National 7 (Spotlight Weekly)

Delivering Sustainability : Challenges And Opportunities For The Energy Industry

Delivering sustainability has become a clear priority of the energy sector. The principal conclusion of the 2004 World Energy Congress is that sustainable energy systems are achievable, but the challenges are many and need to be tackled urgently if sustainability is to be achieved in this century.

Recent increases in energy prices are likely to be the precursor of a longer term trend. While they will encourage much needed energy efficiency and stimulate investment, they pose severe difficulties for expanding access to modern energy services to the one third of people who still do not have it, or whose access is inadequate for economic development. An energy system embodying such inequities is neither sustainable nor acceptable.

Equally, supply disruptions - experienced by many in developing countries on a recurring basis and by north America and Europe in the blackouts of 2003 - exact a heavy economic penalty, highlighting the importance of ensuring security of supply in an increasingly interdependent global energy system.

Delivering sustainability demands that this access and security of supply be provided, while avoiding environmental impacts, which would compromise future social and economic development.

Drawing on the wide-ranging discussions of the Congress, the World Energy Council draws the following conclusions:

* All energy options must be kept open and no technology should be idolized or demonized. These include the conventional options of coal, oil gas, nuclear and hydro (whether large or small), and the new renewable energy sources, combined of course with increased energy efficiency. Each is subject to uncertainties, we cannot afford to jettison any one of them. Energy source diversity is the bedrock of a robust system, even if the optimum mix will vary according to local circumstances.

* A larger share of global infrastructure investment must be devoted to energy. For this cost-reflective prices are essential. Energy systems which do not pay for themselves over the medium to long term are not sustainable. Regulatory frameworks must recognize this and provide stability and transparency to attract the necessary investment in a timely manner.

* A more pragmatic approach to market reform is emerging. It is now widely recognized that market interventions (for example, subsidies or taxes) may be needed to achieve essential goals, including energy access, security of supply, the promotion of innovation and a level playing field in which external environmental impacts are reflected in prices. The more pragmatic approach allows for such interventions, while recognizing they should distort price signals as little as possible.

* The reliability of electricity supply is an important priority. In industrialized countries, consumers demand 100% reliability, while those in developing countries often suffer frequent disruptions. The cost burden of these disruptions has already been noted.

* Regional integration of energy supply systems can boost access and energy supply security. Regional collaboration needs to be enhanced to harmonize development of energy regulation and create the necessary infrastructure. It is also the key to optimizing the water-energy nexus.

* Climate change is a serious global concern, calling for changes in consumer behavior, but offering potential win-win opportunities. These include increased transfer of efficient technologies from industrialized to developing countries and incentives to investment through emerging voluntary or regulated emissions trading or other mechanisms.

* Technological innovation and development is vital to reconciling expanded energy services for more equitable economic development with protection of the environment. Improvements to existing energy supply and utilization of technologies are as critical to increased efficiency and to reduced costs and environmental impacts as new "breakthrough" options.

* Research and development must be more strongly and consistently supported than has been the case. It is the pre-condition of the innovation, which is needed. A starting point is the reduction of R&D redundancies through international cooperation. A further priority is the transport sector where R&D is the key to improving sustainability.

* Public trust must be won and retained. This in turn depends on energy sector transparency. Cost-reflective pricing will not always be popular with consumers. Great public understanding of the issues involved will be needed to obtain acceptance and avoid political pressures that risk deflecting governments from essential policies.

* Public understanding and trust starts with the youth. The Congress Youth Symposium Declaration clearly demonstrates the importance youths attach to sustainability and their understanding of the issues and challenges involved in achieving it in practice.

(Excerpts of the conclusions of the World Energy Congress held in Sydney, Australia from 5-9 September 2004)