IEA Climate-energy policies

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Many countries around the world are embarking on transitions to sustainable energy systems. Others are already well underway. These transitions will involve fundamental and interrelated changes in technologies and fuels used, infrastructure built, policies employed, markets and institutions. Lessons learned by countries whose transitions are already underway are potentially transferable and could help enhance effectiveness of policy packaging in other jurisdictions. International Energy Agency works on “real-world policy packages” investigates and addresses the complexities of layered energy-climate policy mixes and their interactions. We aim to help national policymakers deliver more effective, realistic, and well-integrated low-carbon climate and energy policies that take account of local political realities. Issues include integration of energy and climate policies with wider policy objectives, exploring the realistic role for moderate carbon prices, and understanding the benefits and trade-offs of “second-best” policy approaches. The work draws upon IEA’s world leading scenario modelling, as well as working directly with government policymakers to understand choices and trade-offs in policy packages in differing national contexts.

The historic Paris Agreement on climate change sets the course for a fundamental transformation of the global economy over the next decades. The Agreement’s overarching goal of limiting global average temperature rise to “well below 2°C” will entail profound changes in the global energy system. Achieving the deep cuts in global carbon emissions that this vision requires is no small task given the enormous challenge of implementing and eventually exceeding current country climate pledges. Carbon pricing is a critical element of energy-climate policy packages. Accurate pricing of energy drives decisions in investment, operations, and consumption across the energy sector by all actors. One form of carbon pricing, emissions trading, is a way of introducing flexibility into a system where participants have to meet emissions targets. These participants may be countries, or companies. Participants can buy units to cover any emissions above their targets, or sell units if they reduce their emissions below their targets. The presence of a market for these units creates a value for emissions reductions which stimulates investment in the most cost-effective areas.

Founded in 1974, the IEA was initially designed to help countries co-ordinate a collective response to major disruptions in the supply of oil. While this remains a key aspect of its work, the IEA has evolved and expanded significantly. The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy, demand side management and much more. Through its work, the IEA advocates policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries and beyond. The history of the IEA began with the 1973-1974 Middle East War crisis and its immediate aftermath. While oil producing countries appeared relatively well organized to utilize their new oil based economic and political power, many OECD countries found themselves inadequately equipped with the information and organization necessary to meet the corresponding challenges. For the most part, these countries permitted excessive and even wasteful and inefficient use of energy and of oil in particular. Energy conservation measures were woefully underdeveloped and oil production potential was not fully realized, nor was sufficient investment devoted to the development of alternative energy sources. They had also yet to devise a workable system for responding to serious disruptions in oil supply and their organizational arrangements for co-operation could not enable them to cope effectively with the institutional implications of those situations.

The policy and institutional lessons of the crisis led swiftly in November 1974 to the establishment of the IEA with a broad mandate on energy security and other questions of energy policy co-operation among Member countries. The main policy decisions and the Agency framework were firmly anchored in the IEA treaty called the “Agreement on an International Energy Program”, and the new Agency was to be hosted at the OECD in Paris. The Agency would become the focal point for energy co-operation on such issues as: security of supply, long-term policy, information “transparency”, energy and the environment, research and development and international energy relations. While these remain key aspects of its work, the IEA has evolved and expanded over the decades. It is today at the heart of global dialogue on energy, providing authoritative statistics and analysis and examining the full spectrum of energy issues, advocating policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries and beyond.

 

Author is an Executive Editor of Mélange int’l Magazine and Secretary Information Center of Pakistan and International Relations (COPAIR)

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