Ecology and Energy Options

Chaired by H. E. Mr. Pierre Elliott Trudeau
29-30 April 1989
Montreal, Canada

1. Global warming is with us. If present trends continue unchecked, rapid and continuous shifts in climate - including possible droughts in mid-continents and increases in frequency and intensity of tropical hurricanes - accompanied by increases in sea-level will occur over the next decades. These changes are bound to endanger the well-being, perhaps the survival of humanity as well as the security and physical integrity of entire countries - and they are already beginning to create anxiety among the people in many countries. While all scientific phenomena may not yet be fully understood, the long lead time for remedial measures to show effects calls for immediate action by all countries, individually and collectively. The world cannot afford the risk of being complacent: no country will be able to escape the risks of global warming. The cost of inaction now will become staggering a few years hence triggering political tensions and conflicts hitherto unknown.

2. The greenhouse effect - the increasing accumulation of a variety of gases in the atmosphere which trap heat and reflect it back to the earth' surface - is the principal cause of the evolving global climate change. Carbon dioxide (C02) alone accounts for more than half of the gas build-up - largely caused by energy consumption patterns and by deforestation. Other gases, including methane, nitrous oxide, chlorofluorocarbons (CFC) and tropospheric ozone are responsible for the remainder. The present pattern of use of fossil fuels is also responsible for local air pollution and acid deposition. CFCs are responsible for destruction of stratospheric ozone.

3. Energy is basic to any economic growth and developing countries, in particular must pursue economic growth policies to develop. Population growth, especially in the third world, the quest to raise standards of living, an expansion in economic activity and wasteful attitudes in energy consumption will be key determinants for future energy demand. Although the experience of OECD countries suggests that growth in GNP is not necessarily coupled to similar growth rates in energy demand, all scenarios about energy requirements until well into the next century - despite their differences - agree that considerable increases in fossil fuel use will happen unless effective corrective action is taken (for examples see appendix).

4. All Governments must therefore adopt the stabilization of the composition of the atmosphere as an imperative universal goal. A reduction in emissons of C02 will be critical to reach such a goal and there is general agreement that a scientific and technical solution to the C02 problem is possible given the political will to initiate and manage the process. Various proposals call for the adoption of benchmarks for CO2 emission reductions within specific timeframes. The 1988 Toronto Conference on Global Climate Change, for example, called for a global reduction of emissions by 20 % by the year 2005. However, most experts consider such a reduction as insufficient to stop global warming. To this end, a much higher reduction target would be more appropriate. Accordingly, other targets suggest more significant C02 reductions to produce a stabilization of the C02 content of the atmosphere at the 1985 level within a decade. Such a step would require a major global shift away from fossil fuels starting immediately. Given their past pattern of energy use, industrialized countries have a special obligation to decrease their CO2 emissions drastically to show the way for the transition period.

5. Targets must be adopted as an initial point of departure by the national parliaments of OECD countries, the OECD and IEA, the summits of the industrialized countries, the European Communities, the Council for Mutual Economic Assistance, the Movement of Non-Aligned Countries, the Organization of African Unity, the ASEAN countries, the Organization of American States and other similar groups. In the age of interdependence, all leaders have a political and moral obligation to go beyond a verbal commitment to these targets so as to avoid encumbering future generations with the consequences of global warming. The public expects them to be more specific as to the policies required to reach those quantitative reductions and to launch and manage the necessary action. The industrialized countries must immediately take the lead in order to induce complementary action by the developing countries. A safe and sustainable energy future must rely on new thinking and new approaches in all countries. Thus, special advocacy and education campaigns will have to reach out, with the support of the media, to all strata of society.

6. Developing countries have a special responsibility to adopt vigorous plans to control population growth. An unabated population explosion coupled with anticipated economic growth will substantially increase energy demand worldwide cancelling out any savings accomplished in developed countries. As most of the energy needs of developing countries are satisfied at present through deforestation and the use of fossil fuels, the detrimental impact on global climate is inevitable.

7. To foster openness and accountability and to stimulate public pressure, the International Energy Agency should incorporate in its annual reviews of the energy policies of member countries a system of monitoring performances in reducing C02 emissions and in the effectiveness of relevant policy measures. Such systems should subsequently be established for other regions, and eventually be consolidated within the framework of the United Nations.

8. An effective CO2 abatement strategy must comprise a mix of short, medium and long-term policies, to be adopted by all countries, in order to realize any agreed target.

- In the short term, conservation and increases in the efficiency of energy use (demand) and production (supply) must become the cutting edge of national energy and environmental policies.

- In the medium-term, a shift in the fossil fuel mix from coal and oil to gas, taking advantage of their different carbon contents, will help to reduce CO2 emissions.

- In the long-term, there must be a massive promotion and aggressive introduction of renewable sources of energy on a large scale.

9. Time, capital and institutional innovations will be critical determinants for the policies of transition toward a new energy era. There can be no universally applicable prescription to accomplish a decreasing use of fossil fuels. Each country must make its own choice, but it must contribute - individually, regionally and globally.

10. Prices have proved to be an effective tool in influencing energy consumption. Between 1973-1985, high energy prices drove the significant gains made by most OECD countries in energy productivity. In the medium term, the price-elasticity of demand for all energy sources has been substantial. To help bring about the desired reduction in the demand for fossil fuels, Governments should therefore introduce "conservation pricing" of energy (as recommended by the World Commission on Environment and Development), reflecting external costs to the environment. This could be accomplished through a well-devised system of subsidies, taxes, levies and incentives although public opinion must be convinced that such instruments are appropriate for the purpose. All or part of the revenues obtained could be earmarked for the support of policies by developing countries in the energy sector (see para. 36 below).

a) Levies could stabilize relative energy prices or, at least, prevent a decline, although the level and technical feasibility of each levy would have to be established;

b) Levies could deliberately increase relative energy prices or, at least, the prices of fuels with CO2 emissions in order to induce steady annual gains in energy productivity or switches to other energy carriers. (The global target for energy productivity improvement should be at least comparable to the rate of global economic growth so that overall energy use would stay roughly constant. Industrialized countries might have to attain a higher target so as to reduce their currently high per capita levels of energy use.)

c) In the present structure of energy subsidies, incentives for the use of fossil fuels should be removed and incentives to accelerate the coming on stream of bio- and renewable energy technologies should be introduced.

11. Massive research and development (R&D) programmes need to be funded by governments and the private sector in all areas of energy use and supply, ranging from improvements in energy efficiency and the efficiency of end-use technologies, to the development of new and renewable sources of energy and, where applicable, to the problems of the safety, waste disposal and diversion-resistance of nuclear power technology. Research should equally be accelerated in order to gain a better understanding of the processes underlying climatic change.

12. International agreements and assistance may help accelerate the overall process. Thus, all nations should immediately start negotiations leading to the early adoption of a global convention on the global warming issue. Such a convention should, among others, provide for

a) A control of the emissions of all greenhouse gases;

b) Agreed levies on the carbon content of all carbon fuels;

c) The establishment of an international fund to support developing countries with measures to prevent and adapt to the consequences of global warming (see para. 36 below); and

d) The formal creation of a global monitoring system (see para. 7 above).

13. Energy policies must henceforth be harmonized with environmental objectives and concerns, fully integrated into the overall decision-making process of a nation and oriented towards sustainable development. Human and natural resources should be able to support the development and welfare of the world's people now and in future. In that respect, the United Nations should build on the 1972 Stockholm Declaration and elaborate a code for the protection of the environment defining each nation's responsibilities and rights in preserving and improving the global environment.

14. If the proposed policies are implemented, consumption and production patterns will change and may have a positive impact on global quality of life, changing in the process our culture. Even if the greenhouse effect should turn out to be less dramatic in its consequences than currently predicted, a better global energy structure would have emerged, leaving more room for decisions by future generations.

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ENERGY EFFICIENCY AND CONSERVATION

15. In the short run, energy efficiency and conservation measures will be crucial in reducing demand for and supply of fossil fuels and, thus, their emissions. In the 1970s and 1980s, the OECD countries pursued conservation in a quest for energy security without regard to environmental issues. In the future, increased use efficiency, conservation and energy waste reduction by all countries will hold a significant potential for reducing energy demand - and thereby C02 emissions. Moreover, energy-saving technologies and efficiency policies can bring about real economic benefits and help to preserve the limited and increasingly costly fossil fuels for alternative uses, e.g. in chemistry, and for use by future generations. While small by themselves, energy use improvements can cumulatively help maintain globally current levels of energy consumption for several decades without impinging on the economic growth prospects of nations. In their research and investment policies, regulatory and other efforts, countries should therefore accord top priority to energy efficiency improvements and the development of environmentally sound technologies. As energy efficiencies in various industries, transportation and home use vary from country to country by a factor 3, there is a potential for greater global reduction if a mechanism can be devised for the transfer of advanced technologies.

16. Regulatory policies, in particular, should be modified to mandate a steady improvement in the efficiency of energy use appliances, lighting, transportation and production technologies. Governments should be encouraged to take unilateral measures following the commendable lead taken by Sweden or the Southern California region.

17. Specific practical measures could be:

a) Mandatory thermostat adjustments for public and government buildings;

b) Expansion of public transport systems and promotion of ride-share arrangements;

c) Co-operative global targets for increases in automotive fuel economy (to the range 40-50 miles per gallon (mpg) by the year 2000 and 80-100 mpg by 2010), to be agreed upon by the auto industry (this would also reduce the pollutant tropospheric ozone);

d) Reduction in paper use and increased recycling of waste paper;

e) Increased bio-control schemes to reduce the use of pesticides.

18. Price and non-price incentives need to be devised which will encourage conservation across the board and nurture the development of an industry that sells energy services. The price of each energy source must reflect its full production costs (including, to the extent possible, environmental costs). Subsidies stimulating energy use must be eliminated in order to induce efficiency. In preparing for 1992, the countries of the European Community will bear a special responsibility in that regard.

19. While initial savings from efficiency and conservation measures may be considerable, the problem becomes more complex in the long run, when substantial shares of energy will have to be saved. How much can reasonably be saved and what is a reasonable level?

20. On the supply side, adequate technologies should be developed to reduce the fossil fuel components, especially in the generation of electricity, where promising opportunities for improving efficiency in fuel-based power generators involve shifting from steam to gas turbines.

21. At the national level, the establishment of a new mechanism bringing together the private sector, labour, governments and environmental groups may foster the emergence of new strategies and stimulate innovative corporate responses to the problem.

ADJUSTMENTS IN THE ENERGY SUPPLY MIX

22. If the use of fossil fuels is to be significantly reduced, savings and gains in energy efficiency alone will not suffice. New and cleaner ways of producing energy will have to be developed on the supply side. Each country will have to tailor its own solution in the light of its specific circumstances. The available options are:

a) A substitution between hydrocarbons toward the use of fossil fuels with a lower carbon content (more gas for oil and coal);

b) The development and introduction of renewable energy resources, such as biomass and solar, to substitute for hydrocarbons;

c) The use of nuclear energy.

23. In the medium term, a shift in the fossil fuel mix from coal and oil to gas should be encouraged, because gas emits 43% less C02 per unit energy produced than coal. Further, gas installations are usually considerably more efficient and burning gas emits almost no sulfur dioxide and, thus, creates less acid rain. There is an enormous potential of natural gas to be tapped in centrally planned economies, in Europe, the Middle and Far East and North America. It takes, however, time to build the expensive infrastructure including necessary transport facilities.

24. In developing countries and in some developed countries, there is a strong momentum to use more fossil fuel products. The announced plans of developing countries like China and India to expand greatly the number of their coal power plants causes concern as their emissions would offset any savings in CO2 emissions by other countries. National interests and the global dangers associated with a growing greenhouse effect must be reconciled and developing countries should be vigorously assisted in finding ways to do so.

25. The nuclear option will remain a part of the picture. Nuclear energy is one of those energies which avoids C02 emissions. It is one of the most advanced, industrialized of all energies, but is also seen as inefficient and uneconomic if one includes the cost of permanent disposal of spent fuel rods and decommissioning of plants. Because of its high risks and proliferation potential, it cannot be considered as the solution to the climate warming problem. On the other hand, a shut-off of nuclear reactors would at present lead to increased use of coal and gas.

26. Decisions about nuclear energy must rest with each individual country. Given widespread public opposition, however, there are currently no new nuclear plants in the pipeline. Owing to the cross-frontier risks of nuclear power generation, more effective internationally binding rules and regulations governing the management of nuclear energy and standards of operation will have to be developed and made mandatory.

27. The establishment of nuclear energy centers may offer a practical solution, also in view of the non-proliferation aspects. In general, more research funds may have to be allocated to scrutinize more intensively safety and waste disposal problems and to explore the potential of nuclear fusion and superconductivity.

28. The least cost option should be the guiding principle for all decisions comparing costs of actions on the demand side with the different options for supply - with a full reflection of environmental costs. In institutional terms, the energy sector, which is vertically organized in strong competition (i.e. oil, gas, coal and nuclear power), may have to be re-organized into horizontal industries so as to market energy services to satisfy end-uses on a least-cost basis. The private sector in OECD countries will have to play a major role in the transition period, in particular in developing technological solutions and initiating joint ventures with Eastern European and developing countries.

THE NEED FOR RAPID EXPANSION OF RENEWABLE ENERGIES

29. In order to stabilize the present composition of the atmosphere and subsequently reduce C02 and other greenhouse gases, there must be a policy commitment to the rapid development and deployment of renewable energy resources such as biomass, photovoltaics, winds, hydroelectric and others in lieu of fossil fuels. Hydrogen as a new clean fuel should also be promoted as a secondary fuel. In the long run, these energies represent the best hope for a safe and secure energy supply. They have a particular potential for developing countries if used efficiently and for urban areas with big pollution problems. Certain types of renewable energies, however, may not be apt for certain countries. e.g. biomass dependent on sufficient water supplies is unlikely to succeed in arid countries.

30. Substantially increased research and development is urgently required to develop renewables in all countries and to achieve a quantum leap. The private sector will have to play a special role. The initial focus should be on bioenergy - both biomass production and bioenergy conversion-technology and science. In developing countries, particular attention should be paid to the development of substitutes for fuelwood to slow down deforestation. The supply of inexpensive cooking stoves will decrease by several times the amount of wood now used for cooking on open fires.

31. It should be borne in mind, however, that the large-scale uses of biomass and other renewables will have an impact on land-use patterns, life style and innovations, that is, ultimately, culture.

THE CHALLENGE IN DEVELOPING COUNTRIES

32. Developing countries are trapped in the traditional paradigm that GNP growth must lead to energy growth. This has led to a pattern of consumption and growth that aggravates the greenhouse effect and is ecologically unsustainable. If adjustments are requested on account of global warming, developing countries may interpret this as an effort to impede their development. This greenhouse-development dilemma must be overcome through a new approach. Energy services must replace energy consumption as a true indicator of development with priority assigned to energy services for basic needs on an incremental least-cost basis.

33. In developing countries "technological leapfrogging" of the present pattern of development should be promoted. To this end:

a) Energy efficiency should be made a major design feature of development planning and become a decision factor for all investments in new plant and equipment and should not only be limited to "retrofitting" of existing capacities.

b) Bilateral and multilateral development assistance agencies should reorient their approaches and eliminate any bias against investment in new technologies in spite of powerful commercial and institutional vested interests that may push "wrong" technologies for energy supply, industry, agriculture and transport not scrutinized under the least-cost approach. Loans for energy projects should only be approved if they demonstrably will not cause undue environmental damage beyond the project completion period. Furthermore, the international financial institutions should begin to support energy-saving ventures from the demand side instead of concentrating exclusively on the energy supply projects.

c) R & D centers should be established in developing countries to promote energy-intensive basic industries to serve as "engines of growth" during the period of infrastructure-building (e.g. in the steel, cement, fertilizer, and glass industries).

34. As most options, including the introduction of renewable energy sources will have to be purchased or developed and will therefore require capital, this will be a major constraint for the developing countries, especially the highly indebted ones.

35. Within the framework of the United Nations, a tripartite commission comprising OECD, the Council for Mutual Economic Assistance (CMEA) and developing countries should be established to study and recommend co-operation measures to enable developing countries to implement CO2 -reducing policies.

36. There is a strong case for the establishment of an international fund to finance domestic and international programs designed to promote an efficient energy future and the transition to a stable climate. This fund could be financed both from the proceeds of a national or an international system of greenhouse gas (particularly CO2) emission levies (see para. 10 above) and from direct Government contributions. The recent decision of the Government of the Netherlands to pledge unilaterally funds for action by developing countries to stabilize the global climate is most encouraging and should be emulated by many other industrialized countries. Alternatively, countries could be asked to make contributions in accordance with their annual CO2 emissions which are known (see para. 7). Developing countries should use the available resources: to obtain specialized technology for environmental risk reduction; to accelerate the transfer of energy efficient methods for their industries; to stimulate the development of new needs-oriented technologies with a view to promoting environmentally sustainable development and energy efficiency, halting deforestation and facilitating the transition to energy paths without excessive reliance on fossil fuel use.

37. In developing countries, there is need for the emergence of credible non-governmental organizations (NGOs) which could increase internal pressure on decision-makers to take into account their global responsibilities. In most cases, external pressures through donor governments, agencies and international NGOs are already applied but they may not have the same impact as that from domestic organizations. New mechanisms or prizes may have to be established so as to confer recognition to heads of state adopting policies to counter global warming trends. Such symbolic acts may be particularly important in situations where a country has sacrificed its immediate welfare for global interests and where international commendation may bolster further leadership and resolve.

OTHER MEASURES TO COMBAT GLOBAL WARMING

38. Intensified research must urgently be undertaken into possibilities to reduce the emissions of other greenhouse gases besides CO2, namely methane, nitrous oxide, CFC's or their substitutes, tropospheric ozone (a pollution product).

39. A determined global effort is required to stop deforestation and the decline of forests in all continents - tropical and temperate countries alike - and to launch effective and large-scale programmes of afforestation and reforestation which will help to recapture CO2 from the atmosphere, to prevent soil erosion, to improve the soil water balance and to preserve species. All such programmes should seek to work with communities in order to ensure greater success than has been recorded by experts who endeavoured to re-afforest countries for or on behalf of the natives. One additional intriguing feature of new forests would be that they would open the way to efficient methods of biomass burning for electricity generation, such as gasification and the use of aeroderivative gas turbines. The InterAction Council, in 1988 made detailed proposals on this issue and the urgency of their implementation is again underlined.

APPENDIX

I. Facts and figures

- The total consumption in primary energy consumption will have more than doubled by the year 2000 even if present growth rates in consumption are only slightly reduced.

- The overall growth in energy consumption averaged 2.85 per cent per annum since 1968. The pattern of growth was much faster prior to 1974 (4.47 per cent), followed by relatively slow growth until 1984 (1.97 per cent) and a strengthened growth since then (2.59 per cent).

Average Annual Growth Rates in Primary Energy

(Per cent)

1968-74    1974-84    1984-87    1987-2000
OECD    3.57    0.47    1.40    1.40
CPEs    6.62    3.22    3.59    2.89
DCs    6.52    5.73    4.23    3.74
World    4.47    1.97    2.59    2.34

- The worldwide consumption of oil has fallen over the last ten years both in absolute and relative terms - while the shares of other fuels have steadily increased worldwide with coal and nuclear taking the major part of this increase.

- During 1974-1984 there was negative annual growth (-1.45 per cent) in oil consumption by OECD countries.

- With the fall in oil prices since 1984 consumption has picked up again in OECD countries, but growth has continued to decline in developing countries.

Distribution of oil Consumption by region

(per cent)

1968    1974    1984    1987    2000
OECD     71.1    66.9    57.0    56.4    52.5
CPEs    15.6    18.9    23.1    23.1    22.9
LDCs    13.3    14.1    19.1    20.5    24.6
World    100.0    100.0    100.0    100.0    100.0

- Over the past several years, nuclear energy consumption grew at more than 10 per cent annually, and accounts now for 8.45 per cent consumed in OECD countries.

- The centrally planned economies (including China) realized both a decrease in oil and coal consumption, due to the increase in natural gas (now 23 per cent) and nuclear energy.

- In China, coal grew to take a larger share and natural gas was reduced.

- In the developing world, non-commercial sources (fuelwood) make for an important contribution and are also the cause of environmental degradation. While no authoritative statistics exist for this sector, it is estimated that these fuels account for more than 10 per cent of world primary energy consumption.

- On the basis of present trends, coal consumption will grow at 3 per cent annually, i.e. the world will consume 86 per cent more coal by the year 2000 than it did in 1977. More than two-thirds of the consumption will take place in developing countries and centrally planned economies.

- In the past, a population growth of 2% was associated with an increase of 3 per cent in energy consumption per capita.

- The industrialized countries - a mere 1/6 of the world population - account for 50% of the total world consumption, while the developing countries - 2/3 of the world population - consume 1/6 of total energy.

- If present trends continue, the concentration of CO2 in the atmosphere would double by the year 2065. With the simultaneous increase in other greenhouse gases, the effective doubling date will be 2030.

II. Pattern of Consumption

Relative Shares of Various Energy Sources

(in per cent)