Communique. Meeting of the Governing Board at Ministerial Level

Key Messages:

We can and will achieve a sustainable and secure energy future through stronger actions now to:

• curb our growing energy import dependence as world reserves narrow to fewer sources;
• lessen our economic vulnerability to high and volatile energy prices, including through increased energy efficiency measures; and
• reduce the environmental impact of the world’s growing reliance on fossil fuels.

Energy Security:

1. Energy security remains our core mission, particularly in oil, gas and electricity. Our vision of energy security is greater global availability of reliable, affordable, clean energy. Persistent high energy prices are a significant concern for us, as they are a drag on economic activity and growth, and penalize the poor. We remain resolute in our commitment to act together to ensure adequate supply in times of market disruption.

2. Speculation is a concern in oil markets, but it is not the underlying cause of volatility and high prices. Energy markets require both timely investment and sufficient stocks to absorb unpredicted yet inevitable surprises. Price subsidies distort markets and barriers to investment impose capacity restraints. Today’s prices demand actions to stimulate and diversify energy supply and curb demand.

3. Our deepening dialogue with oil producing and major consuming countries has proven critical to promoting market stability and we welcome efforts by producers to increase supplies to meet growing demand. We are particularly pleased to be joined today by Minister Elizondo of Mexico, a major oil producer and Member of OECD. In cooperation with producers and building on the example of the Joint Oil Data Initiative, we will seek higher standards for transparency in oil markets through better data.

4. A challenge confronting producers and consumers alike is the need to strengthen the flow of capital to the energy sector. IEA estimates that $16 trillion in investment will be needed in the energy sector by 2030. However, we are witnessing underinvestment in power generation and transmission and up and down stream along the oil and gas value chains. We reaffirm our conviction that market forces must guide the shaping of these competitive markets as governments remove impediments to investment.

5. We commit to creating a more stable and transparent framework to ensure adequate and timely investment. We call upon governments world-wide to adopt this commitment as their own. We recognise that private sector investors face different risks in reforming markets and that they will require new mechanisms to manage risk and induce the needed flow of capital.

Global Energy Markets:

6. We welcome the participation of Vice Minister Zhang Xiaoqiang from the People’s Republic of China. China’s rapid economic growth means greater economic welfare for its 1.3 billion citizens. However, fuelling that growth in China and the rest of the world will be a major challenge. We will reinforce our effort to share our experiences and best practices world-wide to help us all embark upon a more sustainable energy path. Our relations with China exemplify the importance of such dialogue with other major energy producers and consumers worldwide. We applaud China’s determination to build strategic oil stocks.

7. We welcome the participation of Minister Piechota from Poland and Vice Minister Pomothy from the Slovak Republic and recognize the considerable progress by Poland and the Slovak Republic in meeting the conditions of IEA membership. Their membership will also reinforce our collective ability to deploy up to ten million barrels of oil per day during several months in times of severe supply disruption. This remains our most important first line of defense. Adequate strategic and commercial oil stocks are especially important as asymmetry grows between where the world’s oil is produced and where it is consumed.

Cleaner Energy Systems Worldwide:

8. In a business-as-usual scenario, IEA projects that 85% of the world’s incremental energy needs over the next 25 years will be met by fossil fuels. Global energy demand and carbon emissions both grow 60%. Under this scenario, developing country carbon emissions would double by 2030, surpassing the OECD, and nearly 1.4 billion people would still have no access to electricity in 2030.

9. But we are not bound to any business-as-usual energy future.

10. IEA’s Alternative scenario shows that by implementing policies we have under review today, we could reduce IEA consumption by 10 per cent and CO2 emissions by 16 per cent by 2030 below the reference scenario. End use efficiency would contribute 60% of this. The rest would be realized by better power generation using clean coal technologies, more gas and renewables and nuclear power in those countries having chosen nuclear power as an option. Yet we can do better.

11. OECD countries’ energy efficiency improved even faster between the oil shock of 1973 and 1998. Our collective energy consumption would have been 49% higher absent the efficiency savings over that period. Efficiency gains have slowed since the mid 1980s but stronger policies now can reverse that trend. We commit to reinforcing our efficiency effort and we instruct the IEA to monitor our efforts to do so, including in our peer Country Reviews and in sharing our best practices globally.

12. A sustainable lower carbon future is clearly possible, but only through more rigorous policies, market-based instruments and by engaging the rest of the world. We will do this directly and through existing mechanisms including G8, UNFCCC and elsewhere. This is a shared responsibility.

13. We must extract more from today’s technologies and accelerate tomorrow’s if the promise of technology is to become its reality. We can and will increase the efficient, cleaner use of fossil fuels, even as we identify and deploy cost-effective low or no-carbon fuels. Accelerating energy technologies requires substantial private and public resources. We undertake to do our part to mobilize strong financial and policy support for these essential energy technologies.

14. With the lessons of the past and our vision of the future as guides, we will draw on the power of markets, the promise of technology and our policy resolve, to achieve for ourselves and the world, secure and sustainable energy for future generations.

15. Ministers stressed the important role of the IEA in meeting energy security and sustainability challenges, emphasising the importance of demonstrating clear and measurable outcomes in this regard. To further enhance the effectiveness of the IEA, Ministers agreed to prioritise the IEA work programme, with a focus on:

• improved transparency and analysis of energy markets;
• improved engagement with key non-member countries;
• the pursuit of energy efficiency, particularly in the transport and building sectors;
• research and development of cleaner combustion technologies and carbon dioxide capture and storage;
• encouraging an improved investment environment to meet the challenges of future energy demand, much of which will occur in the developing world; and
• further work on economic growth and CO2 reduction.

16. In order to bridge the gap between what is happening and what needs to be done, IEA will help to develop strategies aiming at a clean, clever and competitive energy future. This needs leadership and co-operation.