 Ninth APEC Energy Ministers Meeting (Fukui Japan, 19 June 2010:  “We remain committed to the 2009 Leaders' Declaration to rationalize and phase out over the medium term fossil fuel subsidies that encourage wasteful consumption, while recognizing the importance of providing those in need with essential energy services.”

 Power sector (displacing regular coal) › Renewables (wind and solar) › Nuclear power (for interested economies) › Natural gas (half the carbon of coal per kWh) › Coal with Carbon Capture and Storage  Transport sector (replacing petroleum): › Electric vehicles (running on wind, solar, nuclear, natural gas, coal with CCS) › Biofuels (from second generation nonfood feedstocks – farm and forest residues, grasses)

 Many economies have subsidies – including subsidies for motor fuel and heating fuel (raising both carbon emissions and oil import dependency)  A clearer picture is needed of fossil fuel subsidies in developing economies.

 Economic and environmental benefits of fossil fuel reduction are clear to all.  But people don’t like to see their energy costs go up, and governments don’t like to see their people unhappy.  So we need to share information on best practices that economies have successfully implemented – and which other economies can then emulate.

 Key challenges to subsidy reduction: › Energy access for low-income households › Impact on living costs for poor households › Concerns about cost-competitiveness (and therefore export trade and jobs for the poor)  Responding to the challenge: › Programs to expand energy access › Programs to help the poor pay energy bills › Avoid general energy subsidies to everyone

 Nature of subsidies affecting production and consumption of fossil fuels.  Magnitude of fossil fuel subsidies in APEC.  Economic issues raised by subsidies.  Implications of subsidies for energy consumption and for the environment.  Benefits of phasing out subsidies in APEC.

 Issues involved in phasing out subsidies.  Ways to protect low-income households.  Case examples from phasing out subsidies, including experience in protecting low-income households.  Methodologies used in prioritization and in decision-making in subsidy reduction.  Recommendations for priority attention by APEC developing economies.

 Ministerial directive June 2010  Concept note September 2010  Request for Proposals Late 2010  Work carried out during 2011  Outreach workshop in early 2012.