Tanaka : « Nous appelons à un nouveau plan qui englobe les énergies propres »[en] 

Nobuo Tanaka became executive director of the IEA on 1 September 2007.

To read a shortened version of this interview, please click here. 

The International Energy Agency estimates that investment in energy on the supply side will require $26 trillion up to 2030. Can such a huge amount be expected to come only from the private sector? Is public money also necessary for some key infrastructure projects such as the Nabucco pipeline project?

Financial resources at a global level are sufficient to finance this projected energy investment, though the conditions need to be right.

More of the capital needed for energy projects in the future will have to come from private sources than in the past, as there has already been a marked trend away from financing energy investments from public budgets. 

Many governments have privatised energy businesses, both to raise money and to limit the future call on the public budget, and have opened up their markets to foreign involvement.  

Nevertheless, there will always remain a role for public money in the energy sector – particularly to develop projects needed to meet energy security and environmental objectives. 

Are investment conditions today conducive to achieve such huge levels of investment?

More important than the absolute amount of finance available worldwide, or even locally, is the question of whether conditions in the energy sector are right to attract the necessary capital. 

Most investors require a return related to their perceived risk. If they do not see that being achieved in the energy sector, they will invest elsewhere.

The risks faced by investors in energy projects are formidable and are changing. Those risks, which include those of a geological, technical, geopolitical, market, fiscal and regulatory nature, vary by fuel, by the stage of the fuel chain in question and by region. But the energy sector has, in most cases, been able to mobilise the required financing in the past. It will be able to do so in the future only if financing mechanisms are in place, investment returns are high enough and investment conditions are appealing. 

Given the need to 'decarbonise' the global energy system by 2050, is there a danger that those investments will not be made or that cheaper but more polluting sources of energy, such as coal, will be preferred over clean technologies? How does the ongoing financial turmoil change the situation?

The current credit crunch, along with lower energy prices, could give a boost to coal and gas supply investment in the power generation sector, which would put us on a higher emissions trajectory than would otherwise have been the case. 

The reason for this is that reduced credit access makes capital-intensive projects, such as nuclear and renewables, more difficult to finance, and lower energy prices make fossil-fuel power generation more competitive in comparison. 

However, both the lower prices and the credit crunch are expected to be temporary, hence investments should be made with the longer-term in mind. One of the biggest dangers is that the long lifetimes of energy stock (e.g. power plants have a lifetime of 60 years) means that the consequences of investment decisions made today will be with us for many years to come.    

Over half of those energy investments are needed in power generation to meet the growth expectations of populations mainly in the developing world. Have developing countries adopted the right policies?

In most developing countries, power sector investment needs to rise well above current levels if we are to meet economic growth, environmental and social development goals. 

The uncertainty about whether developing countries will be able to mobilise this level of investment is significant, particularly for Africa and India. Overcoming the various obstacles will require significant efforts of restructuring and reform in the electricity sector and elsewhere. A major challenge will be to make tariff structures more cost-reflective.

How can industrialised countries help?

In many developing countries, where power utilities are often state-owned and revenue collection is insufficient, investment capital typically has to come from the government and in the form of loans from multilateral lending agencies. 

But there is now a growing tendency for developing countries to increasingly look to attract some private sector investment – either from industrialised countries or from domestic sources – to meet part of their needs. 

Attracting private investment can be challenging. The private sector, while in principle welcoming business opportunities in rapidly growing developing economies, will respond only if it perceives a sufficiently stable and adequate legal framework and can expect returns high enough to compensate for the risks. 

Another way that industrialised countries can assist developing countries is by sharing the lessons learned – both good and bad – during liberalisation of our power markets. In particular, we can outline the issues that are most critical for successful electricity market liberalisation and for the need to understand that it is a long process which requires strong on-going government involvement and commitment.

Today, there is no genuine international governance framework for energy policy, with issues usually dealt with on a bilateral basis. What are your recommendations to strengthen international cooperation on energy?

There is a clear need to design a global framework for energy policy. Perhaps the best demonstration of this is that even if all OECD member countries were to reduce their CO2 emissions to zero by 2030, we would still not be on a path that adequately addresses climate change – unless non-OECD countries were also to reduce their emissions from current trends. 

Another example is that - with the vast majority of energy demand growth to come from IEA non-member countries in the coming decades - IEA member countries must work with non-members to address energy security, in light of the interconnectedness of global markets. The IEA can and must remain at the centre of such a global dialogue.

The IEA is the only international energy organisation with expertise across the entire energy field. We have a philosophy of open markets and diversity of supply. We have a reputation for objective and independent analysis. And we provide a range of fora in which governments - both IEA and non-IEA, as well as researchers and industry experts, can come together to solve common problems in a practical and co-operative environment.

China today represents the fastest growth in energy demand across the world and will soon be the largest energy consumer globally. Do you plan to invite China to join the IEA? 

The IEA has strong links with China, alongside the bilateral relationships that our member countries have with China. Due to China's increasingly key role in global energy markets, we are extremely interested in continuing to work closely and further build co-operation, when conditions permit. 

The first condition would of course be China's desire to join the IEA. In addition, the IEA has certain criteria that would have to be worked through. These include emergency oil stocks that member countries are required to have and also the need to amend the IEA's treaty (currently only OECD member countries may join the IEA).

The IEA was established in the wake of the oil crisis in the 1970s. What lessons have been learned since, as we now seem to be in a deeper crisis?

The 1970s crisis was partly the result of an oil embargo, a situation that led to the IEA's creation. Today's crisis is somewhat different from that of the 1970s. Currently, there is a temporary period of surplus in the oil market, but we should not be complacent. Investment needs to be sustained through the current crisis to meet renewed demand growth in the future. 

Founded during the oil crisis of 1973-1974, the IEA's initial role was to coordinate measures in times of oil supply emergencies, like Hurricane Katrina and Rita. Since the 1970s, energy markets have changed and so has the IEA.  

Today, the IEA's mandate includes the 'three E's' of balanced energy policymaking: energy security, economic development and environmental protection. This mandate encompasses a number of areas: guidance on good energy policy design, collecting and analysing global energy statistics and undertaking key analysis on the world's oil markets. 

Our core mission – helping governments to support their economies with secure, environmentally acceptable energy – is all the more valid today due to the financial crisis. We have been urging governments worldwide to ensure that stimulus packages embrace low carbon technologies, what we are calling a 'clean energy new deal'.