1. The Energy Charter and Energy Efficiency Dario Chello Director, Energy Efficiency and Investment Energy Charter Secretariat dario.chello@encharter.org@encharter.org 29 October 2008

2. 2 1. Energy Charter Treaty  Strengthen rule-of-law on energy issues  Reduce risk for energy investments and trade  Promote energy efficiency 2. Forum  Government, industry, other stakeholders across Eurasia  Discuss policies and instruments that can provide a constructive framework for international energy cooperation and enhanced energy security 3. Series of Activities  To implement principles of the Energy Charter Treaty  Developed by Secretariat in cooperation with subsidiary working groups of the Energy Charter Conference and with the help of the Industry Advisory Panel What is the Energy Charter Process?

3. 3 1. Investment Protection  Creates a stable and supportive business and political climate for cross-border investments across its constituency 2. Trade  Promotes a well functioning energy market across borders through guidelines on cross-border trade 3. Transit  Facilitates discussion among members of the Charter constituency on promoting and securing cross-border energy flows based on the Energy Charter Treaty 4. Energy Efficiency  Encourage international cooperation in developing and implementing energy efficiency strategies and policies Four Pillars of the Energy Charter Treaty

4. 4  Energy Charter Conference - the governing and decision- making body for the Energy Charter Process  51 Signatory Countries represent: Around 40% of global GDP Around 40% of global gas production Around 25% of global oil production Energy Charter Process

5. 5 Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA)  Formulate and implement EE strategies and policies  Create appropriate legal, regulatory and institutional frameworks  Develop, implement, and update EE programmes  Encourage new approaches of financing EE  Co-operate internationally and assist each other

6. 6 PEEREA Activities Review Progress in Member Countries In-depth reviews (18 since 1999) Regular reviews (60 since 1999) Follow-up reviews (6 since 2004) Regular updates from Members « Horizontal » Studies 20 reports since 1999 Events, information sharing, cooperation Esp. IEA, UNECE, UNFCCC

7. 7 PEEREA Activities – monitoring and supporting achievement of commitments  Regular reviews Albania 2007, Russian Federation 2007, Bosnia & Herzegovina 2008, Italy 2008, Ukraine 2008  In-depth (peer) reviews Latvia (2007), FYR Macedonia (2007), Bulgaria (2008), Slovak Republic (2008)  Progress report to the Environment for Europe process – for Kiev 2003 and Belgrade 2007

8. 8 Delivering Energy Efficiency Progress and Challenges: Institutional and Policy Framework EE in Buildings EE in Appliances District Heating and Cogeneration Challenges:  Transport  Using KP Mechanisms  Financing  Integrating EE and RE

9. 9 PEEREA Support Activities  Advice support to governments (in-depth review recommendations)  Analytical reports and policy papers  Discussions and exchange of experience in the PEEREA Working Group (panel discussions, round table, good practices dissemination)  Invited presentations by relevant institutions (EU Commission, IEA, UNFCCC, EBRD, UNECE …)  Dissemination of information

10. 10 How much investment is needed? UNFCCC “Investment and Financial Flows to Address Climate Change”, 2007 To return to current emissions levels by 2030, annual investment of $150 billion in 2030 in EE Of this, $60 billion in developing/transition countries On top of $400 billion p/y in clean energy supply IEA “Energy Technology Perspectives 2008” To halve emissions by 2050 (Blue Scenario) $45 trillion in investment to 2050 36% of savings from end-use efficiency

11. 11 Where will investment come from? “When considering means to enhance investment and financial flows to address climate change in the future, it is important to focus on the role of private-sector investment as they constitute the largest share of investment and financial flows (86%)” UNFCCC

12. 12 Why is Demand-side EE different?  Business Framework Split incentives Not “core business” (e.g. industrial or commercial operations are not EE businesses)  Nature of investments Often small and scattered No obvious revenue stream – baseline problem

13. 13 What is needed? 1.Underlying investment framework 2. Energy Efficiency Institutional Framework 3. Well-targeted Programs 4. Enhanced International Cooperation

14. 14 1.Strong underlying investment framework EE investments still investments Financial situation means less “easy money” Pricing Energy Charter Framework exists and is working Energy Charter Treaty contains comprehensive dispute settlement mechanisms

15. 15 2.Strong EE Institutional Framework  Government EE Organisations Dedicated, stable Links with other government agencies (incl. transport) Active cooperation with industry Links with regions  Strategy and Action plans Targets and timelines Short- and long-term Realistic funding (maybe dedicated funding) Clear roles for EE and RE  Legislation Priority for EE clearly stated Responsibilities clear and effective  Monitoring and review Accurate and transparent assessment Balance precision with stability

16. 16 3.Well-targeted programs  Commercial and Residential sectors dominated by mass produced items, so regulation supported  Industry sector can be more diverse – need more specific approaches  Transport is often difficult – need a systems approach  Role for broad measures (e.g. white certificates, information)  EE on supply side important

17. 17 4.Enhanced International Cooperation  Sharing of Information and Experience Examples: IEA, PEEREA  Joint projects Examples: APEC-ESIS  Global frameworks Examples: UNFCCC, Energy Charter  International Finance Examples: Development Banks, EE21

18. 18 The future of PEEREA PEEREA has supported effective action…. A. Improved understanding and sharing among members B. Rapid institutional and policy progress in many transition countries …but more needs to be done A. Coverage B. Certainty C. Speed

19. 19 Promoting Investment in EE Investment Framework EE Institutions Targeted Programs International Cooperation

20. 20 Thank You! dario.chello@encharter.org Energy Charter Secretariat www.encharter.org