Time to get real – the agenda for change INSERT YOUR COMMITTEE LOGO HERE World Energy Trilemma Time to get real – the agenda for change

The World Energy Trilemma The Energy Sustainability Index Public and private stakeholder dialogue Agenda for Change

The World Energy Trilemma

The world is far away from achieving sustainable energy systems 1.2 billion people live without access to electricity 2.8 billion people lack access to clean cooking facilities Population growth from 7 to 9.3 billion people by 2050 Energy demand is expected to increase between 27% and 61% by 2050 CO2 emissions continue to grow Cumulative investment needed: US$ 19.3 to US$ 26.7 trillion by 2050 in electricity infrastructure alone

World Energy Trilemma Report Policy review and analysis (deep dives) Energy Sustainability Index Call for increased dialogue 2012 report captured the views of more than 40 senior energy executives on what they need from policy 2013 report captured the response of more than 50 governments, multilateral organisations and development banks Work culminated at World Energy Congress in Daegu in October 2013 and in the Agenda for Change

Energy Sustainability Index

The diversity of energy profiles among the top performers illustrates the importance of policy

Five profiles of the energy trilemma highlight common challenges Illustrative members Key strengths Core Challenges Pack Leaders Switzerland, Denmark Overall performance and balance Ensuring achievement of 2020 climate targets Fossil-fuelled United Arab Emirates, Malaysia, Saudi Arabia Affordability and security of energy Energy and emission intensity challenges Highly-industrialised India, Mexico Energy security and strong GDP growth Rapid industrial growth and impacts Hydro-powered Brazil, Colombia Use of renewables leads to low emissions and higher electrification rates Improve energy access and affordability Back of the Pack Zimbabwe, Nicaragua Not yet locked in to fossil fuel heavy development path Investment challenges

The 2013 Index highlights an opportunity for developing countries

Public and private stakeholder dialogue

Develop a clear vision that encompasses a mix of energy sources and technologies 

In 2013 public decision makers agree with energy industry`s recommendations but point to an increasing policy complexity Lack of global consensus on target profile of future energy system Dynamics of changing energy supply and demand Inherent difficulties in translating policy into effective regulations

To meet the complexity, public stakeholders ask energy industry to help Improve energy policy and regulation through greater dialogue, sharing knowledge and experiences Increase energy investments and R&D through better risk alignment Support least-developed and developing economies on a new path to energy sustainability

Agenda for Change

hard choices in this generation to “We must accept that we have to make hard choices in this generation to bring about real changes for future generations and the planet. Politicians and the industry must get real.”

Back up

Recommendation 1: Define a coherent and predictable energy policy

Recommendation 2: Enable market conditions that attract long-term investments

Recommendation 3: Encourage public and private initiatives that foster R&D

Recommendation 1 Industry should proactively help improve energy policies and regulation Inform and engage public General Public Politically achievability? Industry Industry -> Public Policymakers need an engaged and well-informed public to build national consensus Industry can help shift public support towards sustainability by educating public on cost of energy, new technology, and benefits of energy efficiency Industry -> Government Policymakers want industry to adopt a long-term perspective rather than bending to shareholder pressures for short-termism and buying into “flavor of the month” perspectives Industry should share knowledge, insights and experiences to offset information asymmetry Industry can help policymakers identify real needs of market and understand new technologies Public -> Government Public perspectives and sentiment on energy policy have significant effect on what can politically be achieved “If you build on the national values and create a national consensus, politicians can come and go, but a clear message from the people remains” Help policymakers through energy / technology expertise Government

Recommendation 2: Increasing energy investment through better risk alignment Policymakers agree it is their role to reduce political and regulatory risk… …but call on industry to be less risk averse Energy and infrastructure investments Industry lead role in energy technology development and reducing costs Form coalitions to align their research plans and long-term goals Risks to investor Ways to mitigate Lack of transparency Regulatory & policy risk Country risk Working with development banks Political risk insurance “Uncertainty regarding the regulatory and economic framework surrounding energy systems does not support private investment” WEC/Oliver Wyman survey found regulatory & policy risk and country risk to be two biggest risks negatively impacting energy investment Policymakers acknowledge they need to provide stable legal and institutional framework that supports transparency Stimulating investment without subsidies can help decrease mid to long-term uncertainty Leveraging development banks and political risk insurance can help investors manage country risk

Recommendation 3: The new path to sustainability: an opportunity for developing countries Support to government in four areas: Creating attractive policy and regulatory frameworks Generating opportunities for investment in “technically good projects” Developing local human capital needed to establish and maintain an energy sector Developing a path that recognizes the knowledge gap and sticks to locally adapting proven technology

United States on rank 40 Signs of progress Total primary energy intensity improved continuously over the past years and is better than world average Emission intensity improved even more in the same timeframe and is close to world average. Further improvements are to be expected in the near future, e.g., coal replaced by gas, GHG and fuel efficiency standards and so on 2011 2012 2013 Trend Score Energy security 19 17 12 h A Energy equity 1 g Environmental sustainability 90 88 86 C Overall rank and score 16 15 AAC

Energy sustainability balance Asia

Energy sustainability balance Europe

Energy sustainability balance Latin America and the Caribbean

Energy sustainability balance Middle East and North Africa

Energy sustainability balance North America

Energy sustainability balance Sub-Saharan Africa