UNUnited Nations Economic Commission for Europe

Press Releases 1998

[Index]

UN/ECE COMMITTEE ON SUSTAINABLE ENERGY ANNUAL MEETING: HIGHLIGHTS

19 October 1998

The Committee on Sustainable Energy met in Geneva for a three day session that substantively reinforced the work of this key UN/ECE group, the principal subsidiary body of the Commission in the field of energy whose 55 country membership includes North America, western Europe and the transition countries of central/eastern Europe, the CIS, the Baltic States and Israel. The mandate of this committee are in the areas of sustainable energy, energy efficiency and gas as well as on coal and thermal power and electricity interconnections.

ECE Executive Secretary, Mr. Yves Berthelot, highlighted the key issues that were taken up by the Committee:

- The opening and liberalisation of energy markets;

- The energy sector's potential response to climate change in the light of the Kyoto Protocol of the United Nations Framework Convention on Climate Change; and

- The need to focus attention on improving energy conservation and efficiency.

Liberalisation/Restructuring

Liberalisation of energy markets will affect the competitive setting of energy producers and distributors and impact energy consumers. This process, already advanced in North America, the Nordic countries and the United Kingdom, is seen as a probable continuing trend for the entire ECE region. Restructuring, liberalization and privatization that are taking place in the energy sector are likely to enhance energy security and promote a more efficient allocation of resources, greater consumer choice and the continued development of new sources of energy to meet demand. But there is the need for Governments to strive to strengthen energy security by championing energy conservation and efficiency, expanding the fuel mix and diversifying sources of supply. A potential economic/political problem concerning energy security, in reference to the new development of energy supplies from the Caspian Sea, is the need for confidence by investing countries in the region's social and economic stability and the paramount importance of the rule of law. Otherwise, investment is not likely to develop at a rate consistent with the importance of the newly discovered reserves.

Coal

Progress in the next four years was seen as crucial in attaining goals. Productivity gains were viewed as a positive element but employment problems (e.g. those associated with mine closures) particularly for transition countries are a continuing policy challenge.

It was stated that rational pricing policies aiming towards world market prices were needed for coal and for all forms of energy in general. This would include the removal of state subsidies.

A problem for the coal industry in transition countries was stated to be the lack of adequate financial support, in view of the squeeze on state budgets, a factor in western Europe as well. Investment was also seen as inadequate to support the modernization of the industry in transition countries.

It was concluded that the restructuring process in central/eastern Europe and the CIS are advancing but at different paces with social problems faced by the major coal producers.

Gas

The diversity of the situation in the transition countries was noted. Integration into the European gas market is an objective for transition countries as it allows for an enlargement of the entire European gas market with the attendant benefit of increased competivity and security of supply. The key issues facing the gas industry were stated to be:

- Establishment of a stable and transparent regulatory framework;

- Rational pricing policies including the elimination of cross-subsidies between household and industry. The problem of non-payment was also said to be a serious matter in Russia and other transition countries;

- Marketing strategies; and

- Long-term security of supply, which was seen to be enhanced by long-term contracting.

Electricity

Technical, economic and institutional forces are all part of the restructuring equation in the electricity sector. The main challenge facing the electricity sectors was seen to be the technical and organizational restructuring of electricity generation, transmission and distribution systems. The key targets in the restructuring process were seen to be:

- Promotion of competition generally;

- Regulation of the natural monopoly of transmission and distribution and the introduction of new market means for enhancing competitivity, thus forcing a change in these market structures such as third party access and unbundling of production, transmission and distribution; and

- Limitation of environmental impacts.

The new EU directives in gas and electricity were seen as a force towards liberalisation of markets and would enhance security of supply as well.

The Kyoto Round Table: On the Eve of the Buenos Aires Conference

The Kyoto Protocol to the Framework Convention of Climate Change was the focus of a Round Table organised by the Committee. The timing of this Round Table is particularly appropriate for two reasons. It occurred just one month before the crucial Fourth Conference of Parties of the Climate Convention to be held in Buenos Aires. Equally important, the stakeholders -- energy industries in particular -- had a voice at the Round Table in expressing their views on how the issues relating to the Kyoto Protocol might be dealt with. These issues include emissions trading among developed countries and both among developed countries and between developed and developing countries, joint implementation and the AClean Development Mechanism@, aimed at fostering greenhouse gas reduction projects carried out between partner countries.

The Energy Efficiency 2000 Project: Achievements/New Directions

The UN/ECE Energy Efficiency 2000 project has fostered, for a number of years, Energy Efficiency Demonstration Zones in ECE transition countries. A success has been the leveraging of comparatively small technical assistance support in the Project to obtain much larger technical assistance grants. One example: the Project worked with the World Bank, with the support of Norway, for investment in eight Energy Efficiency Demonstration Zones in Russia.

The Project's Action Plan looks beyond Demonstration Zones to encourage the transformation and modernisation of transition country energy sectors through networking, traditional capacity development and technical assistance activities to facilitate the implementation of energy efficiency projects. Future work will aim at legal, legislative and policy matters geared at improvement of the overall investment climate for energy efficiency projects and to stimulate trade and co-operation between the western countries and transition countries, particularly in energy efficiency demonstration zones. The Project's Bureau foresees the need to enter into a new phase, "Energy Efficiency 21" to assist governments to meet their international treaty commitments under the Kyoto Protocol and the UN/ECE Convention on Long-range Transboundary Air Pollution.

Gas and the ECE Gas Centre: Key Elements in the ECE Energy Picture

The work in the gas sector concerns upstream and downstream activities, carried out by the Working Party on Gas, and in the area of technical cooperation, by the UN/ECE Gas Centre. The Working Party on Gas has major projects underway on underground gas storage, interconnections of gas networks and is finalizing an international map of gas fields. The Gas Centre, supported by 26 major gas companies from 20 ECE countries, is organizing forums on topics of strategic importance, for example on market liberization, introduced by the EU Gas Directive, and on market-oriented reforms in general.

UN Framework Classification for Solid Fuels and Mineral Resources

This classification, developed by UN/ECE, will enhance communication on a a national and international level, provide a framework for evaluating the existing reserves/resources on a common market-oriented basis and make investment in solid fuels and mineral commodities safer and more attractive. This work is being presented to other UN regional entities in Bangkok,Thailand this week.

For more information please contact:

Mr. George Kowalski, Director
Energy Division
United Nations Economic Commission for Europe (UN/ECE)
Palais des Nations
CH - 1211 GENEVA 10, Switzerland
Telephone: (+41 22) 917 2761
Telefax: (+41 22) 917 0038
E-mail: [email protected]