Energy and Resources Policy
The world is characterised by great regional disparities in resources. In order to achieve new patterns of energy production and consumption, emerging economies need new technologies, improved business models and diversified energy portfolios. For instance, while Russia, China and South Africa share a high dependency on fossil fuels, Brazil already has a much more diversified and cleaner energy production and rather focuses on making the existing energy system more efficient. In addition, developing and emerging economies need to meet energy needs of a growing population and ensure universal access to electricity and energy. This means that newly installed energy systems should be as efficient and green as possible while keeping in mind parallel trends of urbanisation and industrialisation. Germany, as an advanced economy, equally faces challenges with respect to increasing energy efficiency and sharing the cost of green energy across the population.
In this Policy Initiative, think tanks from Azerbaijan, Brazil, China, Germany, India, Russia, South Africa jointly develop research papers and policy recommendations on the priority issues indicated above, working on the following specific topics:
- Future of Global Energy: How Green will Energy be
- Energy Access and Redistribution Scheme
- Experiences around Responsible Business
- Supply Side Economics and the Need for Energy Diversification
The Policy Initiative is coordinated by the Indian think tank ORF.
EPF News & Activities
EPF & ORF host Concluding Lunch of the Munich Security Conference 2015 on The Future of Energy: Assessing Uncertainties and Opportunities
08 February 2015, Munich, Germany On 08 February 2015, the Observer Research Foundation (ORF) and The Economic Policy Forum (EPF) co-hosted the concluding lunchtime panel at the Munich Security Conference (MSC). ORF and EPF also used the occasion to launch their report on “The Future of Energy,” with contributions from various EPF member institutions in India, Brazil, Germany, Russia, China and South Africa. The two-hour session was attended by over eighty high level guests of the MSC, including Chairman Wolfgang Ischinger and the Foreign Minister of Ethiopia, Tedros Adhanom Ghebreyesus. [caption id="attachment_2212" align="alignright" width="244"] Photo: EPF[/caption] The Future of Energy report was launched by Arnold Schwarzenegger (Founding Chair of Regions20 and former Governor of California), Samir Saran, (Vice President, ORF) and Astrid Skala-Kuhmann (representing the EPF). At the outset, Arnold Schwarzenegger, as keynote speaker and panelist, stressed the importance of clean energy solutions for responding to climate change concerns. He highlighted his successful experiences from Governorship of the state of California to explain how private sector, civil society and governments can work together at the sub national and local levels in order to solve energy policy challenges. Panelists Sunjoy Joshi (Director, ORF) and Peter Sutherland (former Chairman of BP plc) supplemented Mr. Schwarzenegger’s address by recognizing the rapid technological advances made in clean energy and their increased viability. However, they cited some of the report findings as sobering reminders that conventional fuels including coal, oil and gas will remain the dominant energy sources for the next two decades. Peter Sutherland noted the emergent role of natural gas, stating that a substitution of one per cent of coal generation by gas would need to be matched by an equivalent of an eleven per cent increase in renewable energy based generation. Sunjoy Joshi cautioned that not enough attention is being paid in global energy discourse to the potential of efficiency technologies such as those already available in the coal and thermal sector. He thus made a compelling case for increased technological flows between countries to facilitate a global low carbon transition. [caption id="attachment_2211" align="alignleft" width="312"] Photo: ORF[/caption] Vyacheslav Nikonov (Member of Russian Duma), and Ali Asghar Soltanieh (former Iranian Ambassador to the International Atomic Energy Agency), reaffirmed the findings of the report by recognizing the need for economic diversification in energy exporting economies, to reduce structural vulnerabilities caused by price and demand fluctuations. Mr. Nikonov alluded to the growing importance of China as a destination for Russian energy exports in the face of fledgling growth in its traditional export markets. Meanwhile Ambassador Soltanieh pointed out that the global energy discourse should be de-politicized so that global energy flows are freed from geopolitical uncertainties. In the open floor discussions, the panelists also commented on African energy sector realities, including possibilities of leveraging natural endowments such as large tracts of land towards renewable energy generation, particularly solar. Their caveat was that many African countries would need to solve structural problems such as the lack of skilled manpower and bridge governance deficits in order to attract larger energy investments. The panelists agreed that in general, a concert of policies, market dynamics and technological trends will drive the future of energy. Collaboration between the economic, scientific and policy communities remains key to ensuring that countries can harness best practices and learn from each other’s’ successes and failures in the energy sector. The panel and open floor discussions were moderated by Samir Saran of the Observer Research Foundation. Event Programme Information: MSC Side Event 'The Future of Energy' - Programm Information ORF-EPF Report: ORF-EPF Report - The Future of Energy Panel Discussion on YouTube: https://www.youtube.com/watch?v=nuTDa7fmE7g
EPF Think Week 2014 - Joint Working Group on Sustainable Investment Policy will present sectoral Code of Conduct on Climate Action
Beijing, 3-6 November 2014 Around 15 experts from leading policy think tanks in emerging and industrialized countries met upon invitation of the Economic Policy Forum (EPF) from 3 to 6 November in Beijing for a „Think Week“ around issues of „Successful Investment Policy Design – Framing Challenges and Opportunities of Emerging Economies.“ The innovative concept of this Think Week combined a 2-day roundtable discussion on input papers from key Chinese investment experts with visits to reknowned Think Tanks based in China’s capital. As growth in BRICS+ countries continues to depend on investments, yet capital flows remain highly volatile, the policy experts discussed how investment policies can generate sustainable economic growth. The topic’s relevance is recognized also by the establishment of a G20 „Investment and Infrastructure Working Group“ focusing on similar topics. In Beijing, experts from Bangladesh, Brazil, China, Germany, India, Pakistan, Russia, South Africa, Turkey and Vietnam presented their research, providing specific country perspectives to such challenges as the issue of the sequencing and timing of public investments, the inadequate involvement of the private sector in public infrastructure projects, and the problematic of guaranteeing sustainability of investments. Going beyond the national context, the role of Chinese foreign direct investment and investment patterns of foreign players in Africa were discussed. Both themes were agreed to be taken further in cooperative research strands for the development of joint policy recommendations. Keynote presentations from representatives of the Chinese Central Bank, the Ministry of Finance’s associated Asia-Pacific Finance and Development Center (AFDC), and Chinese Academy of International Trade and Economic Cooperation (CAITEC) provided valuable input on China’s successful investment policies, as did a visit to the China Development Research Foundation (CDRF) and the Development Research Center (DRC) of the Chinese State Council, which advises at the highest political level. The Think Week thus combined a focused international research exchange with the study of specific policies and reform measures. The Brazilian think tank Fundação Getulio Vargas (FGV), which has been commissioned by the French government for the upcoming COP21 in Paris with the development of guidelines for sustainable business practices and investments in various sectors, agreed with other participants at the EPF Think Week to jointly develop and present such a Code of Conduct in Paris in November 2015. This is a good illustration of how EPF’s research results and policy recommendations continue to inform international policy processes. Think Week Programme Information: Think Week Handbook Working Paper: AERC | Think Week Working Paper on Estimating the Knowledge Capital Model for a Developing Country – Pakistan BIDS | Think Week Working Paper Investments & FDI in Bangladesh: Potential vs. Reality CESP | Think Week Working Paper A Note on the Indian Growth Story Ciem | Think Week Working Paper on How to implement successfully Industrialization Strategy in Vietnam CIRD | Think Week Working Paper on Enhancing Corporate Driving Force in Regional Economic Integration HSRC & SAIIA | Think Week Working Paper on Deepened BRICS led Engagement İstanbul Aydın University | Think Week Working Paper Global Investment Challenges: A Turkish View ORF | Think Week Working Paper on Enhancing Corporate Driving Force in Regional Economic Integration Tepav | Think Week Working Paper Investment Policy Framework for Turkey in the Twenty-First Century
EPF Conference on 'Resources Policy: Energy and Environment'
After a successful launch in January this year in Berlin, the Economic Policy Forum (EPF) met at a conference on 'Resources Policy: Energy and Environment,' hosted by Observer Research Foundation (and supported by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), in New Delhi. The meeting also facilitated an initial conversation on 'The Prospects for Regional Integration.' The EPF is a new alliance of think tanks from emerging economies and selected developed economies, with the objective to foster and support joint research among members on common challenges and issues of socio-economic development in their countries. The conference comprised representatives from BRICS, Germany, and Azerbaijan. The aim of the conference was to facilitate discussions towards the production of a joint paper composed of four topics including: 'Future of Global Energy: How "green" will energy be?;' 'Energy Access and Redistribution Schemes;' 'Experiences around Responsible Business: Resource Efficiency;' and, 'Supply Side Economics and the Need for Energy Diversification.' In the first session, Dr. Rajan Gupta, a distinguished fellow at ORF, presented the first draft paper entitled, 'Future of Global Energy: How "green" will energy be?' He emphasised the need for new, clean forms of energy to drive global development. For the first time in history, humankind is required to move away from easily accessible energy, in the form of unclean fossil fuels, for the purposes of mitigating climate change. Gupta suggested that newer technology, better business models, and a diversified energy portfolio are prerequisites for making energy cleaner and more sustainable. Meanwhile, he highlighted the need to recognize regional disparities in resources. Certain regions are still rich in fossil fuels, such as North America, Russia and the Middle East, but others lack sufficient indigenous resources, such as Sub-Saharan Africa, Europe, and the Asian Tigers. These disparities were illustrated in the ensuing discussion. Russia, South Africa, and China are highly dependent on fossil fuels, whereas Brazil and the EU have more diversified, cleaner energy production. All countries are exploring cleaner energy production. Russia for example is looking into greener measures in order to hedge the risks of rising carbon fuel prices in future. China is implementing a national programme that selects 1000 villages, 200 cities, and 200 counties to be models for renewable energy distribution, and the EU has formulated a number of goals to reduce carbon emissions and focuses on technological and efficiency improvements across all energy sectors. Given such disparities there cannot be a one-size-fits-all energy policy, and each country must determine its own development goals before defining its own policies. A point that frequently arose during discussions was the role of crisis and hunger for change, in providing the impetus for transforming energy policy. For example, Brazil's diversified green energy sector was necessitated by the oil crisis in the 1970s. There is a need to change social attitudes so that transformation may occur even in countries that are currently more energy-secure than others. The second draft paper, 'Energy Access and Redistribution Schemes,' encompassed all country perspectives. India, China, Russia, and South Africa all reported lack of electricity access to large portions of their populations, while Brazil and the EU have better overall access but still face new challenges. General trends in India show that the lack of grid-based power in rural areas has led poor households to spend more of their income on inefficient, polluting energy such as biomass, than wealthier households do on cleaner, grid-based energy. There is still debate as to whether to expand the national grid to rural areas, particularly when there is a high instance of rural-urban migration. China's rural poor also rely on biomass for fuel, but the government is planning to subsidise biogas and upgrade the national grid in its Twelfth Five Year Plan to overcome this. Russia's electricity access problems are often caused by the extreme weather and vast distances within the country, and the government suggests that renewables would be more suitable for supplying rural areas rather than extending the national grid. South Africa suffers from an overloaded national grid and there are disagreements about how fair it is to supply rural areas with renewable but not grid-based energy. Brazil no longer has problems with electricity access in rural areas thanks to a successful Luz Para Todos ('Lighting For All') programme implemented in 2003. The EU also has few problems with electricity access, but is facing new challenges because energy is no longer affordable to poorer communities. The third session was led by Vivan Sharan from ORF, who presented his draft paper on 'Experiences around Responsible Business: Resource Efficiency.' The aim of the paper is to consider business' responsibility in ensuring sustainable energy use, which encompasses resource security, energy efficiency, employment generation and long-term capital formation. The paper will explore the correlation between energy efficiency and annual revenue of a list of the most profitable businesses in Brazil, Germany, India, Russia, and South Africa. Sectors to be examined include cement, manufacturing, power, and oil and gas. Once the list of profitable businesses has been identified, the paper will analyse their energy efficiency performances and attempt to explain trends through possible market and policy drivers. This paper hopes to use its findings to influence business' energy policy decisions. The fourth draft paper addressed 'Supply Side Economics and the Need for Energy Diversification'. It was presented by Dr. Rajan Gupta. With prospects of high constraints in energy resources in the next 30 years, the presentation emphasised the need for all countries to diversify their energy sourcing. Factors to consider include improving infrastructure, investing in technology, building partnerships between countries and between the public and private sectors, and balancing imports and exports of resources. There are, however, many barriers to such attempts at diversifying, such as poor levels of education, unskilled workforces, low levels of entrepreneurship and lack of capital. In addition, political instability and climate change creates uncertainties and volatilities in the markets. This presentation stimulated diverse interventions from the floor. Dr. Rovshan Ibrahimov, from the Centre for Strategic Studies, noted that Azerbaijan is planning to diversify into solar and wind energy, as well as developing a bigger ecotourism industry. Mr. Demétrio Toledo, from the University of São Paolo, commented that Brazil, already having diversified energy sources, is now looking at how not to waste energy, and how to improve industrial policy. Conversely, Professor Dimitri Eliseev, from the Russian Academy of Science, commented that Russia sees no incentives to diversify because the situation is comfortable and despite regulations, "nobody wants to play by the rules." He suggested the best move for Russia would be first to improve administrative efficiency. The participants had an opportunity to interact with Anil Kumar Jain, Advisor (Energy) at the Planning Commission, India's apex planning body. He spoke on India's perspectives on the energy sector, its outlook on the issues surrounding access to energy for all, the initial outcomes of the direct benefit transfer schemes and some of the key questions that policy makers are grappling with as they respond to fuel choices, price points and infrastructure selection. He elaborated that energy security constitutes an important part of the Twelfth Five Year Plan and is focused on the three key criteria of Availability, Access and Affordability. India is highly energy insecure as it has high distribution company (discom) losses, poor indigenous resources, rapidly increasing demand, and high dependency on other countries. Discom losses, and government energy subsidies, are a historical burden in India.. This is an area the government is determined to set right in the next five year plan. Anil Kumar Jain emphasised the strong correlation between energy demand and economic growth, and thus the need for India to improve its energy security in order to achieve its economic potential. The last segment of the conference included a brainstorming session on the 'Prospects for Regional Integration.' The discussion was initiated by Dr. Heribert Dieter from the SWP German Institute for International and Security Affairs. He proposed that regional integration has historically been pursued to improve welfare, increase prosperity and maintain peace, yet recently this image has been somewhat tarnished due to the Eurozone crisis. Dr. Dieter proposed that current failures of the multilateral system, such as the failed Doha Development Round, may see a renewal of interest in regional integration. However, the floor raised a number of potential issues. Firstly, despite the many successes of the European Union, other regions of the world are more heterogeneous; and political, security, cultural, and religious differences may prove difficult to overcome. Secondly, Samir Saran from ORF questioned whether regional integration must take place in geographically contiguous countries, or whether new virtual regions could be created by countries that are in different corners of the world but that have similar world views and economic outlook. Thirdly, it was questioned whether emerging economies are able to drive regional integration through organic processes of economic growth and trade in their regions, such as India or China within ASEAN. Catherine Grant, from the South African Institute for International Affairs, noted that despite being the largest economy in the oldest customs union in the world, South Africa struggles to promote intraregional trade. At the end of the conference, delegates were positive about the progress that had been made, contributors were drawn up for each proposed paper, and targets were assigned. The next EPF meeting is to be held in Haikou, China in early November 2013 on the sidelines of the annual Marquee CIRD event with GIZ. This report is prepared by Olivia Robinson © Copyright by ORF GEGAfrica and the India Backbone Implementation Network shared their experiences and insights from the conference as well: GEG Africa: Conference Report IBIN: Conference Report
DIE I Behaviour matters: improving energy efficiency in informal settlements
By 2022, two billion people will be living in informal settlements according to the United Nations. Although per capita energy consumption in informal settlements is comparatively low, the benefits of energy efficiency uptake – enhanced energy system sustainability, economic development, social development, environmental sustainability, and increased prosperity (International Energy Agency [IEA], 2014) – stand to equally benefit these communities. Yet despite these benefits, informal settlement households – as so many others – have been slow in taking up energy-efficient technologies. This can be partly attributed to behavioural barriers: Consumers often do not invest in energy efficiency in an economically rational manner. Recent research findings point to effective means of implementing behavioural insights for energy efficiency in informal settlements. Building upon this precedence, governments, international organisations and implementing agencies should en¬courage the application of potentially low-cost behavioural insights to energy efficiency initiatives in informal settlements to improve intervention efficacy. It is easy for energy efficiency to be lost in the challenging demands of daily life in informal settlements – sourcing water, managing irregular employment opportunities, or basic health and safety concerns, compounded by risk aversion and the discounting of future-based benefits. This is why it is essential to integrate behavioural insights to facilitate energy-efficiency uptake. This may be done, for example, by making information on energy efficiency simple and meaningful, by focussing on context-specific benefits, by bringing the economic benefit of uptake closer to the consumer while spacing the cost over time, or by appealing to social norms. While most evidence on the importance of behavioural insights for energy efficiency stems from the OECD member country context, the topic is equally relevant in the developing country informal settlement context. Here, the cost-benefit analysis of energy efficiency is further complicated by the fact that many households informally consume electricity without paying for it or by paying a flat rate. This presumably removes the traditional pecuniary motivation – electrical bill savings – upon which to influence energy-efficiency implementation. What entry points then exist for energy-efficient products which invariably have a higher upfront purchase cost when there are – prima facie – no financial benefits to be realised? The higher durability of energy-efficient products in the context of the instable electricity supply occurring in many developing countries could be an obscured benefit. It accrues not just at the societal level but also at the individual level, further building the economic case for energy-efficiency uptake. DIE I Behaviour matters: improving energy efficiency in informal settlements
WEF I Global Energy Architecture Performance Index Report 2016
The Global Energy Architecture Performance Index Report 2016 ranks 126 countries on their ability to deliver secure, affordable and sustainable energy. WEF I Global Energy Architecture Performance Index Report 2016
GGKP | The Future of Energy Technologies: An Overview of Expert Elicitations
The development of new energy technologies is widely viewed as an essential element in addressing climate change. However, identifying and prioritizing which energy technologies should receive research, development and demonstration (RD&D) funding is a key challenge for policymakers. Particular difficulties arise in estimating the future performance and costs of these technologies. To address these uncertainties, researchers have reached out to technology experts in order to develop probability distributions that can provide an indication of future performance and costs of technologies, and allow for an assessment of how government RD&D spending might affect the future prospects for technological change. This GGKP Working Paper provides a comprehensive and systematic overview and analysis of expert elicitation studies that have focused on climate mitigation technologies. The report also reviews the literature on modelling and decision-making that has utilized the data produced through expert elicitations. Green Growth Knowledge Platform | The Future of Energy Technologies: An Overview of Expert Elicitations
OECD | The transition to a low-carbon and climate-resilient economy from a financial sector perspective
Climate change is a major political and economic challenge. This paper sketches out its relevance for the financial sector. Necessary low-carbon investments imply a significant yet manageable financing gap. However, we argue that beyond capital mobilisation that has attracted most attention until now, the main challenge is ensuring a transition-consistent capital reallocation. The financial sector has a key role to play in that respect, complementary to appropriately designed climate policies. To help the financial system fulfil its role, the understanding of the economics of climate change should be deepened and a sector-wide businessoriented appropriation of these issues should be promoted. OECD | The Transition to a Low-Carbon and Climate-Resilient Economy from a Financial Sector Perspective
WRI | Putting a Price on Carbon : Reducing Emissions
In Putting a Price on Carbon: Reducing Emissions, we describe how a national price on carbon would reduce emissions across key sectors of the economy, including empirical evidence and real world case studies. The research examines how the incentives for emissions reductions are depicted in an influential carbon pricing study, and shows why computer models are likely to underestimate the emissions reductions potential of a carbon price. We conclude that carbon pricing can play a central role in helping the US achieve its long-term climate goals, particularly if combined with a smart portfolio of complementary policies. WRI | Putting a Price on Carbon : Reducing Emissions
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