EU proposes closer energy cooperation with developing countries

The European Commission has prepared a report on a EU energy initiative to be presented at the Johannesburg World Summit in August-September 2002. The 27-page document contains concrete proposals for cooperation with the developing countries in the energy sector.
The Johannesburg Summit will for the first time address globally the issue of sustainable development. Energy is likely to be high on the agenda in view of its central role in the three dimensions of sustainable development -- the social dimension, the economic dimension, and the environmental dimension.

Neglected for a long time, in recent years, energy has become an essential part of the sustainable development debate. The Johannesburg conference, noted the document, should provide an opportunity to catch up in this area, by allotting to energy the place that it deserves in order to contribute to sustainable development.
The EU's experience and aid can facilitate the establishment of a sustainable energy sector in the developing countries. At the same time, the EU's security of supply is closely linked to that of the developing countries. They will be even more closely linked in future as a result of the expected increase in consumption of fossil fuels and the aggravation of environmental problems, in particular, climate change and air pollution.

Energy is instrumental in all the key sectors of development -- health, refrigeration of food, lighting and domestic heating, transport, agriculture, industrial production and modern means of communication. To paraphrase a famous saying, is development not democracy plus electricity? Where energy is lacking, poverty develops and an "energy-poverty" vicious circle comes into being.
In this respect, the question of access to energy is also an ethical issue and one, which is of particular concern in the least developed countries. One of the best ways of breaking the "energy-poverty" vicious circle undoubtedly lies in the possibility of having access to knowledge, i.e. education and training.
In this connection, new technologies and the information society represent an opportunity, which the developing countries must be able to seize. It cannot be seized without energy, and it is therefore urgent to combat energy deprivation in order to avoid this opportunity being transformed into a new north-south divide.

The forecast is that in the next few years there will be a significant increase in energy demand in the developing countries, on account of population growth, increasing urbanization and economic development. However, per capita consumption will continue to be significantly lower on average in the developing countries than in the industrialized countries.
This wide variety of situations is a fundamental factor in energy cooperation relations between the EU and the developing countries. Coal consumption in developing countries is forecast to grow by almost 3 % p.a. between now and 2020. It will continue to be the dominant fuel in China and India. Coal will remain the most important source of electricity generation in many developing countries.

Nuclear power is expected to more than double its capacity in the developing countries between 2000 and 2020, although from a low base. With few exceptions these plants will be built in China and India, where the share of nuclear in electricity generation is planned to increase.
The financial implications for the developing countries of increased reliance on imported energy, particularly oil and gas, have been very considerable. This is likely to be even more so in the future, when demand in the developing countries will also have a bigger impact on oil market prices.

If future global oil demand increases from 75 mm bpd to 115 mm bpd, a $ 5/barrel upward pressure on oil prices would be a modest assumption. The financial implication for developing countries, however, would be far from modest -- an additional oil import bill around $ 90 bn annually -- an amount comfortably exceeding the total value of present or future worldwide development aid.
The document underlines three conclusions:
-- the EU and developing countries have a shared, growing interest in oil and gas market stability;
-- developing countries will increasingly have a self-interest in policies promoting energy efficiency and alternative energy sources; and

-- the present producer-consumer dialogue will gradually have to include major consumer developing countries.