"The energy industry is going through rapid change and transition and faces what are, perhaps, unprecedented challenges. Global market growth will continue in the long term despite the recent slowdown. Yet reducing emissions and global environmental protection are part of the mainstream political agenda. New technologies offer both new opportunities and challenges. The structural backdrop is ongoing liberalisation and globalisation of markets. These issues are complex and inter-relate, that is why the International Centre for Energy Policy and Technology (ICEPT) aims to provide high quality analysis at the policy/ technology/environmental interface. By way of introduction some of these key themes are considered here.

Global Growth and Development
World consumption is already growing at a rate equivalent to the UK's entire energy market each year. This adds the equivalent of an entire USA market - currently the world's largest energy consumer - every decade. Yet today two billion people are still without access to modern energy. As populations grow and urbanise, access to traditional energy forms becomes difficult, and local environments may be degraded. Localised and indoor pollution from traditional sources can be severe. Modern energy services are key to both improving living standards and facilitating economic growth.

Yet expanding energy supplies is a major challenge. Continued expansion in rural areas of the developing world - beyond the grid - is a technological challenge, reaching poorer people an economic, developmental and policy challenge. Combining growth with environmental protection may be the biggest challenge of all.


Environment
Tackling climate change and cutting carbon emissions has become a stated objective of energy policy in many industrialised countries. The UK recently committed to a 60% CO2 cut 'aspiration' for 2050. Many of the rich nations, by far the largest per-capita emitters, have committed to the so-called 'Kyoto' targets to reduce emissions. There are serious doubts already as to whether it will be possible for all nations to meet the targets in the 2008 - 2012 Kyoto timeframe, as there is debate over the acceptability, cost and even necessity of pollution reductions. However, climate scientists are urging far deeper cuts - 60 to 80% reductions are likely to be required of the largest current emitters in the long term to stabilise atmospheric CO2 at levels that reduce the risks of climate change reaching dangerous proportions. There is still great uncertainty surrounding the role that Developing Countries will be expected to play in future climate change agreements, but energy is essential for economic development and for the forseable future their emissions will rise.

Technology
New and improved technologies will be essential meeting to the twin challenges of expanding energy supply and reducing emissions. New technologies may offer opportunities to move over time to much lower levels of carbon emission per unit of economic output. Energy efficiency will play a key role, and a variety of low carbon options are emerging. Yet technology development itself can drive changes in energy markets, systems and policy. These impacts require careful consideration. Some emerging technologies bring with them both the potential for large reductions in pollution per unit of energy and the need to fundamentally rethink the developed world's traditional technical, institutional and economic approaches to energy supply. Photovoltaics and fuel cells, or microturbines, for example, could provide very low emission, modular and potentially cheap small scale power systems - 'distributed generation' close to the point of use. Whilst there are many technological options for reducing emissions - efficiency, storing the CO2 from fossil fuels, renewables, nuclear - many have probelems or require continued development, and the economic, environmental and policy implications need careful consideration.


Liberalisation and Globalization
The economic and political backdrop to these profound environmental problems and technological challenges is characterised by privatisation and liberalisation in all sectors and in most of the world. The market place for energy is seeing increased competition, as previously protected sectors are being opened up, and increasing globalisation - through transnational merger activity, new international collaborations and through technical developments. Liberalisation has improved efficiency and reduced prices, and can bring environmental benefits, but questions for both industry and policymakers remain as to how long term social and environmental objectives can be addressed within a deregulated framework."

Excerpted from ICCEPT