As oil prices reached a nominal record high of $147 per barrel and increasing volatility with prices dropping down to below $40 per barrel in 2008, the Committee on Sustainable Energy consolidated its expert dialogue on energy security held during its annual sessions with the participation of representatives of Governments, energy industries, the financial community and relevant international organizations. The new dialogue confirmed by the sixty-second session of the Commission in April 2007, focused on the key relationship between national and international oil companies to ensure the technology deployment and large investments needed for a secure energy future. The interrelationship of energy security and sustainable energy policies became more pronounced and, as a result, the Committee’s work programme has become increasingly integrated, with new projects and activities with implications for energy security being undertaken by its subsidiary bodies.
Enhanced Energy Security Dialogue
At its seventeenth annual session in 2008, the Committee held its second enhanced expert dialogue on “Strategic Alliances for Energy Security”. This dialogue involved two special working sessions: one on the evolving relationship of international and national oil companies in the hydrocarbon sector with the financial community and the other on the complementary nature of government energy security strategies. A new publication on Investing in Energy Security Risk Mitigation was presented to the session. The publication examines investment requirements in the hydrocarbon sector and recent trends, the changing role of oil companies, the role of Governments in infrastructure investment, methods of financing energy projects and case studies on the performance of national oil companies. The Committee considered a range of new activities, including a project on enhancing energy efficiency for secure energy supplies in energy-exporting countries; a study on how energy security risks are perceived by decision makers in Governments, industry and finance; an analysis of energy security and sustainable energy policies; and an appraisal of the use of statistical indicators to measure the energy vulnerability of UNECE member States.
Cleaner Electricity Production
The new Ad Hoc Group of Experts on Cleaner Electricity Production from Coal and Other Fossil Fuels, launched in line with the Work Plan on UNECE Reform of 2005 to streamline the sustainable energy work programme, held an expert Forum on Carbon Capture and Storage in November 2008 that brought together high-level representatives of the electricity and coal industries, regulators, the financial sector and governments to address the best ways to foster investments in this segment of cleaner electricity production. The event also reviewed related technological issues and challenges along the production and supply chain, and assessed the current state and interaction of financial and electricity markets.
Energy Reserves and Resources
The recent upheaval in global capital markets has demonstrated the need to address how global markets are managed. The requirement for increased international energy trade has led to a greater interest in the common terminology needed to classify and report energy and mineral reserves and resources. Following the endorsement by the Economic and Social Council in resolution 2004/233, the Ad Hoc Group of Experts on the Harmonization of Fossil Energy and Mineral Resources Terminology has led a global effort to develop a common code through application of the United Nations Framework Classification for Fossil Energy and Mineral Resources (UNFC), a system adopted, adapted or tested by more than 60 countries worldwide. In reconciling the views of disparate partners including the Organization of the Petroleum Exporting Countries, OECD/IEA (International Energy Agency), the Society of Petroleum Engineers, the International Accounting Standards Board (IASB), the minerals industry and United Nations Member States, the Ad Hoc Group of Experts has made significant progress to promote the widespread application of the UNFC. Although the UNFC will remain a classification system that can be directly adopted or adapted by member States or other organizations, there is growing recognition of its strength in also serving as an overarching umbrella system to which all other major systems can map against. In 2008, the Ad Hoc Group of Experts made substantial progress towards development of the global code through a detailed mapping of the UNFC against other major classification systems, and also by attracting additional participation and interest. This work comes at a propitious time when IASB and the United States Securities and Exchange Commission are also considering revising their requirements for financial reporting relating to extractive activities, including energy reserves and resources. The UNFC “project” aims to make the recovery of fossil energy and mineral resources more sustainable by serving the needs for information for long-term energy policy formulation, for effective government resources management, for efficient industrial management and for appropriate capital allocation.
Energy Efficiency
UNECE promotes the formation of an energy efficiency market in Eastern Europe so that cost-effective investments can provide a self-financing method of reducing global GHG emissions through its Energy Efficiency 21 Project (EE21). Along these lines, dedicated financial instruments have been promoted, such as the European Clean Energy Fund (ECEF) raised by SwissRe/Conning and Company under a mandate of the EE21 Project. An EE21 sub-project, Financing Energy Efficiency Investments for Climate Change Mitigation, largely supported by the United Nations Foundation, Global Environment Facility, Fonds Français pour l’Environnement Mondial and the European Business Congress has advanced significantly during 2008, with assessment missions having been undertaken to each of the 12 participating countries and the successful completion of three significant international competitive bid tenders. One tender has engaged a contractor to establish a dedicated public-private equity Fund for 12 countries in Eastern Europe, Central Asia and South-Eastern Europe for energy efficiency and renewable investment projects. The other tenders have engaged contractors for Internet communication services and a regional analysis for energy policy reforms to promote investment in energy efficiency. The EE21 Project also launched two additional sub-projects on new and renewable energy sources in the Russian Federation and the countries of the CIS as well as the Global Energy Efficiency 21 Project, which seeks to promote energy efficiency trade and cooperation through the four other United Nations regional commissions.
Regional Advisory Services on Energy
The services provided by the Regional Advisor on Energy have included assistance to member States on energy efficiency and sustainable energy development, particularly in Central Asia and in South-East Europe. The advisory services have also led to launching an energy efficiency project with the new Regional Cooperation Council (RCC), which was established in 2008 in Sarajevo. The project will draw on the capacities of national Governments through UNECE and RCC, energy efficiency agencies through the Regional Network for Efficient Use of Energy and Water Resources, on regional authorities of the European Foundation for the Sustainable Development of the Regions and on municipal authorities through the Network of Associations of Local Authorities of South-East Europe. The Regional Adviser on Energy organized the UNECE-hosted Conference on “International Cooperation on Energy Efficiency: Working Together for a Low Carbon Economy”, held jointly with the Energy Charter and IEA in relation to the 2008 session of the Steering Committee of the EE21 Project. Regional Advisory Services were also engaged to develop potential projects for financing with the SwissRe/Conning and Company ECEF.
Natural Gas
At its eighteenth session in January 2008, the Working Party on Gas organized a round table on the Role of Liquefied Natural Gas to Enhance Energy Security in the UNECE region, bringing together leading gas experts from producing, consuming countries and countries of gas transit. Progress on the study on Gas Saving to Reduce Natural Gas Demand and Enhance Energy Security, undertaken together with Eurogas, was reviewed by the Working Party. Delegations discussed the implementation of the Blue Corridor Project, aimed at establishing transport corridors in Europe for heavy-duty vehicles using natural gas, instead of diesel, as fuel. They also reviewed gas market and gas industry developments in the UNECE region and developments in the natural gas vehicle market worldwide. The Working Party also launched work in three new areas: (a) current status and prospects for liquefied natural gas in the UNECE region; (b) update of the UNECE study on Underground Gas Storage in Europe and Central Asia; and (c) assessment of the impact of the liberalization of the natural gas markets on gas demand and prices. The Working Party also contributed to the ongoing energy security study of the Committee on Sustainable Energy.
With the support of 26 gas companies throughout the UNECE region, the task forces of the Gas Centre held meetings on the implementation of the EU Gas Directive, gas transportation and pipelines, gas markets and gas industries, as well as their implications for countries in Central and Eastern Europe. A High-Level Conference on Deepwater Gas Production and Processing was hosted by StatoilHydro in Molde, Norway, 3-5 June. The Technical Committee of the Gas Centre Database continued to work on a special gas map of Europe. Gas Centre member companies are transferring data to the database where a map of the high-pressure transportation and supply pipelines in Europe is being created. Newly developed software will make the map interactive.
Clean Coal
The project on Capacity-Building for Air Quality Management and the Application of Clean Coal Technologies in Central Asia (CAPACT) is designed to help institutions managing air quality to implement the UNECE Convention on Long-range Transboundary Air Pollution, with funding from UNDA as an intersectoral project between the Committee on Sustainable Energy and the Committee on Environmental Policy. It provides assistance to participating Governments on energy pricing policy reforms and promotes investment project finance. Energy efficiency projects were also approved with the support of UNDP and Global Environment Facility in Belarus, Kazakhstan, Kyrgyzstan, Russian Federation and Ukraine.
Coal Mine Methane
Coal mine methane (CMM) is a GHG over 20 times more potent than carbon dioxide. Mitigation of methane emissions not only yields important benefits related to climate change, but it can also provide an energy stream that delivers many additional co-benefits. Methane capture and use improves mine safety, provides an additional energy source for power generation, heating or other uses, and supports another revenue centre within the mining operation. With 40 per cent of global production and 38 per cent of global CMM emissions, there is great potential for CMM capture and use in the UNECE region. The Ad Hoc Group of Experts on CMM pursues a work programme intended to identify and address key barriers limiting further implementation of CMM projects in the region. In 2008, the Ad Hoc Group of Experts continued work on promoting the financing of mine methane projects in Central and Eastern Europe and the CIS countries. In addition, mine safety remains very closely tied to methane utilization, and the Ad Hoc Group of Experts received reports on two key initiatives directly related to mine safety: (a) review of regulatory frameworks to identify outdated or ineffective rules and statutes relating to methane degasification, and (b) assessment of the insurance industry’s support for additional mine safety improvements in methane degasification and utilization. In addition, the Ad Hoc Group of Experts cooperated closely with the Methane to Markets Partnership, and is currently in the first stages of developing a common terminology for the global industry.
Major Challenges for 2009
The major challenges for 2009 will involve the further implementation of the 2005 UNECE Reform that has had a positive, strengthening and integrating effect on the work programme of the Committee on Sustainable Energy. It introduced the environmental consequences of energy security into the heart of the Committee’s activities, which revealed the growing coincidence between sustainable energy policies and energy security. The work of each subsidiary expert group and extrabudgetary project under the purview of the Committee has clear implications for energy security. Indeed, the long-term sustainability of the region’s energy economy will depend largely on prudent energy security policies pursued today. During 2009 and the 2010-2011 biennium, the further consolidation of this approach will add value to the Committee’s work on energy efficiency, clean electricity production, natural gas, CMM, and energy reserves and resources. As a result, the Committee is likely to enjoy the ability to transfer the results of its intergovernmental expert dialogue on energy security into its operational programmes and technical assistance projects in each of these fields. This will lend greater weight to the expert dialogue on energy security during the annual sessions of the Committee, while providing increasingly meaningful direction to the activities of each expert group or project to produce the results requested by member States. The new project on enhancing energy efficiency for secure energy supplies from energy-exporting countries in the region should add a fresh dimension to the dialogue and practical work on energy security. The EE21 Project will work with ECEF to develop investment projects in Eastern Europe. With the selection of an international company as the investment fund designer, the project will begin work on the Public Private Partnership equity fund to finance energy efficiency investment in 12 East European, South-East European and Central Asian UNECE member States. The Committee on Sustainable Energy will address these challenges while benefiting from several advantages, including committed local experts, the interest of energy industry, government and financial-sector decision-makers and with significant extrabudgetary resources to complement the United Nations regular budget.
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