Japan’s proposals to EMM 2014 in Beijing May 2014 Shinichi Kihara Ministry of Economy, Trade and Industry, Japan Agenda Item 6

Proposal 1: Study Project on Energy and Competitiveness in APEC APEC is comprised of member economies that have some of the largest economies or energy consumption in the world. Other emerging member economies, including those in Southeast Asia, are also expected to become major energy demand centres in the long-term. As such, APEC region sees steep rise in energy demand and consequently the correlation between economics and energy is becoming stronger. Furthermore, historically high level of crude oil prices and the Asian LNG price are becoming important political agenda items for some economies in recent years. These facts indicate that it is now critical for APEC economies to address energy- competitiveness issues for their sound and sustainable economic development, while paying due consideration to other important energy related challenges such as energy security and environment protection. It is important to note that energy will influence competitiveness through the following “channels”, which are all “economic matters” as well. – End-user prices International prices, taxes and subsidies, domestic margins, etc. – Efficiency – Availability Restriction on quality and quantity, and infrastructure At the same time, it is essential to acknowledge the diversities among APEC member economies in such areas as: economic development; economic structure; cost structure: endowment of energy resources; etc. 1/4

IEA “World Energy Outlook 2013” Chapter 8 “Energy and competitiveness” points out that disparities in energy prices especially for natural gas and electricity have implications for economic competitiveness. The European Union and Japan see a strong decline in their shares of global exports of energy-intensive goods, while the United States sees an increase in its share of exports. IEA “World Energy Outlook 2013” Chapter 8 “Energy and competitiveness” points out that disparities in energy prices especially for natural gas and electricity have implications for economic competitiveness. The European Union and Japan see a strong decline in their shares of global exports of energy-intensive goods, while the United States sees an increase in its share of exports. EU “Energy Prices and Costs (2014)” The paper prepared by the European Commission argues that retail energy price rises in the EU create cost burdens on households and industry and affect Europe’s global competitiveness. EU “Energy Prices and Costs (2014)” The paper prepared by the European Commission argues that retail energy price rises in the EU create cost burdens on households and industry and affect Europe’s global competitiveness. IEEJ “Asia/World Energy Outlook 2013” An enhanced unconventional oil/gas resource development in the world results in GDP increases for the US, China, India and Japan while decreasing GDP in the Middle East. IEEJ “Asia/World Energy Outlook 2013” An enhanced unconventional oil/gas resource development in the world results in GDP increases for the US, China, India and Japan while decreasing GDP in the Middle East. Proposal 1: Existing Researches on Energy and Competitiveness 2/4

Proposal 1: Outline of Study  Lead by APERC, with participation of other institutions  Kick-off at EMM 2014  Workshops to be held  Interim report to EWG in 2015  Report back to Ministers at EMM Preparatory Research Literature survey on updated and advanced state of knowledge Survey on current situation of APEC economies 2.Analysis on impacts of energy issues on competitiveness Effects of electricity and fuel price change Effects of energy efficiency improvement How to improve economic competitiveness of the APEC region as a whole 3.Policy Recommendations for economic competitiveness and sustainable development of the APEC region Taking into consideration the diversity of APEC member economies The project will study how the APEC region can improve its economic competitiveness while at the same time pursuing a sustainable development and addressing energy security and environmental concerns. 3/4

1. Voluntary Implementation of Oil and Gas Security Exercise （ OGSE ） by APEC Economies  To establish “Oil and Gas Security Exercise Model Procedure (EMP)”.  To assist voluntary exercises by dispatching APERC researchers and/or registered experts from IEA, ASEAN institutions, IEEJ, etc. upon the request of each Economy. 4/4 Proposal 2: New Launch of APEC Oil and Gas Security Initiative (OGSI) 3. Publish Oil and Gas Security Studies (OGSS)  To research on issues related to oil and gas security and publish one or two reports per year as part of an Oil and Gas Security Studies (OGSS) series.  The OGSS series will be presented at OGSN Annual Forum and uploaded to APERC’s homepage. A limited number of prints will be distributed to APEC EWG members.  Examples of research themes for the OGSS Series include: a.The potential impact of political and social instability in the Middle East on APEC’s oil and gas security. b.The impact of Arctic melt on new opportunities for oil and gas resources and trade routes. c.The current situation of oil and gas storage in the APEC region and possibility of building a stockpile system. 2. Establish APEC Oil and Gas Security Network (OGSN)  Members ： Government officials responsible for policy related to oil and gas security in each Economy  Secretariat: APERC  Major projects  Information Sharing and Transmission through Mailing List To transmit updated information on oil and gas security through publishing “Newsletter”.  OGSN Annual Forum To hold the OGSN Annual Forum for delegates from each Economy, in order to share information and exchange views on oil and gas security and also jointly discuss how to improve emergency preparedness.