energies provide any ambitious binding incentives. cities China India As a result, the achievement of final need is for objectives is doubtful. While Europe action talentalso in the midst of an investment cycle in order to replace old generation assets, the fact that some local consumers have been paying for highly polluting and macrothegeopolitics business vision & economic & regional technology inefficient power plants thatenvironment are required to flexibly cope with unstable power supply (which typically happens in cold winters), while promoting renewables at the same time seems to go against the overall goal of climate agenda.

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One of the highest change issues is unconventionals i.e. the use of and the generation of electric energy from unconventional energy sources, such as shale oil and shale gas. While the shale gas development has been much contested in many European states, low gas prices have continued in the US. If this is the case, the economic impact of the unconventionals could be felt in two ways: Firstly, as a pressure on the gas prices in the European market, and consequently it would also add pressure on the existing long-term contracts with price indices that do not reflect changes in market prices for natural gas. Secondly, due to the relatively cheaper gas of the US, some large gas-consuming companies are considering building their new industrial sites in the US, leading to lower demand for natural gas in Europe. Nuclear is another issue that has changed significantly, which has lost importance, although many European countries have taken nuclear as part of the solution for climate change equation. A declining economic outlook for Europe, however, has also slowed down the progress of developing new nuclear projects. With shale gas becoming more available in the US, the coal exports to Europe have increased significantly from 2010 to 2011. The US continues to become a global coal supplier, especially to Europe.

According to leading energy experts and policy makers, the following issues require actions to be taken. First, regarding renewables, some renewable energy producers are in economic trouble because of the economic downturn and retroactive cuts of the European promotion schemes such as feed-in-tariffs. These schemes should be more aligned with each other and with the internal European market. Second, as far as Russia is concerned, it would be necessary to establish price-indexed formulas for natural gas imports without compromising the objectives of long-term gas contracts, i.e. to find a balance between competitive gas prices and secure delivery/supplyrelations. Third, with regard to China, as it has become an enormous energy consumer (which affects European energy markets and prices), Europe must get ready for it by reducing the fossil fuel demand in the long term, this may be encouraged by a strong price signal for CO2. (*1) Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC

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Figure 7World Regional – Monitor Latin America EnergyMap Issues Figure 7 Latin America, 2012 Regional Map – Latin America

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critical uncertainties critical uncertainties

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terrorism

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currency EU uncertainty Cohesion electric vehicles EU Cohesion electric

vehicles

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nuclear nuclear US policy

sustainable signals cities weak signals

Middle East trade global recession dynamics barriers renewable energies Middle East trade energy water nexus dynamics barriers biofuels corruption renewable energies energy water nexus electric storage talent biofuels corruption smart grids capital markets electric storage talent

US policy

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sustainable cities Russiaweak

energy prices

global recession ccs

energy poverty

smart grids

energy capital markets affordability

Brazil

regional energy affordability interconnection

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regional interconnection

energy prices

energy subsidies large scale China hydro India energy unconventionals innovative subsidies regulation Business cycle Business cycle energy efficiency energy efficiency

scale innovative unconventionals large regulation accidents large scale accidents

need for action need for action

macro geopolitics business vision & economic & regional environment technology macro geopolitics business vision & economic & regional environment technology

impact World Energy Issues Monitor Latin America, 2012

climate framework

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commodity prices large scale China hydro India

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3.4

commodity prices

impact impact

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Latin America & Caribbean’sglobal recession As far as resources are Middle East Critical Agenda trade

unconventional energy commodity energy prices prices concerned -- in particular dynamics for shale gas and oil shalelarge--scale finding barriers China hydro renewable energies India currency shale resources and developing these energy water nexus energy The global recession, energy prices, uncertainty subsidies biofuels corruption nuclear sources and then bringing the energy to unconventionals and development of EU electric storage talent innovative unconventionalsissues. Cohesion electric the market are two separate regulation large scale hydrovehicles systems are the major US policy smart grids capital markets hydrogen large scale Whilst in some countries of LAC, shale issues economy or concerns for leading energy accidents Business gas exploration be a more energy cyclemight experts and policymakers in the Latin affordability economic and hence a viable option, needinfor Russia regional American and Caribbean region (LAC). energy Brazil interconnection sustainable efficiency in hydro will become action others, investment cities Moreover, the region’s economy has energy more significant (e.g. Brazil). strong ties poverty with that of China as the weak

region signalsexports coal, oil, gas and other commodities to the country to guarantee impact their prosperity. With the nationalization of Repsol YPF oil company in Argentina (which turned Argentina from an exporter of oil and gas about a decade ago to an importer of much needed fuel,) state intervention (subsidies, price caps and export excises) may have led to hampering some investors for their willingness to invest in E&P.

The region’s critical uncertain issues are macro geopolitics business large scale hydro, prices, vision and& economic &energy regional environment technology commodity prices, all of which could impact have quite an influence in terms of energy security and the economy. In particular, the potentiality of large scale hydropower to meet future electricity demands would be more critical as it may offer competitive energy prices for the region. Commodity prices, including

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crude oil, may become another critical uncertain issue as it would be affected by struggling global economy or China/India economy which may not going as fast as previous years. As an issue on the energy policy agenda, climate framework does not seem to have such a high impact as it has on the global agenda or in other regions or as of in previous years, though it still remains in a high uncertainties area on the issues map. High change issues are renewables, CCS and electric vehicles. Renewables and CCS have moved down to a lower impact area on the issues map. In contrast, large scale hydro moves up straight to the high impact, uncertain area, receiving much more attention than renewables. In terms of price competitiveness, hydro would be far stronger than photovoltaic/solar or wind. The electric vehicles become an issue with far less impact or uncertainty attached to it. Therefore, while still in the uncertainty area on the issues map, large scale hydro may be one of the most important issues that require immediate action to be taken as it might be a major source of electric energy for countries in the

LAC region. Problems often associated with the construction of new large scale hydro power, such as social issues, environment issues, technologies and capital market situations need to be solved altogether. Accordingly, innovative regulation and regional interconnection need action as they are related to this issue of investment in and the construction of new large scale hydro power Though energy poverty may look less important as an issue in this yearâ&#x20AC;&#x2122;s issue map, the importance of this issue may be still felt as it might require more action than can be seen on the map.

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Figure 8 â&#x20AC;&#x201C; Regional Map MENA

uncertainty uncertainty

Figure 8 Regional Map â&#x20AC;&#x201C; MENA

hydrogen economy

climate framework smart electric grids climate framework vehicles electric smart storage electric grids vehicleslarge scale electric accidents storage unconventionals

Brazil biofuels

ccs

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large scaleMiddle East unconventionalsSustainable accidents dynamics EU cities Middle East cohesion dynamics Sustainable Russia currency EU talent cities cohesion energy uncertainty energy nuclear Russia subsidies currency Business affordability talent cycle trade barriers energy uncertainty energy regional nuclear energy interconnection commodity subsidies renewable Business affordability efficiency energies prices cycle trade barriers regional large energy renewable interconnection commodity scale energy energies prices water efficiency corruption hydro large nexus Innovative scale energy water regulation corruption hydro nexus Innovative regulation US policy

Brazil

World Energy Issues Monitor MENA, 2012 World Energy Issues Monitor MENA, 2012

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weak signals weak signals

energy poverty terrorism energy poverty terrorism

impact

global recession

global China recession India China India

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capital energy markets prices capital markets

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macro geopolitics business vision & economic & regional environment technology macro geopolitics business vision & economic & regional environment technology

impact World Energy Issues Monitor MENA, 2012

critical Middle East dynamics, as geo-political uncertainties issues, notably sabre-rattling over the Iranian nuclear industry, is a critical global large scale unconventionals accidents on US uncertainty the issues recession map, The 52% of the hydrogen region accounts for policy Middle East China economy dynamics the Sustainable particularly for states the India world proven oil reserves, 42% of the EU Brazil cities cohesion Cooperation Council for the Arab States gas reserves; and its Russia sustainabletalent currency biofuels energy uncertainty of the Gulf (GCC) as the GCC member energy energy growth depends on steady oil and prices nuclear gas subsidies capital Business affordability ccs states feel that they have little influence markets cycle trade barriers by regional demand, which has been influenced energy renewable interconnection commodity over the issue but face huge efficiency risks in the energies prices global recession, as well as by China large event of conflict. Other critical scale and India economy. Given future energy water corruption hydro nexus uncertainties include energy prices, and Innovative climate framework of some European regulation global recession, i.e., lower economic countries, to promote de-carbonization need for growth in key markets. action by replacing oil and gas resources with energy

Middle East and North Africaâ&#x20AC;&#x2122;s Critical Agenda

uncertainty

3.5

climate framework smart electric grids vehicles electric storage

renewables, this may also have weak negative effects on the demand for signals primary energy sources from this impact region. However, like the cases of Saudi Arabia, it would be possible to minimize such adverse effect on demand reduction as they could divert their export of fossil fuel to other destinations, such as China or India where there is strong and increasing demand.

poverty

terrorism

High change issues on the issues map are nuclear, CCS and unconventionals. macro geopolitics vision & Nuclear, one economic year after the business Fukushima & regional environment technology accident, has gone to a low uncertain and lower impact area. It is picking up in UAE or Saudi Arabia reflecting a growing acceptance that nuclear energy remains a valid alternative and strategically effective towards diversifying the potential future energy mix, where rapidly-growing domestic power demand has eaten into

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hydrocarbons available for export. While the issue of CCS is becoming less prominent on the issues map. GCC member states are now implement the region’s first Carbon Capture and Storage projects, such as UAE testing the enhanced oil recovery performance which may add more value to CCS. As far as unconventionals are concerned, regional oil and gas producers see its reserves as the way forward. Ultra-sour gas in very tight reservoirs hitherto considered non-commercial is now being developed to supply growing markets. The region has seen the importance of renewables grow, such as solar to make up for domestic oil consumption growth. While countries are highly dependent on oil/gas exports for their economic growth, energy efficiency should be another issue to be dealt with to cope with local demand for energy. Ensuring electricity supply for both air conditioning and desalination purposes is a priority. The region also needs investment to cope with the energy poverty or access issues. The region could be a real front runner, as we have seen in the Masdar Project in Abu Dhabi, UAE which seeks to deliver the concept of a “green city”. Similar growth of renewables may also

be observed if they could successfully develop DESERTEC DESERTC for example. The benefit could be to further strengthen ties with Europe in terms of economy, energy security, technology and mutual goal of decarbonisation.

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Figure 9 Regional Map â&#x20AC;&#x201C; North America Figure 9 World Energy Issues Monitor Regional Map â&#x20AC;&#x201C; North America North America, 2012

World Energy Issues Monitor North America, 2012

critical critical uncertainties

ccs

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biofuelsbiofuels

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currency US policyUS policy ChinaChina IndiaIndia currency renewable uncertainty renewable energies uncertainty trade barriers Innovative sustainable Russia energies trade barriers Innovativeregulation sustainable energy Russia cities Commodity regulation corruption energy talent cities water Commodity prices regional EU corruption nexus talent water smart grids prices Cohesion regionalinterconnection nexus smart grids interconnection energy affordability

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Energy poverty

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energy energy affordability markets Business prices capital energy cycle large Business markets energy prices scale cycle efficiency large hydro energy scale efficiency hydro

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3.6

North Americaâ&#x20AC;&#x2122;s Critical Agenda

power plant is under construction critical with uncertainties additional major transmission lines being planned to be constructed across the As the global recession goes on, a Middle East border e.g. from Quebec to New York unconventionals dynamics massive shift from coal to natural gas electric storage climate City, aiming at framework the US market. In Mexico, utilisation in United States has made it biofuels with respect to climate change globalpolicy, the recession possible for them to be on target to electricenacted a climate change hydrogen government large vehicles economy achieve their goal of CO2 reduction with Brazil scale law in 2012 in whichaccidents one of its goals is respect to the Copenhagen accord US policy China India currency renewable that by 2024, 35% of the electricity terrorism uncertainty nuclear energies although the US government has not set trade barriers Innovative sustainable Russia generation will be carried out with clean regulation energy cities Commodity a climate change policy. The demand for corruption talent water prices fuels; renewables, nuclear and fossil fuels regional EU nexus smart grids energy, electricity and gasoline has interconnection Cohesion with CCS. dropped in part due to the recession andenergy affordability energy need for capital markets Business prices Energy also due to significant efficiency gains in cycle Mexico has alsoenergy shifted to natural gasaction to large poverty energy subsidies scale automobiles, building, and appliances. efficiency replace aging fuel oil electricity generation hydro weak Unconventional gas development in the as well as to satisfy the continuous signals US has been successful, providing natural growing energymacro demand; its participation geopolitics business vision & impact economic & regional environment technology gas at far lower prices for domestic in the gross internal supply has increased consumption than other regional markets from 33% in 2000 to 42% in 2010. around the globe. Thus, the US will The most critical uncertainty in the region become more self-sufficient due to shale on the issues map is global recession, gas development and domestic petroleum where and when the recovery or production. strengthening of the economy happens. In Canada, hydro power business The impacts on the energy sector from remains significant. 10,000MW of hydro tax reform in the U.S. and timing of uncertainty

<< low

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mandates for GHG reductions are also a critical uncertainty with some impact across the region where cross border enterprise in wind power pertains. As far as Nuclear, it appears as a more critical uncertainty in North America as compared to the global level. This is likely to be because North America has the largest number of nuclear plant (U.S. over 100) and they are aging. Even with life extension granted for 20 more years, most existing plants will be retired by 2050 when the U.S. power system is expected to be decarbonized. Questions therefore arise if these facilities can be replaced. The current and projected future price of natural gas calls into question the economic viability of new nuclear and if the country will pay a price premium for zero CO2 emission power and for diversity of supply. Canadaâ&#x20AC;&#x2122;s nuclear industry remains uncertain, with aging infrastructure, some closures and slow decision making on refurbishment, let alone on the creation of new facilities. Access to and diversification of markets for Canadaâ&#x20AC;&#x2122;s energy products is a continuing uncertainty. Renewables markets have a large domestic element but cross border activity, particularly with

the United States presents challenges. Again, as illustration, the U.S. wind power production tax credit and its renewal will influence the development of wind power in Canada. The tax credit represents an incentive to some of the Canadian wind power industry that will turn upon renewal. Larger development of the domestic market for renewables, broadly speaking, rests upon the increase and continued existence of subsidies. Regarding oil and gas, for both conventional and nonconventional, Canadaâ&#x20AC;&#x2122;s primary market the United States is shifting with its own capacity on the increase. International markets outside of the continent present opportunity. However, the ability for Canada to export its oil and gas product outside of North America is constrained through insufficient infrastructure. In North America unconventional oil and gas are a rising issue, which is more predominant than anywhere else in the world given that its prospects look much more successful. However, questions arise over the environmental regulatory treatment of hydraulic fracturing and this issue might in turn be linked to the issue of the energy-water nexus. This technology is essential to tap into unconventional resources. Hence, if

2013 World Energy Issues Monitor

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banned (as in the case of parts of New York state) its future production levels are threatened. It should be noted that decades of experience indicate that fracturing is safe and water issues can be properly addressed if industry â&#x20AC;&#x153;best practicesâ&#x20AC;? are followed. Additionally, CCS, is seen as both uncertain and impactful, given that it is critical to continue the use of fossil fuels in a carbon constrained world and because North America has by far the largest number of CCS demonstration plants: 8 industrial scale units in the U.S. and 2 industrial scale units in Canada will become operational by 2020. And since 6 of those units are intended for enhanced oil recovery CCS becomes more highlighted in the context of utilizing CCUS technology (with utilization adding value to CCS by providing a revenue stream to CCS plants). However, a more progressive roadmap or actions will be required to enable the CCS/CCUS technology to become established, rather than remaining in the demonstration phase. In Mexico the large fossil fuels and electricity subsidies are an important economic issue with a high degree of uncertainty to reduce or eliminate them due to the political implications.

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4 Assessing Countriesâ&#x20AC;&#x2122; Critical Energy Agenda Analysis of five selected countries for Issues Maps 4.1

Colombiaâ&#x20AC;&#x2122;s Critical Agenda

Energy subsidies and high energy prices are critical uncertainty issues as they are both affecting social equity, although energy subsidies could be effective and efficient when applied in the right way. Smart grid is also quite a critical uncertainty issues as it lacks regulation for proper return on investment or financial support. Energy efficiency may be an important factor in influencing smart energy consumption and might help to achieve overall sustainability. In addition, large scale hydro needs action as it is an uncertainty issue. Though Colombia has potential to develop this resource, only a small fraction of the overall potential resources has been developed so far. In order to develop these sources further, it will be necessary to reconcile with regulation as the dam puts impact on society, animals and environment by flooding of farmland and forests.

2013 World Energy Issues Monitor

Figure 10 National Map – Colombia

World Energy Issues Monitor Figure 10 National Map – Colombia Colombia, 2012

World Energy Issues Monitor Colombia, 2012

critical uncertainties

terrorism

UNCERTAINTY

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Russia

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2013 World Energy Issues Monitor World Energy Council uncertainties energy subsidies

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Innovative regulation

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corruption energies electric climate Innovative renewable vehicles sustainable energy regulation framework energies cities climate water energy prices large scale framework commodity nexus energy accidents prices energy water energyenergy prices large scale regional nexus commodity affordability accidents interconnection efficiency prices talent energy energy regional biofuels affordability interconnection efficiency Business talent China biofuels energy poverty cycle India China Business large scale capital energy poverty cycle India hydro large scale marketscapital trade hydro markets Brazil barriers trade need for barriers Brazil

4 Assessing Countries’ Critical Energy Agenda Analysis of five selected countries for Issues Maps currency uncertainty

EU cohesion

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Russiasignals

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macromacrogeopolitics vision geopolitics business business vision& & economic economic & regional & regional environment environment technology technology

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4.1

Colombia’s Critical Agenda

critical uncertainties

terrorism

Energy subsidies and high energy electric storage prices are critical uncertainty issues as hydrogen they are both affecting social equity, economy middle east although energy subsidies could be dynamics ccs effective and efficient when applied in sustainable cities the right way. energy EU water Smart gridnuclear is also quite a critical cohesion nexus uncertainty issues as it lacks regulation talent biofuels for proper return on investment Business or currency cycle uncertainty financial support. Energy efficiency capital markets trade may be an important factor in barriers Brazil influencing smart energy consumption Russia and might help to achieve US overall policy weak sustainability. uncertainty

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unconventionals global recession

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energy prices large scale commodity accidents prices energy energy regional affordability interconnection efficiency China India

energy poverty

large scale hydro

need for action

signals

impact

In addition, large scale hydro needs action as it is an uncertainty issue. Though Colombia has potential to develop this resource, only a small fraction of the overall potential resources has been developed so far. In order to develop these sources further, it will be necessary to reconcile with regulation as the dam puts impact on society, animals and environment by flooding of farmland and forests.

macro economic

geopolitics & regional

business environment

vision & technology

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Figure 11 National Map – Germany

Figure 11 National Map – Germany World Energy Issues Monitor 2012 Monitor World Germany, Energy Issues Germany, 2012

ccs

uncertainty uncertainty

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corruption

energy corruption poverty energy poverty

critical Climate uncertainties framework

Climate framework

need for action need for action

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impact impact World Energy Issues Monitor Germany, 2012

4.2

critical uncertainties

electric global storage electric recession Middle East dynamics unconventionals global storage energy EU energy recession prices energy cohesion unconventionals efficiency energy EU subsidies Innovative energy capital prices energy cohesion efficiency regulation markets subsidies Innovative renewable electric capital regulation energies vehicles markets trade hydrogen renewable regional electric Business smart commodity barriers economy energies interconnection vehicles trade cycle hydrogen grids prices regional biofuels Business smart commodity economy currencybarriers interconnection talent nuclear cycle grids large scale China India prices biofuels uncertainty US policy Russia accidents currency talent nuclear large scale China India uncertainty US policy Russia accidents sustainable cities terrorism energy affordability sustainable cities large terrorism energy scale affordability large hydro scale hydro Middle East dynamics

energy water energy nexus water nexus

Germany’s Critical Agenda

macro geopolitics business vision & economic & regional environment technology macro geopolitics business vision & economic & regional environment technology

critical uncertainties prices for 20 years ahead, they get

uncertainty

ccs East dynamics paid whetherelectric or not global the power has “Energiewende (Energy Middle turnaround)” Climate storage recession framework been picked up, energy and they will not pay unconventionals takes place in the country, and it EU energy prices energy cohesion the transportation of electricity. The efficiency seems to further accelerate subsidies the Innovative capital regulation country has been markets paying 5 cents/kWH building of new power plants renewable electric as they energiespremium of vehicles for wholesale plus the trade hydrogen have decided to fully exit out of nuclear regional Business smart commodity barriers economy interconnection power by 2022. “Energiewende” iscyclenot grids pricesabove 5 cents/kWH for renewables. biofuels currency talent large scale China India Germany’suncertainty sole issue,nuclear and itUSmight policy Russia accidents The necessary action includes that the energy affect other neighbour countries as it is sustainable cities market model/grid need to be rewater terrorism nexus not confinedlargewithin the country. Withenergy affordability designed. Though some investment is scale PV plus 20GW of wind weak 30GW of Solar hydro happening, it is mostly encouraged by signalspower installed, on windy sunny need side for is the feed-in tariffs, and the down holidays, the German electricity action Brazil the country or most of other Europe corruption transmission network might need to countries can’t cope with it so easily. energy get ready for more frequent crosspoverty border exchanges of power with its The removal of trade barriers and the macro geopolitics business vision & impact economic neighbours while conventional plants regional environment technology protection of &intellectual property rights have to stop and stay in stand-by. It for inventions [patents and license] are would also require the grid expansion priorities as the country is more tied to of transmission and distribution lines China/India economy. as well. All of them would result in costing consumers much.

Energy price is significant issue. The investors to renewables are well covered as they have guaranteed fixed

2013 World Energy Issues Monitor

World Energy Issues Monitor India, 2012

12 Monitor 2013 WorldFigure Energy Issues National Map – India

Figure 12 National Map – India

uncertainty uncertainty

World Energy Issues Monitor India, 2012

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energy prices

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China India energy unconventionals currency Middle East subsidies uncertainty dynamics climate talent corruption energy water nexus innovative framework regulation nuclear electric China India vehicles energy unconventionals US policy Middle East subsidies capital trade barriers electric dynamics talent markets Russia corruption energy innovative storage regional EU regulation nuclear poverty interconnection renewable US policy cohesion energy capital trade barriers energies smart electric commodity affordability markets energy large storage grids regional prices poverty scale EU interconnection renewable cohesion large scale energy hydro energies Brazil smart commodity accidents sustainable affordability large global grids prices cities energy recession scale large scale hydro efficiency Brazil accidents

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4.3

India’s Critical Agenda

uncertainty

Other issues that need critical action are uncertainties energy efficiency, sustainable cities terrorism energy prices currency and commodity prices. Energy poverty hydrogen uncertainty Critical uncertainties are volatile energy climate economy should energy be looked In fact, the framework water nexus at as well. electric prices, climate framework, energy– China India issue is closely linked to climate vehicles energy unconventionals Middle East water nexus and currency uncertainties, subsidies framework dynamics and energy efficiency talent innovative all of which affect the energy sector. AsRussianuclear corruption ccs regulationhouseholds still because many poor US policy the country highly depends on import of capital trade barriers use wood for their cooking purposes. electric markets energy storage natural gas, oil and coal, weakening regional poverty EU to be also addressed interconnection This issue needs renewable cohesion energy India Rupee (i.e. currency uncertainty) energies smart in terms of both CO2 commodity emission and affordability large gridsit prices is quite an important issue because scale energy efficiency aspects. large scale hydro Brazil accidents biofuelsaffects energy prices. sustainable global recession

Though being positioned at lower Business impact, less uncertain because of local cycle weak oppositions to project, large scale signals hydro may require some actions to be considered as it is impact perceived as a viable solution to meet the energy needs in relatively environment friendly manner as compared to fossil fuel based power generation considering the immense hydro potential that India has.

energy cities efficiency

need for action

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vision & technology

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World Energy Issues Monitor2013 World Energy Issues Monitor World Energy Council Indonesia, 2012

Figure 13 National Map – Indonesia

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World Energy Issues Monitor Indonesia, 2012

UNCERTAINTY

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large scale hydro business energy cycle global innovative unconventionals efficiency recession nuclear regulation climate China Middle East electric commodity dynamics framework corruptiontrade India storage barriers prices electric large scale accidents large scale hydro biofuels business vehicles energy global smart cycle capital renewable sustainable unconventionals efficiency recession grids nuclear energies markets cities climate China Middle East energy electricenergy framework US policy corruption India dynamics poverty regionalstoragewater energy electric large scale accidents interconnection nexus vehicles affordability smart renewable capital sustainable grids talent energies markets cities energy energy US policy water regional poverty EU energy interconnection nexus cohesion affordability biofuels

energy prices

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talent EU cohesion

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Indonesia’s Critical Agenda

macro economic

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critical transportation, storage site, technical uncertainties availability of enhanced oil recoveryenergy (EOR), subsidies Energy subsidy and energy pricing are risk monitoring, or financial framework, etc. innovative perceived as two most critical, underlying with specific timeframe to be defined for regulation issues facing Indonesia's energy landscape. each stage of the pilot development. As for energy trade commodity prices barriers prices Numerous studies and assessments clearly scale hydro Nuclear, it would be large necessary to improve biofuels business energy cycle global unconventionals efficiency have shown that the money spent on recession public understanding and acceptance of ccs nuclear climate China Middle East electric subsidies could have been far more nuclear technology, including its costs and corruption framework India dynamics storage electric large scale accidents productively spent on infrastructure as hydrogen risks. vehiclesThe promotion of energy efficiency for smart economy renewable capital sustainable shown by terrorism the public call to grids divert subsidy both and demand sides has been energies markets cities supply energy energy US policy budget into public service and regional energy water more acknowledged poverty in this year’s issue map energy interconnection nexus currency affordability infrastructure. It seems it would be difficult to survey than previously. uncertainty talent need for change the current practices of the subsidies action Russia EU Since renewable energies, energy poverty as it has beenBrazil met with politicalcohesion opposition. and energy affordability are all found in the Consequently the country’s challenges have weak action areas of the map, there should be been to expand their reliable energy signals stronger actions showcase macro to geopolitics business that visionenergy & impact infrastructure for sufficient, secure and economic & regional environment technology subsidies have such adverse impacts on affordable energy supply. them. With proper budget allocation, there As for CCS, even though not much progress would be more secure source of energy has been made despite supply resources including new and renewable energy growth and more reliable Indonesia’s strong support of CCS to be power grid systems development. included in the Clean Development Mechanism, a pilot project and its roadmap are strongly needed as a necessary early step for development. The roadmap should provide broad guidance such as capture site,

uncertainty

4.4

trade barriers

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14 Monitor 2013 WorldFigure Energy Issues

National Map â&#x20AC;&#x201C; South Africa

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World Energy Issues Monitor South Africa, 2012

Figure 14 National Map â&#x20AC;&#x201C; South Africa critical uncertainties

World Energy Issues Monitor hydrogen South Africa, 2012

uncertainty uncertainty

economy

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weak weak signals signals

climate

Innovative regulation hydrogen economy

electric nuclear storage electric ccs climate vehicles framework Innovative unconventionals currency Russia energy regulation renewable uncertainty subsidies energy smart energies large scale electric prices nuclear grids hydro storage biofuels large scale electric sustainable China Middle East ccs accidents regional vehicles global cities energy India dynamics Business interconnection recession water currency Russia energy cycle nexus renewable uncertainty commodity subsidies energy smart energies largeprices scale prices trade barriers grids energy hydro energy biofuels large scale sustainable affordability China Middle East efficiency accidentstalent EU US policy capital regional global cities energy India corruption dynamics cohesion Business interconnection markets recession water cycle nexus commodity Brazil energy prices trade barriers energy energy poverty affordability efficiency need for EU US policy capital talent corruption cohesion markets action

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World Energy Issues Monitor South Africa, 2012

hydrogen economy

South Africaâ&#x20AC;&#x2122;s Critical Agenda

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critical uncertainties

uncertainty

are unrealistically optimistic in the context of the poor performance on climate framework Innovative energy security and energy equity. unconventionals The Republic of South Africa (RSA) regulation Furthermore, such strategies are likely electric has a fragile electricity supply system nuclear storage to cause a reduction in coal mining electric ccs 8GW coal fired power and is building vehicles with a consequent reduction in jobs, currency stations Russia to alleviate uncertainty the problem. energy subsidies energy further worsening therenewable unemployment smart energies scale prices However, these projects are running large grids hydro biofuels large scale issue. sustainable China Middle East accidents behind schedule. In parallel, the regional terrorism global cities energy India dynamics Business interconnection recession water government process to introduce wind,cycle nexus commodity About the critical uncertainties, climate prices solar and concentrated solar power trade barriers energy energy framework is very topical because the affordability efficiency need for EU by independent (CSP) provided power US policy capital talent corruption cohesion government is considering introducing markets action producers (IPP) to the market is also a carbon tax, which mechanism is energy running very late.Brazil poverty weak uncertain. Unconventionals are signals important because there has been a Electricity prices are impact rising sharply to macro geopolitics business vision & moratorium economic on the exploration for & regional environment technology support the new build, and the global shale gas and many court challenges recession including the slow recovery are expected when the moratorium has in the OECD countries is suppressing been lifted. Shale gas could be a game the demand for commodities, while changer for South Africa since there is liquid fuel prices are suffering from the no indigenous oil or natural gas. volatility and high levels in the global Electric storage is important because markets. They are having a negative of the fragile electricity supply system effect on the RSA economy. with the moves to introduce wind, solar Furthermore the government is and CSP to the energy mix. determined to deliver on carbon mitigation strategies that many believe

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In action areas of the issues map, the energy-water nexus is addressed as it is very much related to RSAâ&#x20AC;&#x2122;s energy supply to achieve energy equity and energy security while at the same time RSA is already struggling to maintain security of water supply. This is also probably why biofuels are a low priority because their stress on water supply means they may never be a significant part of the RSA energy mix. Other issues in the action areas are renewables and China and India. In particular, the government in RSA is expected to facilitate the process of introducing wind, solar and CSP, otherwise it would threaten the necessary financial arrangement to materialize.

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Figure 15 FigureWorld 15 National Map – SWITZERLAND Energy Issues Monitor National Map – Switzerland Switzerland, 2012 World Energy Issues Monitor Switzerland, 2012

critical uncertainties

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hydrogen EU economy cohesion ccs hydrogen EU electric economy cohesion vehicles electric

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terrorism commodity business prices cycle commodity business energy prices Middle Eastcycle dynamics biofuels energy affordability energy Brazil water Middle East dynamics biofuels energy affordability nexus weak Brazil water regional energy interconnection nexus corruption signals regional poverty energy interconnection corruption poverty

Russia unconventionals global unconventionals recession

global sustainable recession capital markets cities capital largemarkets scale hydro large scale hydro

sustainable cities talent talent

Russia

energy prices energy energy prices efficiency energy efficiency

China India nuclear

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climate electric nuclear framework storage innovative climate renewable regulation framework energies large scale innovative accidents regulation renewable energies large scale accidents smart grids smart grids

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Switzerland’s Critical Agenda

uncertainty

4.6

In May 2011 – only two months afterccs hydrogen Fukushima – the Swiss Government economy drafted its «Energy Strategy 2050», electric US policy vehicles currency which, for the moment being, is under uncertainty consideration of all stakeholders. A trade barriers terrorism final draft should be presented to weak Parliament in 2013 or early 2014. Most commodity signals business prices cycle probably, there will be a referendum, energy will accept or where the Swiss citizens Middle East dynamics biofuels energy affordability reject theBrazil strategy and its legal water consequences.nexus regional energy interconnection corruption Although the strategy contains some poverty important changes concerning the sectors mobility and heating and impact cooling, the main part is aimed at a rapid change in the electricity production. Switzerland until now has produced its electricity by and large without CO2-emissions, up to 60 per cent being hydro, up to 40 per cent nuclear. Unlike the German «Energiewende», the Swiss strategy does not propose to close down the existing nuclear power plants, but to

critical uncertainties

abandon the planned construction of energy subsidies new ones. This meansChina toIndiadevelop energy efficiency measures and to electric nuclear foster electricity production by storage climate Russia renewables. It means also to rely in EU framework cohesion part onunconventionals gas-fired electricity innovativeproduction. The electricity grid hasregulation to getrenewable smarter, energies global large scale recession accidents to be redesigned and strengthened. energy sustainable prices however, there are For the time being, capital markets cities energy little incentives to invest in the large scale smart efficiency talent hydro grids electricity sector. On this political background, the World need for Energy Issues Monitor for Switzerland action shows that «nuclear« and «electric storage» are important critical uncertainties as well as «renewable energies». Furthermore – as macro geopolitics business vision & Switzerland’seconomiceconomy is highly & regional environment technology export-oriented – a reliable carbon price system and «climate framework» are also a predominant critical uncertainty. The issues of «smart grids», «energy efficiency», «sustainable cities» and «large scale hydro» being central elements for achieving the aims and

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2013 World Energy Issues Monitor

2013 World Energy Issues Monitor World Energy Council

vision of the «Energy Strategy 2050», are considered as a need for action. «Renewable energies» together with «energy subsidies» remain listed under uncertainties, whereas the need for action for installing smart grids seems to be accepted today. There are only weak signals concerning «regional interconnection». This is rather surprising, as regional interconnection is a condition for embedding electricity from renewable sources into the supply system and as the negotiations between Switzerland and the European Union on an agreement for the electricity sector are pending.

2013 World Energy Issues Monitor

World Energy Council

5 Assessing the Global Agenda - Feedback from our Future Energy Leaders (FELs) The climate framework and mitigating the negative impact of climate change are among the most critical uncertainties for the Future Energy Leader (FEL) community. This is unsurprising given the insolvency of on-going debates around a new â&#x20AC;&#x153;Kyotoâ&#x20AC;? agreement and the lack of collective commitment from countries to address and tackle climate change issues. Future Energy Leaders pay much attention to the development of unconventional energy resources, renewables, and electric storage technologies. The development of these innovative technologies can be expensive and time consuming however; so there is some doubt as to whether they will ever replace conventional resources altogether and meet growing energy demands of the future. Future Energy Leaders place importance on global macroeconomic factors, the rise of energy prices and commodity prices that directly impact development of the energy industry. The FEL perspective shares a number of parallels with that of the Global Energy Leader. Both communities consider climate framework to be a fundamental global uncertainty. Fluctuating energy prices and the global recession are other key instabilities that

jeopardise development of the energy sector and feature in both maps. High growth rates in China and India have increased the demand for energy in the region which will significantly impact the global energy industry. The advent of unconventional resources such as shale oil & shale gas highlights the need for future investment in energy efficient technologies. Future Energy Leaders identify unconventional, renewables and energy storage technologies as critical issues and should therefore be understood as key drivers for the future. The Future Energy Leadersâ&#x20AC;&#x2122; outlook suggests that immediate investment into energy efficient and energy saving technologies is necessary. Recognising and acknowledging such technologies as energy sources of the future will enable global populations to use energy effectively and provide consumers with a reliable, future energy supply at an affordable rate.

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2013 World Energy Issues Monitor

Figure 16 Global Map â&#x20AC;&#x201C; Future Energy Leaders

World Energy Issues Monitor Global, 2012, Future Energy Leaders

uncertainty

critical uncertainties

EU cohesion

Middle East dynamics

innovative regulation

nuclear

renewable energies

smart grids

currency uncertainty business cycle

biofuels

electric vehicles

US policy corruption

talent

ccs

weak signals

commodity prices

electric storage

global recession

China India

large scale accidents

trade sustainable cities barriers

hydrogen economy

capital markets

unconventionals energy prices

energy subsidies terrorism

climate framework

Russia regional Brazil interconnection energy water nexus energy affordability large scale energy hydro poverty

need for action energy efficiency

impact

macro economic

geopolitics & regional

business environment

vision & technology

World Energy Issues Monitor Global, 2012, Future Energy Leaders

uncertainty

critical uncertainties

nuclear

EU cohesion

Middle East dynamics

innovative regulation

renewable energies

smart grids

currency uncertainty business cycle

biofuels

hydrogen economy

trade sustainable cities barriers

ccs

weak signals

electric vehicles

US policy corruption

talent

Russia regional Brazil energy interconnection water nexus energy affordability large scale energy hydro poverty

impact

capital markets

unconventionals energy prices

energy subsidies terrorism

climate framework

commodity prices

electric storage

global recession

China India

large scale accidents

need for action energy efficiency

macro economic

geopolitics & regional

business environment

vision & technology

2013 World Energy Issues Monitor

World Energy Council

Project Participation

Project Team Christoph Frei John Bourne Ori Chandler Latsoucabé Fall Masato Komiya J. K. Mehta Paul Mollet Pablo Mulás del Pozo Stuart Neil Catriona Nurse Gloria Piña Dan Rieser Slav Slavov Greg Schmidt Barry Worthington

Special thanks to the following Member Committees for country level deep dive Colombia Germany India Indonesia South Africa Switzerland

Special thanks to the regional vice chairs of WEC for assessing the regional energy agenda FEL Advisory Board Anna Illarionova Mrinal Madhav

Thanks many energy leadersand and The also manyto theenergy leaders policymakers kindly gave their policymakerswho who kindly gaveinsights their and expertise an anonymous basis. insights and on expertise on an anonymous basis.

World Energy Council

2013 World Energy Issues Monitor

World Energy Council

Member committees of the World Energy Council Albania Algeria Argentina Austria Belgium Bolivia Botswana Brazil Bulgaria Cameroon Canada Chad China Colombia Congo (Democratic Republic) C么te d'Ivoire Croatia Cyprus Czech Republic Denmark Egypt (Arab Republic) Estonia Ethiopia Finland France Gabon Germany Ghana Greece Hong Kong, China Hungary

Iceland India Indonesia Iran (Islamic Republic) Ireland Israel Italy Japan Jordan Kazakhstan Kenya Korea (Republic) Kuwait Latvia Lebanon Libya/GSPLAJ Lithuania Luxembourg Macedonia (Republic) Mexico Monaco Morocco Namibia Nepal Netherlands New Zealand Niger Nigeria Pakistan Paraguay

Peru Philippines Poland Portugal Qatar Romania Russian Federation Saudi Arabia Senegal Serbia Slovakia Slovenia South Africa Spain Sri Lanka Swaziland Sweden Switzerland Syria (Arab Republic) Taiwan, China Tanzania Thailand Trinidad & Tobago Tunisia Turkey Ukraine United Arab Emirates United Kingdom United States Uruguay Zimbabwe

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For sustainable energy. ISBN: 978 0 946121 20 5

The World Energy Council (WEC) is the principal impartial network of leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all. Formed in 1923, WEC is the UN-accredited global energy body, representing the entire energy spectrum, with more than 3000 member organisations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. WEC informs global, regional and national energy strategies by hosting high-level events, publishing authoritative studies, and working through its extensive member network to facilitate the worldâ&#x20AC;&#x2122;s energy policy dialogue. Further details at www.worldenergy.org and @WECouncil