Caio Koch-Weser discusses the World Energy Outlook of the International Energy Agency with industry and political experts
Vice Chairman Caio Koch-Weser was the only financial sector representative at the International Energy Agency’s joint Energy Ministerial and Energy Business Council meeting.
A large number of energy company CEOs participated in a panel addressing climate change, signaling that business is keen to have a clear framework to facilitate investment to reduce emissions. Participants agreed on the need for a clear, pragmatic and realistic goal to reduce emissions that is accompanied by a long-term, transparent and consistent policy framework. Caio Koch-Weser said “Growing numbers of energy companies are favouring some form of carbon pricing as part of governments‘ regulatory framework“.
Discussion between ministers and companies on the topic of competitiveness concluded that energy price differentials between regions is a structural, long-term issue that needs to be tackled. There is no ‘silver bullet’ but a range of actions are needed including improving the integration and competitiveness of markets, moving away from oil-indexed natural gas prices, ensuring renewable support schemes are well designed, using all indigenous sources of energy supply and making much more effort to improve the efficient use of energy.
Deutsche Bank also participated in a discussion of the IEA’s report in Germany. At Deutsche Bank in Berlin, Dr. Fatih Birol, the chief economist of the IEA, presented the recently published work on developments in the global energy sector. In addition to the annually updated forecasts of consumption, production and reserves, the presentation placed a special focus on the topic of “energy policy and industrial competitiveness in the world”. The Federation of German Industries (BDI), the World Energy Council Germany and the Federal Ministry of Economics and Technology had extended invitations to the event.
For Dr. Markus Kerber, the Director General of BDI, this year’s WEO impressively demonstrated that Germany is not the world’s only “energy transition country”. “Some countries have modified their energy mix and others’ their balance of trade in the energy sector. Some countries have even progressed from having no energy supply whatsoever to having an energy supply,” said Kerber.
World Energy Outlook ‘s findings
- Technology and high prices are opening up new oil resources, but this does not mean the world is on the verge of an era of oil abundance. Although rising oil output from North America and Brazil reduces the role of OPEC countries in quenching the world’s thirst for oil over the next decade, the Middle East – the only large source of low-cost oil – will take back its role as a key source of oil supply growth from the mid-2020s.
- Large differences in regional energy prices are set to affect industrial competitiveness, influencing investment decisions and company strategies. Enhancing energy competitiveness does not mean diminishing efforts to tackle climate change.
- The centre of gravity of energy demand is switching decisively to the emerging economies, particularly China, India and the Middle East, which will drive global energy use one-third higher
- High energy prices do not have to result in onerous energy costs for end-users or the national economy. Energy efficiency improvements could mitigate high energy costs while concurrently addressing energy security and environmental concerns. In 2011, investments in the energy efficiency market globally were at a similar scale to those in renewable energy or fossil-fuel power generation.
- As the source of two-thirds of global greenhouse-gas emissions, the energy sector will be pivotal in determining whether or not climate change goals are achieved. However, the world is on track for a long-term average temperature increase of 3.6°C, far above the internationally agreed 2°C target. The transition to a more efficient, low-carbon energy sector is more difficult in tough economic times, but no less urgent.
- Key actions to reduce emissions should include improve energy efficiency, limiting the use of inefficient coal electricity generation, minimizing methane emissions from the upstream oil and gas industry and accelerating the partial phase-out of fossil fuel consumption subsidies.
“Growing numbers of energy companies are favouring some form of carbon pricing as part of governments‘ regulatory framework.”