Montreal, September 2010

Developing efficient energy policies for the global market will not only require huge amounts of capital but also integrated solutions supported by both the government and private sector, according to a round-table discussion at the World Energy Congress 2010.

Chaired by Christopher Kearney, Chairman, President and Chief Executive Officer of SPX Corp., United States, the session was entitled, "Road map to efficient energy policies." It featured four participants from Iceland, the United Kingdom, the United States and Canada. Their central message: there is no single energy source that is a panacea for the energy challenges ahead.

Iceland appears to be taking a leading role in renewable energy use, as all of its electricity is derived from renewable resources, said Katrín Júlíusdóttir, Minister of Industry, Energy and Tourism, Government of Iceland. She said the key to renewable energy use is investing in infrastructure which is based on Iceland's energy policy to tap domestic resources. "We have more geothermal hot water than we need. Geothermal steam can generate electricity and hot water for space heaters. We use geothermal for heath care and spas which boosts tourism."

In addition, Iceland's potential for hydroelectric generation is bigger than its market. But even with its abundance of renewable energy, Iceland is still confronted by issues of sustainability and regional development, said Júlíusdóttir.

With rising energy prices, other countries could follow Iceland's lead by making the necessary investments in their renewable energy infrastructure, the minister suggested. And while domestic renewable resources cover 60-70 per cent of total energy used in Iceland, the transportation and fishing sectors are powered entirely by fossil fuels. Iceland has very ambitious plans to reduce the transport sector's dependence on fossil fuels through new technologies, the minister added.

In order to come up with a comprehensive energy policy, we need to start at the end, not the beginning, suggested Joan MacNaughton, Senior Vice-President, Power and Environmental Policies, Alstom, United Kingdom. "The scale of investment is huge, nearly $1,600 billion by 2050. While switching from coal to gas (to lower CO2 emissions) will get you to 2030, it will not get you to where you need to be beyond 2030."

That will require a range of policies to decarbonize the energy sector and a need to improve energy efficiency through a mix of technology, production efficiency and carbon capture. "We need to look to CO2 pricing on a regional basis. The less effectively we price CO2, the more the need for incentives, but I believe we need those anyway."

Since energy and economic growth are linked it's important to expand the energy supply, said Andrew Swiger, Senior Vice-President, Exxon Mobil Corp., United States. For developed nations, energy fuels commerce: while in the developing world, energy liberates people from poverty, he added. "By the year 2030, we expect energy demand to grow by 35 per cent in developed nations and 65 per cent in developing nations. Therefore we must expand all sources of energy. Fossil fuels will continue to meet most of the global demand until at least until 2030."

The critical challenge is to reduce emissions: will require integrated solutions and sound energy policies which will require both government and the private sector to have clear objectives. Governments can inspire confidence by encouraging transparency. And it is crucial energy policies maintain a level playing field for all participants, Mr. Swiger emphasized.

As conventional sources of energy become difficult to reach, unconventional sources become more important, Mr. Swiger said, alluding to Canada's oil sands than contain 13% of the world's untapped reserves.

But even non-conventional sources of energy can't meet global energy demands which will increase by 50 per cent by 2030, said David Collyer, President, Canadian Association of Petroleum Producers, Canada.

Canada's energy policy is based on a large resource base that can provide a platform for fulfilling the world's energy needs. The industry must address the public perception of its activities, said Mr. Collyer. "We have to raise the profile of energy efficiency and conservation," he said. "Honest conversations about real energy options and costs need to take place and we need to demonstrate leadership. Policy harmonization with key trading partners is also important."

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