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T.J. Hammons, Chul-Su Kim, John S. Jennings, Paolo Fresco, Shoh Nasu, John Baker

World Energy Council
16th Congress Review
T

as a nongovernmental and noncommerhe sixteenth World Energy Council
Focus of the sixteenth
(WEC) Congress was hosted in Tocial organization, on such broad issues
kyo, Japan, October 8-13, 1995, with a
as:
congress was on energy
theme of “Energy for Our Common
0 Energy and the environment
World: What will the future ask of us?’
0 Interrelationship between different
for
our
common
world
Participants in the congress examined
energy forms
several fundamental issues of our times:
0 Energy and the public
and what the future
How to provide the energy services
0 Energy requirements of developing
for an increasing world population,
will
of us
countries
especially in developing countries
0 Energy financing and the economic
impact of energy
How to meet local, regional, and
global environmental and social
0 Conservation &d efficient use of
concerns
energy
0 How to adapt to changing markets and institutions
0 Energy and the consumer.
0 How to respond to diversified transportation and other end
Tokyo Congress
use patterns reflecting human behavior
The Tokyo Congress was under the patronage of His Imperial
0 How to deal with the emerging interdependence of energy
Highness the Crown Prince Naruhito of Japan. All sessions were
markets
held at the Nippon Convention Center at Makuhari, located
0 What action to be pursued individually and collectively.
This article summarizes the highlights of the congress, and approximately halfway between the center of Tokyo and Narita
includes an overview of the World Energy Council (WEC), a Airport. The three languages of the congress were English,
synopsis of the events, summaries of the technical program French, and Japanese.
The congress was attended not only by energy, financing,
division addresses, and a summary of the congress conclusions.
environmental, and technology executives but also by more than
60 energy and other ministers representing ultimate energy policy decision-makers worldwide.
There were four keynote addresses in an opening plenary
session; two global energy addresses, in which eminent speakers
WEC and Its 16th Congress
discussed long-term global energy issues; thirteen technical paT.J. Hammons, chair of the IEEE PES International
per sessions, in which rapporteurs introduced submitted techniPractices for Energy Development, Power Generation
cal papers and invited speakers presented complementary
papers; six round tables, during which specialists debated cruThe aims of the World Energy Council (WEC) are to promote cial energy issues; and eight working group sessions, in which
the sustainable supply and use of energy for the greatest benefit studies undertaken since the Madrid Congress (1992) were disof all. Founded in 1924 as the World Power Conference, the cussed. These topics included studies on developing countfies,
organization was originally orientated towards the electrical eastlwest energy programs, rational use of energy, the environindustry. In 1968, its name was changed to the World Energy ment, energy perspectives, and performance of plant in thermal
Conference, and in 1990 to the World Energy Council. Today generating stations. There was also a special Japanese energy
the organization,through its balanced representationof all forms seminar, technical visits, and a closing address and farewell
of energy, is the sole institution worldwide which is able to dinner. 260 technical papers (comprising more than 4,000 pages
speak collectively for its 100 member countries, representing in the Congress Proceedings) were presented and debated. The
over 90 percent of the energy consumed globally, in its capacity very high standard of the papers, presentations, and discussions
was particularly gratifying. Over 5,000 delegates attended the
This article summarizes highlights of the WEC 16th Congress, held in Tokyo, Triennial Congress.
Japan, October 8-13, 1995. The summaries were prepared by Thomas J. HamThe congress was opened at the Makuhari Event Hall on
mons, Glasgow University,Glasgow, Scotland. For more information on WEC,
Sunday
afternoon by his Imperial Highness the Crown Prince
contuct the World Energy Council, 34 St. James Street, London SWIA IHD,
United Kingdom, i 4 4 171 930 3966, FAX +44 171 952 0452, Telex 264707 Naruhito of Japan, President of Honor of the Congress.
Toyoaki Ikuta, chair of the Organizing Committee, said the
WECIHQG.

ask

IEEE Power Enginemng Review, March 1996

11

 congress coincidedwith the fiftieth anniversary of the founding
of the United Nations. The congress theme represents the historical perspective of the coming millennium. The meeting also
gives some insights into Japan’s energy challenges, i.e., Japan’s
attempts to secure economic development while enhancing the
environment in the light of scarce indigenous energy resources.
Gaishi Hiraiwa, honorary chair of the Organizing Committee
and chair of Keiddanren, Japan Federation of Economic Organizations, said he was honored to welcome delegates to the meeting. The congress provides a perfect opportunity both to review
what has happened in the twentieth century, and to look forward
to formulating our outlook for the twenty-fist century. At present, mankind is facing many challenges such as global environmental problems and population issues, which call for us to
work seriously to cooperate on a worldwide scale.

Energy and Economic Development
Dr. Chul-Su Kim, deputy director general
of the World Trade Organization

We all know that the relationship between energy and economic development is a fundamental one. Although economic
development is the result of many factors, energy plays a key
role because it is an essential ingredient of every action and
process in human society. Energy’s effects are pervasive as it is
an input for material production, a consumer service, and a key
component of industrial infrastructure.
The last 3 years since the 1992 Congress have been placid
in terms of energy prices, but were characterized by remarkable
changes in the circumstances surrounding the world energy
market. These changes will have significant implications for the
future energy market. The conclusion of the Cold War has led
to the world moving into an era in which economic issues will
dominate world affairs. At the same time, the rapid advance of
information and communication technologies as well as increased trade and investment flows across natural borders have
led to globalization of the world economy. This globalization
trend in turn continues to be reinforced by more countries
adopting market-based economic policies of privatization, deregulation, liberalization, and internationalization.
The world community has become increasingly aware of
major environmental challenges that are global in nature, particularly those related to the so-called greenhouse efict. The
United Nations Framework Convention on Climate Change,
with the objective of stabilizing concentrations of greenhouse
gases to a safe level, went into force in March 1994. Each
country is required to establish a greenhouse response strategy
and then develop and implement action plans. A number of
developed countries are already committed to returning greenhouse gas emissions to 1990 levels by the year 2000. International cooperation on environmental conservation is expected
to be a significant factor in the world energy market in the years
to come.
We are in transition from the earlier formula that encouraged
increased energy use to foster economic growth to bring about
a better world to one where we are more intelligent in our use
of energy. We need to impress energy and technology markets
that a better world is one involving greater accountability for
external effects of energy use, especially on the environment,
and that more attention be given to renewable energy use.
If current pattems of economic development and population
growth continue, global energy demand will increase significantly and load on the biosphere would increase beyond what
it could withstand. Among the most serious is the prospect of
global warming, caused by increases in human-induced emissions of carbon dioxide resulting from combustion of fossil
fuels. We must consider the sustainability of current patterns of
energy use and economic development. We must now regard
energy and environmental resources as common assets essential
to economic development and prosperity not only for this generation but also for generations to come. Sustainable development requires energy-environmental systems that give proper
emphasis to the impact of energy use on global resources and
the environment.

Issues and ChaZZenges
As John Baker so aptly remarked during his Congress Conclusions session, there are many issues and challenges. There
have been a number of developments in the energy world in
line with the Madrid Declaration (1992) that gave rise to optimism. Energy supplies have generally continued to flow reliably
to most customers. Improvements in oil and gas exploration and
production technology and efficiency have reduced costs and
expanded production opportunities.
The pace of coordinated international energy development
and interdependence has continued to grow, but many obstacles
still remain to delay this inevitable process.
In addition to technological developments for the recovery
of hydrocarbons, we have seen the increasing efficiency of
combined cycle gas turbine plants; the ability to transport natural gas over ever longer distances; and innovations in electricity,
gas, solar-powered and hydrogen-using vehicles, and in relation
to emission controls. There are continuing efficiency gains in
the production and conservation of energy, and in the mitigation
of at least some of their environmental impacts. Advances have
also occurred in improving the technology and reducing the
costs of some renewable forms of energy, but the pace is slow.
We have seen the expanded globalization of energy companies able to exploit natural resources, convert and market them,
and able to operate across a wide range of countries bringing
finance technology and managerial know-how where it is most
needed.
Such developments confirm the adaptability of energy institutions to the increasingly rapid pace of change necessary if
wider energy availability, improved technology, and adequate
financing are to occur. However, much more needs to be done
today to meet two fundamental challenges. The fcst challenge
is to respond now, with urgency and determination, to the plight
of over 2 billion people mainly in lower-income developing
countries, who neither have electricity nor adequate access to
other commercial energy. The second challenge is that of
achieving a path to sustainable development in the longer term.
This path recognizes the inevitability of world population
growth and the imperative of economic development to provide
all people with an acceptable quality of life; and the need to
come to terms honestly and fearlessly with the impacts of economic development on our environment.
The four technical program division addresses presented subject matter that set the agenda for in-depth discussion of the Energy Conservation
views and perspectives of each Divisional subject. Summaries
Greater emphasis should be placed on the importance of
of the presentations follow.
energy improvement. It is essential for energy security and
environmental preservation, and it can also be an option that
bridges the time gap between reliance on fossil fuel energy
12

IEEE Power Enganeerang Reuzew, March 1996

 sources and new energy sources and technology. By extending
the availability of nonrenewable energy resources, energy conservation plays a direct role in fulfilling our responsibility to
generations to come.
Energy efficiency in developing countries is much lower than
in developed countries, despite their low per capita energy
demand. This is due to inefficient and worn-out energy equipment, lagging technology, out-of-date industrial structures, and
lack of effective market mechanisms. In addition, there is an
urgent necessity to improve energy efficiency at global level,
especially by adopting aggressive policies to encourage investment in new technologies and practices.

Cleaner Energy
Fuel substitution from more carbon-intensive fuel to less
intensive fuels is crucial, since major global environmental
concerns focus on the use of carbon intensive fossil fuels, which
currently account for 69 percent of the world’s total energy
consumption. Scientific assessments indicate that approximately 75 percent of the world’s carbon emissions are the result
of combustion of fossil fuels, and total carbon emissions from
energy consumption have risen about 50 percent over the past
2 decades.
Oil and coal emit more carbon per unit of energy than natural
gas, carbon emissions from natural gas being about half of those
from coal. Natural gas will play a more important role in the
world’s energy supply in the future.
Nuclear energy may be an important source as a carbon-free
fuel, which can contribute to reduced greenhouse gas emissions.
However, in many countries, significant barriers exist to the use
of nuclear energy, including high investment cost, public reluctance to allow expanded use of the technology, and the unsolved
problem of waste disposal.
Renewable energies such as biomass, solar, geothermal, and
wind have advantages in reducing greenhouse gas emissions. It
is unlikely, however, they will have a significant impact on the
energy supply mix in the near future, given current high requirements for capital per unit of energy output.
Natural gas, therefore, represents a particularly promising
fuel for the next century, as its substantial reserves are untapped
in many countries and it is a beneficial fuel in environmental
terms. Gas supply can meet the world potential demand over
coming decades with little structural or geopolitical tensions
in the purchasing markets. With development of combined-cycle power generation, natural gas has become competitive with
all other fuels.
Market Reforms
There are market reforms in both developing countries and
economies in transition. The energy dilemma facing developing
countries is rooted in the lack of financial resources and technology for the viable development of energy infrastructures and
for improving energy efficiency. Developing countries need to
reform their energy sectors to be open to new technology and
foreign investment. This can relieve the burden of large amounts
of public capital, and encourage managerial accountability,market efficiency, and better services, while reducing government
deficits and international debt.
Transformation of centrally planned economies in eastem
Europe to market oriented economies also requires reforms in
the energy sector, including rehabilitation of existing inefficient
facilities, improvement of energy efficiency in most sectors,
creation of new legal and institutional frameworks, and adoption
of new technologies and practices. Such a transition cannot be
IEEE Power Engineering Review, March 1996

achieved in a short period. Significant financial resources are
also required.

International and Regional Energy Cooperation
There are opportunities for international cooperation in the
energy field, and this bilateral and multilateral cooperation
could and should be strengthened to bring improved energy
systems worldwide.
Global environmental conservation is one of the most important areas where multilateral cooperation is essential today,
since the solution for global environment problems may well
exceed the capabilities of a country or even several countries.
The objectives of the Climate Change Convention, for example,

The World Energy Council’s sixteenth congress, heM in Tokyo in October
1995, was attended by energy, jinancing, environmental, and technology
executives, and by energy policy decision-makers worldwide.

could only be achieved through active participation and contribution of all countries which are parties to the convention.
He also believed that intemational cooperation and measures
to abate greenhouse gas emissions should concentrate on those
measures that encourage and increase international transactions.
Transfer and exchange of energy efficienttechnologieswould help
increase trade between developed and developing countries.
Addressing regional initiatives, there is a growing political
and economic interest in greater regional integration of energy
markets through the construction of natural gas pipeline networks. Natural gas has already played an important role in
establishing a regional energy integration system in Europe and
North America. Also, there are great opportunities to construct
natural gas pipeline networks in Northeast Asia and South
America, and this trend will serve to enhance regional energy
integration in the future.
Northeast Asia is a region of great significance for regional
energy and environment cooperation. The region accounts for
almost 26 percent of the total world population and about 17
percent of its total energy consumption.It has a great potential for
increase in energy demand as the countries in Northwest Asia
undergo further economic development, particularly in China.
The region has potentially large untapped energy reserves,
particularly oil and natural gas, in remote areas of China and
the Russian far east. There is a growing interest in countries like
South Korea, Japan, China, and Russia in developing the huge
untapped reserves and also in constructing intraregional infrastructures for integrated energy transportation systems, such as
13

 gas pipelines and electricity grid networks. Energy and environmental cooperation in northeast Asia will be one of the most
urgent needs we face today in pursuit of stabilization of the
global energy supply and demand structure, as well as responding to global environmental challenges.

However, the immediate challenge for the energy industry
will be to manage its way through a period of excess capacity,
to produce and transport oil, gas, and coal as well as excess
capacity to refine crude oil to generate electricity, particularly
in western Europe and North America.
The international oil and gas industry has stopped considerFuture Opportunities
ing increasing real oil prices above $15 (US) a barrel. ProducEnvironmental protection will be one of the most signifi- tion costs have been cut drastically, and innovative new
cant global issues that will shape our energy path and exploration techniques and production technologies have been
economic development pattern in the century to come.
developed. These allow fields, which less than 10 years ago
Energy inefficiency, technological change, and financial would have been uneconomic, to be developed profitably at
vulnerability in developing countries may best be resolved today’s oil and gas prices. At the same time, all sorts of new
by changing their economic and market structures to fa- energy technologies, including the renewable, have set sights
cilitate relevant investments.
on achieving profitability at prices based on $15 (US) a barrel
One of the important tasks for international energy coop- of oil. Several of them will achieve this aim in the course of the
eration is to find solutions to reduce environmental impacts next 20 years or so.
Thus, the likely cost of energy long-term will not exceed say
of energy consumption.
There will be a strong need to facilitate regional energy $25 (US) a barrel in today’s money, and it may have a hard time
and environmental cooperation among the countries of sustaining that level for very long.
Energy demand will continue to grow strongly in the Asia
Northeast Asia, not only for regional but also for global
Pacific and Latin American regions and more modestly elsebenefits.
where. The current capacity surplus will disappear early next
century, and, during the next 30 years or so, most energy demand
will be met by established fossil fuels. This will require massive
investment, quite possibly of the order of $200 billion (US) per
Future Sustainable Energy Supply
year, provided governments manage their regulatory and fiscal
John S. Jennings, managing director of
regimes in such a way that this capital is fairly rewarded. In this
the Royal Dutch Shell Group, United Kingdom
context, over-zealous taxation in the name of environmental
The availability of sufficient energy at affordable prices is conservation could jeopardize energy supply security during
vitally important if the vision of sustainable development, in this period of transition.
which the lot of mankind is gradually improved without undue
Ultimately, higher-cost resources will have to be developed,
damage to the world’s ecosystem, is to be achieved.
including those of remote frontier areas, as well as some heavy
Oil, natural gas, and coal will make an important contribution oil. Inevitably, gas will come to be transported either by pipeline
for many years to come, but renewable sources of energy will or as LNG over increasingly long distances. Modest increases
have to play an increasingly important role in the future. De- in energy prices might be required to ensure that the necessary
velopment of new energy sources is complementary to advances investments are made.
in the development and use of these fossil fuels, and the world
Gas-to-liquid fuel conversion processes will gradually come
will need as many energy options as possible.
into their own, as will various coal gasification technologies.
Sufficient energy for sustained economic growth can be pro- But as we enter the second quarter of the next century, there
vided, at an acceptable cost and in an environmentally respon- will be increasing competition from emerging alternative energy
sible manner, as long as we maintain free energy markets in sources, especially for heat and electric power generation.
which inventiveness, competition, and productivity are encourIt is clear that new renewable energy sources will become
aged and rewarded and maintain decision-making systems steadily cheaper, and thus will be able to expand into new niche
markets. Wind, biomass, and photovoltaic solar rank as front
based on honesty, objectivity, and rational open debate.
It is evident that the established fossil fuels (oil, natural gas, contenders for such market niches. Others like artificial photoand coal) will have to meet the bulk of demand in early years, synthesis and magma energy, are currently somewhat further
but they alone will not be sufficient for more than a few decades. behind. There are likely to be many more which we do not know
In the relatively near future, renewable sources of energy will about at this time.
play an increasingly important role. But it is Likely to be another
W i t h this broad global context of economic growth, two
2 decades at least before they contribute significantly and com- long-term scenarios have been developed at this time. In the
pete with established fossil fuels.
f i s t it was assumed that companies and universities active in
We should regard stimulation of development of new energy developing renewables are successful, while in the second it
sources as complementary to the development of advanced was assumed the effects of human needs were met through
technology in the production and usage of established fossil technologies and systems requiring much lower energy input as
fuels. They should not be seen as threatening one another; there productivity improved.
will be need and room for all in the energy markets of the future.
Under the first scenario, productivity in energy supply keeps
We will need as many energy options as possible if we are improving in an open market context, and the challenge of
to give consumers the diverse energy supplies they seek in such providing abundant energy at competitive prices is met. By 2020
an uncertain world.
the new technologies become fully competitive with convenPrimary tasks of governments should be to create a regula- tional energy sources. Primary energy grows at about 2 percent
tory and fiscal framework in which inventiveness, competition, per annum, supporting a 3 percent per annum growth in world
and productivity are encouraged and fairly rewarded. The com- GDP. The contribution of renewable energy sources becomes
bination of global technology and open access to markets offers significant by around 2020/2030, as they become fully competithe best prospects of meeting the challenges.
tive, and it is renewables that allow growth in energy supplies
14

IEEE Power EngineerzngReview, March 1996

 to be sustained after fossil fuels reach their plateau towards the
middle of the century.
Under the second long-term scenario, primary energy use
grows at about 1.3 percent per annum until 2030 as developing
economies expand. Thereafter, growth slows to below 1 percent,
as greater energy productivity spreads from the more advanced
regions of OECD to the industrializing and developing countries
elsewhere.
In both these long-term scenarios, it is interesting that CO2
emissions from fossil fuels peak at around 10 gigatonnes of
carbon per year before the middle of the next century and then
decline to less than half this value by the end of next century.
Such a projection has such important implications for climate
change that it needs to be urgently explored. As a preliminary
conclusion, we should seek to avoid taking precipitate action to
further reduce CO2 emissions while remaining true to the principle of prudence which has widespread support. We should do
all we can to allow competitive technologies to enter the marketplace. For that reason, the trend to deregulate energy markets
is a strong enabler of these important transitions. Open competition allows the emergence of niche markets which are more
easily captured by new energy sources.
In conclusion, the following should be considered:
0 Fossil fuels will continue to be needed in very large quantities if sustainable development is to be achieved.
@ Global energy market will continue to be very competitive
and, crises apart, there seems little reason to expect that
real energy prices will rise significantly even in the longer
term.
0 From somewhere towards the middle of next century, the
world’s energy needs will come to be met by more and
more diverse sources including, most importantly, renew ables.
0 It would appear that sustainable development based on
deriving maximum benefit from the world’s fossil fuel
resources need not lead to anything like the extreme levels
of atmospheric CO2 concentrations that some have predicted.
There is no doubt that sufficient energy can be supplied at
acceptable cost to support sustained economic growth, and that
it could be supplied in an environmentally responsible manner,
provided we maintain free energy markets where inventiveness,
competition, and productivity are encouraged and rewarded.

More Efficient Use of Energy
Paolo Fresco, vice-chairmanand executive
officer of General Electric Company, United States
The correlation between rapid electrification via high efficiency, high technology, power production, and utilization, and
high growth in gross domestic product is a striking one, particularly in Asia. Indonesia is increasing its generation capacity
12 percent per year and its GDP 6 percent. Malaysia produces
14 percent more electricity per year with an 8 percent growth.
Thailand’s statistics are equally impressive. Big investment in
electrical energy in this region is powering high growth in
productivity, competitiveness, exports, and GDP.
South Korea is a particularly striking example of one of the
world’s most successful economies, and that success would not
have been possible without massive investment in high technology power generation. Many of its key products, steel, chemicals, autos, paper, electronics, and the like are extremely energy
IEEE Power Engineering Review, March 1996

intensive, and the country has increased its generating capacity
75 fold over the past 30 years through high-technology investments. South Korea now boasts the world’s most efficient power
plant using combined cycle technology, at Seolnchon. The cost
of electricity to its customers has declined over 20 percent in
real terms during the past decade, and manufacturing costs have
been cut nearly 50 percent over that period.
In contrast to South Korea, India is a country with potential
to become one of the world’s leading economies in the next
century. India’s GDP is growing at a relatively modest 4 percent
per year, in part due to power shortages that dictate mandated
closure of manufacturing plants on specific days and at specific
times of the day in some areas. India is lagging in the construction of high-technology power generation plants, and there is
now a concern that an emerging xenophobia, precipitated by the
foreign content of much of the power infrastructure, might
increase this lag.
While rapid electrical expansion fuels growth in Asian
economies, energy efficiency and conservation measures must
remain a high priority, as economic goals require prudent consumption and low-cost utilization. Lessons learned in proven
conservation and demand-side management techniques in other
areas of the world will be a great asset to Asia as it wrestles
with balancing its thirst for electric power with the need to stay
competitive on the world stage.
An entirely different situation exists in the United States.
Generating capacity is plentiful, and demand-side initiatives and
conservation have significantly added to the reserve margins.
But an ageing power plant infrastructure threatens to erode their
productivity gains in the form of ever-creeping operation and
maintenance costs. Continued aggressive demand-side management, together with selective power plant renovation and expansion, will be essential to maintain what is now the lowest
cost per kilowatt hour electrical energy supply in the world.
In the United Kingdom, the competition and efficiencies that
have grown with preparation for and privatization of the electrical sector has slowed the growth rate in electricity prices,
doubled labor productivity, and led directly to a 40 percent
increase in total power output from its nuclear plants.
The message here is that those that neglect the cost of energy,
in particular the efficient production and utilization of electrical
energy, as part of their productivity planning, do so at their own
peril. Process industries are particularly driven by energy costs
to the point where a small rise in cost of electrical energy can
drive an aluminum plant into unprofitability and shutdown in
the United States.
Investment in high-technology, high-efficiency, power-generating infrastructure is the link between energy efficiency and
productivity, and productivity and economic prosperity a country requires. Japan has overcome the handicap of having to
import high-cost fuels by its strategic view on nuclear energy
together with its commitment to high-technology,combined-cycle facilities that regularly operate in the mid-to-upper 50 percent efficiency range.
Tokyo Electric Power has been a world leader not only in
nuclear power but in the application of combined-cycle plants
for base-load power generation. The 2,000 MW Futtsu complex
in Tokyo Bay is one of the largest, most efficient, and cleanest
fossil fuel plants in operation worldwide. Another combinedcycle power project at the Yokohama Power plant, which will
produce 2,800 MW at 55 percent efficiency is being worked on
at this time. Newly announced technological advances will drive
the efficiency of these plants past the 60 percent barrier in just
a few years.
15

 At the same time, there have been considerable advances in
The third characteristic of environmental problems that
demand-side technology, such as more efficient lighting, appli- makes them difficult to solve is their transnational aspect. That
ances, and motors; low core-loss amorphous transformers that is, the emissions generated by each country or region affect the
contribute to overall system efficiency; and advanced electronic environment in neighboring countries and regions and, in fact,
metering systems that open up a whole range of demand-side the entire world.
management options.
The problems of acid rain and global warming cannot be
Competition is the key factor in increasing efficiency of solved by any one country or district by itself. This is something
energy production and distribution. The combination of globah- that countries now in the process of economic development must
zation and deregulation of utilities, particularly in the United reconcile with economic growth to which they now give priorKingdom and the United States, has led to a new phenomenon: ity. The necessity of, and the cost burdens associated with,
independent power capacity in countries like the Philippines, capital investment directed towards preventing harmful emisChina, and India being added by subsidiaries of British and sions such as oxides of sulphur and nitrogen, as well as such
matters as carbon dioxide credits, are at the root of conflicts of
American utilities.
Deregulation and privatization are changing the energy in- interest between countries.
According to estimates made by the Intergovernmental Panel
dustry around the world. Productivity is driving both, setting up
competitive markets for energy production and distribution. on Climate Change (IPCC), global primary energy consumption
New investors have been attracted by the opportunity to become in the year 2025 will be double the level of 1990. Yet primary
producers, and host countries have usually welcomed the out- energy consumption by the developing nations will grow at a
side investment. Today, over half of all new power generation rate in excess of the world average. Worldwide, the volume of
facilities being installed in the United States is by independent carbon dioxide emissions will increase at an average rate of 1.5
power producers, and that trend is likely to continue into the percent per year through the year 2025. But emissions from
developing countries are expected to increase at a rate far exforeseeable future.
Energy efficiency and competitiveness of companies and ceeding that.
countries is driven by far-sighted energy planning and investment in advanced power technology, together with aggressive Future Policies and Issues
demand-side initiatives to encourage consumption and the es- for Creating a Better Environment
It is expected the world population will continue to expand,
tablishment of energy incentives that reward low-cost producers.
which will bring increased demands for improved living standThe future will belong to the most productive and to those ards. If our societies and economies continue to develop as in
who will adapt most quickly to intensifying competition and the past, energy utilization will continue to grow, which poses
the danger of serious impact to the environment. In the twentyaccelerating change.
first century, we must break this pernicious chain of events and
resolve to stop harming the environment. We must repair the
damage that has already been done. The following four things
Energy for a Better Environment
are suggested to create a better environment:
0 Conservation of energy and natural resources
Shoh Nasu, chairman of the board
0 Energy pricing
of Tokyo Electric Power Companx Japan
0 Creating the best mix on a global and intergenerational
The global environmental problems currently associated with
basis
increasing energy utilization have three characteristics:
Technology transfer to developing countries
They arise unavoidably from the economic activities and
daily needs of human society.
Conservation of Energy and Natural Resources
Unless counter measures are devised soon, it may be too
The best way to solve the problems of the environment and
late to avoid serious harm.
stabilize the supply of and demand for energy worldwide is to
Global response that goes beyond national borders is re- conserve energy and natural resources.
quired.
Fundamental to the conservation of our valuable natural
These problems make solution of the problems of the earth’s resources is their efficient use and recycling. As societies beenvironment difficult.
come prosperous, they tend to forget the importance of avoiding
The first characteristic of the Earth’s environmental problems waste of their precious resources.
is that they are tied up with the overall social system, that is,
Adilemma of modem civilization is that it is easy and cheap
modern civilization’s social and economic system involving for individual companies and consumers to engage in mass
mass production, mass consumption, and mass waste, as well production and consumption and throw things away. In contrast,
as its modes of production. It is difficult to determine clearly it is unprofitable to conserve energy. Companies and individuals
the responsibilities of the producers and the consumers and to that make up society have a responsibility to that society to
sort out the relationships between the victimizers and the vic- preserve the environment. It is the duty of corporations to limit
tims.
and soften the effects of their production activities on the enviThe second characteristic of environmental problems is that ronment. Rather than relying on regulation, companies should
even though we are unable to tell for sure what or who is devise their own environmental policies. It will be crucial for
harming the environment, we can be sure that unless something each individual consumer to be aware of the importance of
is done about it soon, it will be too late. There is no recovery recycling natural resources and to participate in recycling as a
from the loss of either human life or the natural environment. matter of course. To make that a reality, it will be necessary to
If recovery were possible, its cost would be enormous when educate people. Moreover, it is time for companies that provide
compared with the cost of tackling the problems before dire energy to actively call on society to make efficient use of that
straits are reached.
energy.
16

IEEE Power Engineenng Revaew, March 1996

 Energy Pricing
Toward Sustainable Development
The second point we must consider is energy pricing policy.
To establish a civilization for the twenty-first century in
Since energy is essential to people’s lives and national econo- which sustainable development is possible, it will be necessary
mies, in some countries people are being provided with energy to build an economic and social system based on both the supply
at prices below the cost of production for reasons of policy. Yet and demand sides of energy, a system rooted in recycling and
it is imperative that energy prices be left to market forces. When energy conservation, and one in which humanity and nature can
energy prices are held down for policy reasons, consumption coexist. All countries and regions will have to create plans for
will be unnecessarily high. That will impact on the environment rising above their vested interests, make joint efforts on behalf
and distort the distribution of natural resources. It will also mean of the global environment, and put their plans into practice.
the cost of investing in environmental protection cannot be
I take pride in working towards a stable supply-and-demand
recovered. It will then be delayed, thereby triggering irreparable situation for energy by striving to tackle the problems of energy
environmental destruction.
and the environment. I am determined to meet the challenges
If, for moral reasons, it is necessary to enable people of low involved in that task, and look forward to working together with
income to consume the minimum energy they need to live their the leaders in the world’s energy-related fields.
lives, that should be done through other means, such as welfare
policies.
Developed countries are moving to introduce and expand
competition in the energy marketplace, and to provide people
with energy as cheap as possible. In the future, a major question WEC Congress Conclusions
will be how to supplement those efforts with energy conservation so as to achieve environmental preservation on a global John Baker, chair of the WEC Executive Assembly
basis.
The theme of the congress was “Energy for our Common
World: What Will the Future Ask of Us? The answer is: requisite
Creating the Best M i x on a Global
policy, business and end-consumer decision making must start
and Intergenerational Basis
immediately to ensure the successful transition to sustainable
The third point is that in order to promote the effective use commercial energy provision and use in the longer term. Foreof limited resources and sustainable development, energy most is the realization that there are no easy solutions.
providers must find the best mix on both a global and continental
basis.
There are various types of primary energy resources, but the Full-Cost Pricing
Everything has a cost. Today, energy subsidies around the
key will be to make use of a mixture of energy resources (such
world
amount to many billions of dollars annually. These are
as fossil fuels, various renewable energies, and uranium) that
concentrated
in some transitional economies and developing
will differ somewhat by country and region. It will be important
countries.
The
current price of energy to huge numbers of end
to keep in mind considerations of security, economics, and the
environment, in order to achieve not only the best mix for each consumers is less than the cost of providing the energy in
question. One result is waste and inefficiency,through over-concountry or region, but also the world as a whole. Given that the
Earth’s population is sure to grow, we must also keep in mind sumption now. A second is the disincentive to invest now so as
to assure efficient sustainable energy supplies for the future.
future generations as well.
To create this best mix, we will have to seriously consider Current subsidies exist for a variety of reasons, such as historic,
moving away from fossil fuels. We must address the question political, vested interest, or simply because the customer cannot
of what realistic measures can be adopted so as to be able to yet afford to pay market prices. The supply of energy must cease
to be regarded as a public service. It is a service which, whether
leave our limited fossil fuels to our descendants, prevent global
warming, and cope with the burgeoning worldwide demand for in the public or private sector, should be provided economically
energy? The answer is to make safe use of uranium in the form and efficiently at a price that reflects full costs. Artificially low
prices lull us into a false sense of security about our long-term
of nuclear power.
future.
If sustainability is to be achieved, the full-cost pricing of
Technical Transfer to Developing Countries
energy must reflect the long-term marginal costs of increasing
The fourth topic is the need for new international cooperation
supplies, and should ideally incorporate the costs of environon energy and the environment. Not only must various countries
mental detriments where these are not captured by market
and regions of the world come up with their own solutions to
mechanisms.
problems of the environment, they must work together as well.
The WEC believes that it is necessary to phase out energy
Developed countries, which already possess sophisticated
subsidies so that rational decisions are taken on the basis of the
environmental technology, must actively transfer that technolproper costs, recognizing that the move to full-cost pricing may,
ogy to the developing countries, for whom improvements in the
in some cases, take many years to achieve when account is taken
environment have a potentially great effect.
of economic, financial, and social circumstances.
The transfer of environmental technology must not be left
entirely to the province of governmental cooperation alone.
Private companies also have a large part to play. In building Public Awareness
The lack of public awareness of what is needed to achieve
their energy infrastructure, developing countries are aggressively adopting technology and funding from corporations in sustainability points to a need for a comprehensive public eduthe industrialized countries. Accordingly, it is hoped the coun- cation program that addresses the real issues; changes perceptries in the developed world will make a business of transferring tions; and moves consumers, governments, and industry
technology for energy utilization to the developing countries, towards the new partnerships that our common world will require.
but in a way that incorporates environmental concerns.
IEEE Power EngineeringReview, March 1996

1/

 Energization
For the 40 percent of the world deprived of commercial
energy services and supporting technology at the present time,
effective measures are urgently required to bring commercial
energy to them in order that they may break out of the vicious
circle of poverty and deprivation. This will require stronger
determination by governments, energy enterprises and international organizations. Regional initiatives may be particularly
relevant in encouraging mutual self-help.

diffusion, recognizing that fossil fuels are likely to remain costcompetitive against alternatives over the next few decades, and
are set to play a greater and longer role than was widely understood previously.

Climate Change
Local and regional energy related environmental problems
continue to be a more urgent priority than climate change for
most countries and most people. The risk of climate change,
however, warrants the application now of a range of minimumregret actions to mitigate and adjust to its potential threats.

Institutional Change
Institutional change is required, not least to mobilize local
finance in many developing countries for energy development. Long-Tm Vision
High domestic savings rates must be harnessed, but this will
Greater reliance can be expected to be placed on the market
require radically changed local capital markets, energy institu- system, albeit adapted to incorporate effective pricing signals
tions, and tariffs. Some $30 trillion
in constant 1992 US$) reflecting all costs (including environmental impacts and their
of finance will be required by the energy sector world-wide, mitigation). A judicious mixture of government regulation,
including investments in end-use efficiency, between 1990 and tightening performance standards, and economic instruments
2020.
will be required as well as market liberalization. Here there is
a challenge to the process of privatization, deregulation, and
International Cooperation
reregulation now taking place in many countries. There have
Energy and energy related planning requires a far greater been clear gains for operational efficiency and costs in the new
degree of interdependence and mutual cooperation between enterprises. Nevertheless, there are concerns that customer servcountries than in the past, and governments themselves will ice and satisfaction have not yet been achieved to the extent
often need to take the lead. This is particularly so in many anticipated. There is a risk that concentration on short-term
developing country regions and in some transitional economies. goals may increase, at the expense of the longer-term strategic
Energy and its effects traverse frontiers, and funding the most vision required for tackling many of the issues the congress
cost-effective solutions may require existing notions of national addressed.
patrimony and rigid frontiers to adjust to optimal developments
that cross national boundaries. International trade and invest- lnnovation
ment remain two of the key motors for energy supply, technolTo be successful in the future, energy corporations will need
ogy transfer, and enhanced efficiency.
to be more service and customer-oriented than ever in the past,
to be competitive both economically and environmentally, and
Energy Efficiency and Renewables
to seize the opportunities arising from improved knowledge and
Technological development directed towards improving en- the need for sustainable development.
ergy efficiency and competitive supply of renewable energy
sources must be accelerated by the reversal of recent declines
in research and development expenditure. The effectiveness of Partnershi@ and Cooperation
The congress called for new forms of partnership and coopresearch, development, and demonstration activity will be imeration between government, the consumer and industry; more
proved by the development of govemmenthndustry partnerships
to finante key long-term technologies for new renewable energy open discourse; a greater inclination to listen and adapt; and
increased sense of realism and urgency; the maintenance and
resources, and pollution mitigation. Further development of
nuclear technology for the full energy cycle also appears to be development of open markets for trade and investment under
needed if nuclear power is to make a major contribution to the auspices of the World Trade Organization; and a willingness
longer-term energy needs. Without public confidence in this to act decisively and effectively for the good of our common
technology, there must be doubts as to the role nuclear energy world.
can play.
Decision-MakingProcess
Sustainable energy development for all cannot be achieved
Meeting External Costs
As technology provides greater productivity, and hence ad- overnight. Different priorities will exist for different regions,
ditional resources, it should be possible to allocate some of these countries, and communities, but it is hoped that a greater measadditional resources to meeting the extemal costs for environ- ure of agreement will be achieved to speed up the decision-makmental protection and enhanced efficiency without disturbing ing process than has been apparent during the last few years.
the cost to final consumers.
Alternative Energy Forms
Over the next 30 years, a much wider range of energy forms
will be required to satisfy the world’s increasing global demand.
In addition to fossil fuels, these will include publicly acceptable
nuclear development, and those forms of new renewable energy
which can be made viable. Governments must be encouraged
to finance and develop renewable energy to achieve accelerated

18

Making Plans for the 1998 WEC Congress
The seventeenth WEC Congress will be held in the Fall of
1998 in Houston, Texas, United States. Further details may be
obtained from the World Energy Council Central Office, 34 St.
James Street, London SWlA lHD, UK, +44 171 930 3966, FAX
+44 171 925 0452.

IEEE Power Engineering Review, March 1996