GLOBAL ENERGY CHALLENGES: COULD WE FACE THEM? - Astana, 4-5 September 2008 Slav Slavov Regional Manager for Europe & Central Asia

WEC founded in 1923 all energies and global non governmental long term reflection short term action Rome Congress 2007 Montreal Congress 2010 WHAT IS WEC?

ACCESSIBILITY - the extent to which people have access to modern and affordable energy; AVAILABILITY-reliability+security of energy supply systems once access has been achieved;  ACCEPTABILITY- the environmental acceptance of energy production, transportation and use. WEC GLOBAL GOALS ARE:AAA

Up-Down stream dialogue & cross-border investments Diversification of supply sources and routes Increase share of potential domestic sources Stocks management & global gas market Enhancing energy efficiency FULLYBALANCEDAND MUTUALLY REINFORCED Triple challenge Sustainability Renewable energy Energy efficiency Nuclear option where chosen Emissions trading Competitiveness Timely provided investments Interconnections (Trans-regional net works) New technology & cost reduction Clean coal Carbon sequestration Alternative fuels Energy efficiency Nuclear Security of supply

Delivering sustainability to energy sector should be a priority objective. It is achievable but…challenges are many, and they must be tackle now and urgently if sustainability is to be achieved in this century; And, it requires alternative policies. WEC MESSAGE

Why current policies are limited? Ineffective and short-sighted ; Confusing and unfocused; Inadequate to face the global scale of the issue; Lead to more energy import dependence. What priorities of alternative policies should be? to restrain emission growth in energy & transport & develop carbon- free initiatives; to ensure security by increasing share of alternative sources and encourage diversification of current energy mix; to support technology development & deployment;

Energy is and will remain one of the major global concerns Estimated 2050 world population about 9 Billion; Electricity Consumption is foreseen to triple to some 45,000 TWh/a; How to reduce emissions without compromising economic development. Or shift to low C economy? Background - Population and Energy Consumption Growth Study Background - Population and Energy Consumption Growth IEA Scenario of energy growth for a sustainable future Source: IEA report “Energy to 2050 – Scenario for a Sustainable Future (2003)”

Increasing Dependency To Low Carbon Future Which way to take???

The present global energy dynamics are unsustainable. Source Figure: : IEA, World Energy Outlook 2006, p. 492, 493; 2050: IEA, Prospects for CO 2 Capture and Storage, Paris 2004, p. 101, 109; source insert: : IEA, WEO 2006, p. 492, 512; 2050: WEC, Global Energy Perspectives to 2050 and Beyond, Report 1995, appendix C, scenario B: share developing countries in world primary energy supplies CO 2 emissions from fossil fuel use = 60 % of all GHG 30 % 40 % 50 %: Dcs-overtake emissions from OECD; reaching 60-70% in 2050

Energy and Climate change challenge Electricity: 47%- largest,but provides greatest reduction leverage; Transport: 21%- Growing everywhere. Key challenge for emissions reduction; Industry: 18%- Fast growth in developing countries; offset by increasing efficiency everywhere; Buildings: 13%- Steady growth; wide variation in emissions intensity.

Global CO 2 Emission Scenarios Emissions GtCO 2 /yr Emissions Stabilization Low Carbon Economy A B A – Business as usual; B – Roadmap to low carbon future

What WEC is suggesting? need to create a global carbon market with a fixed global carbon value; need to set up global regulations for this market as as well for emission trading; Common WEC-WTO efforts on energy +emission trading rules beyond 2012.

Technology Map for the SET-Plan

increasing role of RES in energy mix; (20% in Europe by 2020 ?)-very ambitious; further energy efficiency improvements; nuclear renaissance? A burning issue but attractive solution again climate change; Oil from non-traditional resources (oil sands…) (Canada forecasts some 3 Mb/d) Other alternatives lead to improve energy mix and reduce dependency

Question : would EI continue to fall down?

WEC Study on Efficiency:Higher GDP for less energy Since 1990, EI is declining by 1.5% /y. China accounts for 1/4 of the reduction in the world energy intensity. Primary energy intensity, in toe/$95ppp < 0.2

17 Large disparities by region in the energy intensities: a factor 3 between CIS, 2.5 for Middle East and Europe; OECD Asia, India and Latin America (close to Europe); North America, Other Asia and world average: about 30% above Europe; China 40% above Primary energy intensities by world region (at purchasing power parities) (2006)

More than 50% of investment needs to 2030 of $22 trillion are in developing countries, 17% in China & another 6% in India alone Cumulative Investment in Energy Supply Infrastructure, Source: IEA World Energy Outlook 2007 “Reference Scenario” Gas 19% Coal 3% Electricity 53% Oil 24% Biofuels 1% Power generation 51% 49% Other Refining 73% 22% 5% Exploration and development LNG chain Transmission and distribution 55% 37% 8% Mining Shipping and ports 10% 90% $5.4 trillion $11.6 trillion $4.2 trillion $0.6 trillion Exploration and development Transmission and distribution Total investment = $21.9 trillion (in $2006)

What WEC is suggesting here? more pragmatism in policy implementation:e.g. to provide more transparent, predictable and stable reg.frame (new coal thermal projects); to open cross-border investments and cooperation between energy suppliers & consumers; to harmonise cross-border el. tariffs and develop methods for defining a common price formation (in case of deregulated regional markets)

How easy to do business in Central Asia Starting business (number of days): KZ-21; UZ-13; KG-21; TJ-21; Korea-17; Starting business (number of procedures): KZ- 8; UZ- 7; KG- 8; TJ- 13; Korea- 10; Investor Protection Index (0-lowest; 10-highest): KZ-5,7; UZ-4,3; KG-6,0; TJ-1,7; Korea-5,3; Enforcing contract ( number of days) KZ-230; UZ-195; KG-177; TJ-295; Korea-230; AFG-1642; Closing business (recovery rate, cents on $1): KZ-23,4; UZ-18,7; KG-15,6; TJ-23,6; Korea-82; finally How easy to do business/2007 Report (among178 countries) KZ-71; UZ-145; KG-88; TJ-153; Korea-30; Russia:106;

1. WEC-FT Conference on Investing in Clean Energy Business - London,16&17 September - 2. WEC High-Level Dialogue between Caspian Suppliers & European Consumers including the Role of Transit Corridor Countries - Istanbul, 17 October - Two important WEC-events in September and October

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