The ICC Energy Commission is working on a project "Business Perspectives on Energy. The Challenge of the 21st Century". According to the time schedule the project should be completed in the turn of 2000/2001.
The project takes into account the views and results of the leading energy organizations: WEC, IEA, IIASA etc. There has been a close liaison between the ICC project and the just published project of the WEC, "Energy for Tomorrow's World - Acting Now".
Already the beginning of the project of the ICC Energy Commission reveals that all the present energy options must be kept open long into the 21st century if not throughout the whole century.
Energy and sustainable development:
The perspective and the view of the ICC Energy Commission in respect of energy and sustainable development is in several studies crystallized as follows:
Sustainability is a global, ongoing and never-ending process in a world where 1,6 billion people (0,5 billion more by 2020) live without commercial energy - where one billion of the world population of six billions use nearly 60 percent of the energy consumed and five billions the other 40 percent.
This fact is connected with the global problem of poverty. Our question is: how to improve the situation? How to make the needed development sustainable?
The global economic growth is expected to be in the average 1,7 percent /a in the next 30 - 40 years ahead, the growth in developing countries being over 2 percent /a.
This economic growth means at least 1,2 percent or even 2 percent /a growth of the global energy consumption - for the most part of it in the developing countries.
This perspective means almost doubling of the present energy consumption by the year 2025 and eventually tripling by 2050.
If business would be as usual, almost the same picture is ahead of us in respect of the growth of the CO2 emissions from the energy sector, these emissions having link with the threat of global climate change.
ICC Energy messages:
Notwithstanding the alarming growth rates the energy
associations are, however, primarily optimistic: responsible technology development can manage the problems involved.
ICC Energy Commission in its recommendations emphasizes e.g. following messages:
1. All the present energy options must be kept open for the next century, including nuclear energy, coal option with clean coal technologies and strong development of new renewables, which today represent 2 percent of total world energy consumption.
2. Commercialization of all the new energy technologies is the key for their success. Only commercialized technologies can work in the long run.
3. There is no quick transfer from existing major energy systems to new ones. Even oil spent some fifty years to become a major energy system, and the new systems ahead of us are much more demanding.
This is why strong research & development & deployment effort is needed for bringing about new energy technologies and systems.
4. The role of secondary energies (electricity and hydrogen) will grow.
5. New technologies for energy efficiency, such as combined heat and power production (CHP), so often mentioned e.g. in the climate process, must be enhanced in district heating systems and in industrial applications.
6. Subsidized energy prices bring about higher energy intensities, and involve risk of wrong signals.
7. Energy/environmental taxes and other fiscal modalities, as well as regulation, must supplement - not supplant - the market forces in the energy policies. Harmonization is necessary in order to ensure level playing field.
The business and industry are optimistic that sustainable energy future is possible in co-operation with the governments and other actors involved.
But it is hard to think that such future would be possible without demanding CO2 free energy options, like nuclear energy - at least in the industrialized countries.
In addition to renewables also cleaner technologies for the use of fossil fuels, especially coal, are needed.
What obstacles remain in implementing the Kyoto mechanisms?
The Kyoto mechanisms should be cost-effective to ensure global benefits at the lowest possible costs.
Excessive rules, regulations and costs should be avoided and potential barriers to industry participation should be eliminated from the outset.
A range of policy options, including:
- voluntary initiatives and negotiated long-term voluntary agreements;
- changes in capital depreciation schedules;
- tax incentives for research and development, and;
- reform of regulatory barriers to commercialization of innovative technology, among others,
can also play an important role in reducing emissions cost-effectively.
One of the key issues for business is how non-compliance of Kyoto mechanisms will affect companies across each of the countries in which they operate.
How will Protocol enforcement measures treat companies that are in compliance with domestic rules in a country that is itself out of compliance with its international obligations? These questions are still open the question how complicated is the reporting- and review process of the compliance with the Kyoto mechanisms should be solved in such a way that the risks for the companies to participate are not too high.
ICC and its members are ready to co-operate in the development of well designed Kyoto mechanisms, attractive to the business and industry.
In the course of the coming decades, hundreds, or rather thousands of projects are needed under the Kyoto protocol in order to insure that Protocol would meet its purpose: to facilitate reaching the objectives of the Climate Convention.
It is of at most importance for the economical development of the developing countries and the economies in transition that the Kyoto mechanisms are acceptable and attractive to the business and industry.
This means in other words that the risk assessment of the companies do not send too alarming signals when planning individual projects under CDM and JI concepts.
If the criteria, bureaucracy and consequences of non-compliance are too high or severe, the risk of non-attractiveness will exist.
A change of thinking has happened within the business and industry and this change will continue.
Besides regulation, fiscal incentives and voluntary actions the business and industry has seen and must see the climate process creating also business opportunities.
Which again will enhance the commercialization of the new technologies needed.
Originally was published on 2 May 2000 in Budapest.
Juhani Santaholma, Chairman, ICC Energy Commission ICC's 33rd World Congress
© 2000 Mena Report (www.menareport.com)