RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/311 
12 January 2010 
 (10-0109) 
Council for Trade in Services  
  
 
ENERGY SERVICES 
 
Background Note by the Secretariat
1 
  
1. This Note has been prepared at the request of  the Council for Trade in Services, with a view 
to stimulating discussions in the Council on the sector of energy services.  It provides background information and updates a previous Note on Trade in Energy Services (S/C/W/52, dated 
9 September 1998).  This Note focuses on developments and issues considered to be most relevant to 
the GATS.  It is not intended to prov ide a comprehensive account of the sector. 
I. OVERVIEW 
2. Energy is one of the biggest markets in the wo rld, with an estimated value of US$6 trillion a 
year (about a tenth of the world's economic output).
2  The energy sector is highly capital-intensive:  
significant costs are needed to find, produce and tr ansport energy.  The depletion of existing oil and 
gas wells and the need to search for and exploit r esources in more remote regions and more difficult 
conditions (such as in deep seas) contributes to increasing prices.  Large-scale development of 
renewable energy needed to diversify energy sources and mitigate climate change also entails 
significant research & development and infrastructure costs.  Demand for energy is not expected to 
abate as economic development and population growth create pressing energy needs, in particular in 
developing countries. 
3. An efficient energy sector is a prerequisite for social and economic development as energy 
underpins virtually any human activity.  Ensuring the supply of reliable and affordable energy is seen 
as one of the basic responsibilities of governments which regulate the sector in order to pursue different policy purposes:  (i) ensuring that the popul ation has reliable and affordable access to energy 
goods and services (universal service for electricity, for instance);  (ii) mitigating the environmental effects of energy production and consumption;  (iii)  diversifying energy sources in order to ensure 
security of supply; and (iv) en suring conservation and sustainable use of natural resources. 
4. Patterns of energy markets are multifaceted and do  not necessarily evolve in a linear manner.  
Oil and coal markets have been global for a long tim e, but electricity and gas have been regional, due 
to transportation characteristics.  However, the de velopment of LNG terminals is contributing to the 
emergence of a global market for gas as well.  El ectricity markets remain regional (non-storable and 
grid-based nature of supplies) and depend on inte rconnection of the different national systems.  
Energy services markets are not limited directly by geographical limitations, but other types of 
obstacles may exist. 
5. While there has been a long tradition of privat e sector involvement in oil markets, public 
monopolies have been predominant in gas and el ectricity markets.  Until the end of the 1980s, 
                                                     
 
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. 
2 The Power and the Glory – A Special Report on Energy, The Economist, 21 June 2008. S/C/W/311 
Page 2  
 
  electricity and gas were supplied principally by stat e-owned, vertically integrated monopolies.  Given 
the high-capital costs involved in building and maintaining infrastructure, and the monopoly situation characterizing the transportation segment in these se ctors, direct state involvement was seen as the 
best option for ensuring public service obligations.  Drivers for liberalization of gas and electricity 
markets included increased energy demand due to economic development and demographic growth, 
coinciding with strained public budgets.  Technologi cal developments (in particular the fact that 
smaller power generation units became competitive, and increased efficiency of power grids) and 
increasing public concerns about monop oly-related inefficiencies also contributed to the liberalization 
of the sector.  On the other hand, a different trend has emerged in the oil sector, with the increasing role of state-owned national oil companies (NOCs), in particular in the upstream segment.   
6. Over the last 15 years, business opportun ities in the energy industry have expanded 
significantly for service suppliers.  Liberalization pr ogrammes in the gas and electricity sectors have 
involved the unbundling of state-owned monopolies and have provided scope for private operators in 
the production and commercialization segments.  I nvestment opportunities have also emerged in 
transmission and distribution networks.  In the upst ream oil and gas segments, oilfield services firms 
sell highly specialized services to national and inte rnational oil companies.  Consumer demand and 
governmental policies in relation to climate change  have created new market opportunities, including 
for small- and medium-sized service suppliers, in pa rticular in the fields of renewable energy and 
energy efficiency.  Their services involve feasibili ty studies, conceptual design, costs estimates, 
energy auditing, energy saving, e nvironmental impact assessment, fiscal matters, etc.  Many firms 
across the world are specializing in energy-related consultancy services.   
7. Foreign investment provides an opportunity to attract improved technology and knowledge, 
and, hence, to strengthen domestic capabilities.  For instance, some projects in  the oil and gas sector 
(e.g. deep-water oil extraction, production of lique fied natural gas) require sophisticated technology 
not always locally available.  Moreover, a number of  countries require foreign investors to train staff 
and to transfer management skill functions and other responsibilities to local personnel.
3  I n  
infrastructure industries, such as in the electricity  industry, "technology transfer is among the most 
important potential contributions that TNC partic ipation can make to host developing countries";  
introduction of hard and soft technology4 has contributed in a number of cases to improve 
productivity and efficiency, as well as reliability and quality of service provision.5   
8. The energy sector is at a cross-roads.  Acco rding to the International Energy Agency (IEA), 
"[i]t is not an exaggeration to claim that the futu re of human prosperity depends on how successfully 
we tackle the two central energy challenges facing  us today:  securing the supply of reliable and 
affordable energy;  and effecting a rapid transformation to a low-carbon, efficient and 
environmentally-benign system of energy supply.  What is needed is nothing short of an energy 
revolution."6   
9. Investment requirements in the energy sector will be largely influenced by various factors:  
pace of economic growth, oil prices fluctuations a nd government responses to climate change threats 
will determine to a great extent the amount of inv estment required, as well as the type of energy 
source concerned.  According to the IEA, cumu lative investment of over US$26 trillion will be 
required for the period 2007-2030;  this assessment is based on energy policies and measures adopted 
by mid-2008 and implies that global temperature may increase by up to 6° C.  Assuming that policies are put in place and implemented with the objective of limiting the increase in global temperature of 
                                                     
 
3 UNCTAD, 2003 and UNCTAD, 2007. 
4 Hard technology refers to specialist equipment an d soft technology to organizational and managerial 
practices or business models. 
5 UNCTAD, 2008. 
6 IEA, 2008.  S/C/W/311 
 Page 3 
 
 
  approximately  3° C, US$4.1 trillion more investme nt will be needed between 2010 and 2030.  In the 
third scenario, which corresponds to a temperature rise of around 2° C, additional costs are even much higher, requiring an additional 5.1 trilli on as compared to the preceding scenario.
7   
II. BASIC STRUCTURAL PATTERNS OF THE ENERGY SECTOR 
A. OIL & GAS 
10. From exploration of the resource to distributi on of the product to the final consumer, the oil 
and gas industry entails a long chain of complex operations.8  Upstream activities are concerned with 
finding and extracting the resource, onshore or offshor e.  Exploration and production of oil and of 
natural gas – which may be found in the same re servoir – are closely linked and involve similar 
activities.  The chain starts with various servic es, such as exploration management services, 
geological studies and geophysical services, the purpo se of which is to locate and assess the resource.  
Once a suitable reservoir has been found, a well must be drilled and completed, which includes a 
range of different services, in particular:   casing and tubular services, cementing, core analysis and 
other laboratory tests, core taking, design and construction of drilling rigs, drilling bits services, 
fighting and downhole special operations, mud engineer ing and supply, off-shore rig positioning and 
preparation, rig preparation and installation (on- and offshore), solids control, supply and installation 
of completion devices, waste management, and well t esting.  Other activities related to extraction of 
the resource include oil spill control services, well repair, and well decommissioning (plugging wells 
and removing well-head apparatus).  As a number of oil and gas fields are reaching maturity, decommissioning is seen as an important growth sector.   
11. Downstream activities involve processing the hydrocarbons in appropriate facilities, 
transporting and commercialization.  Processing includ es refining of crude oil to produce petroleum 
by-products, such as gasoline, kero sene, gas oil, lubricating oils, etc.  Raw natural gas must be 
purified into finished by-products, such as natural gas liquids (NGLs), for instance propane, butane.  Natural gas may also be liquefied (LNG) which allo ws to transport it more easily to distant markets 
where it will be re-gasified
9.  The petroleum industry relies on various transportation means.  Oil can 
be transported by pipelines, road, rail and tankers.  On the other hand,  the transportation of natural gas 
has taken place mainly through pipelines.  Liquefied natural gas (LNG) is transported mainly on sea 
in LNG carriers, but transport by rail and road is developing.  The last steps in the chain involve 
storage of the hydrocarbons, wholesaling and retailin g, and distribution to the final consumer.    
12. Different categories of companies are involved in the petroleum sector:  (i) the five so-called 
"super-majors", private international oil companies (IOCs),10 are active along the whole petroleum 
chain, from exploration/production to retailing;  (ii)  other smaller IOCs work  in the exploration and 
production segments;  (iii) NOCs owned (wholly or in majority) by the state, which are present in the 
upstream segment, but may also control the entire domestic supply chain11;  and (iv) so-called 
"oilfield-services companies" which provide differe nt services in the upstream market segment to 
                                                      
7 IEA, 2008. 
8 For a detailed description, see Musselli & Zarilli, 2005 and  USITC, 2003. 
9 There is no agreement among Members as to whether operations such as oil refining, liquefaction and 
re-gasification of natural gas should be considered as services or as production of a good. 
10 The five super-majors, ranked by total produc tion, are:  ExxonMobil (United States), British 
Petroleum (United Kingdom), Shell (United Kingdom/Netherlands), Chevron (United States), and Total 
(France) (UNCTAD 2007). 
11 The five biggest NOCs, ranked by total production, are:  Saudi Aramco (Saudi Arabia), Gazprom 
(Russia), NIOC (Iran), Pemex (Mexico) , and CNPC (China) (UNCTAD 2007). S/C/W/311 
Page 4  
 
  IOCs and NOCs, but do not produce oil and gas themselves.
12  Note that these categories are not rigid:  
for instance, IOCs may also sell oil-field servi ces to other companies, in particular NOCs. 
13. The role of governments in the control and management of the resource has evolved over 
time.  In the early age of oil exploitation, governments awarded concessions allowing foreign 
companies to explore and produce the resource agains t the payment of various taxes and royalties.  
Since the 1990s, the preference has switched towards greater direct governmental involvement in the 
exploitation of the resource, generally though NOCs;  the purpose of this policy change is to maintain 
direct state control over the resource and to maximise  revenues.  This has contributed to strengthening 
the role of NOCs on the international stage as, in a number of countries, they are a necessary 
intermediary for private firms who want to work in  the upstream segment.  NOCs currently own more 
than 70 per cent of proven oil and gas reserves a nd account for 51 per cent of world production.13  The 
share of NOCs is expected to grow and account for about 62 per cent of world oil production in 2030 
(as compared with 57 per cent in 2007), accounting for about 80 per cent of incremental oil production.
14  While developed-country companies unde rtake most of their production overseas, 
companies from developing and transition economies, which control most of the global production of 
oil and gas, have a limited degree of internationa lization;  however, a number of them have become 
outward investors and are expanding quickly th eir overseas activities in the upstream segment.15 
14. Recent years have seen the rise of oilfield-services companies, which provide a range of 
services related to oil and gas exploration and production.  They allow NOCs to access advance 
technology and expertise while maintaining full cont rol over the exploitation of the resource.  IOCs 
may also buy these services as they may find it mo re economical to outsource certain activities to 
oilfield services companies rather than maintain ing an in-house capacity to perform them.  The 
revenue growth rate of the top three service companies (Schlumberger, Halliburton and Baker 
Hughes) averaged 25 per cent per year over the pe riod 2005-2007.  During the same period, these 
three companies have hired more than 15000 technical staff per year, and their research & development (R&D) expenditure have increased by 15 per cent to 20 per cent  per year, which means 
that they now exceed those of the IOCs and NOCs.
16 
15. Global upstream oil and gas investment is exp ected to raise to over US$600 billion by 2012, 
most of it being devoted to field development.  The bulk of investment (about 60 per cent) will 
continue to be made by international private co mpanies.  NOCs will account for about 40 per cent of 
total investment.  Drilling alone represents mo re than half of the total upstream costs.17 
                                                      
12 The five largest oilfield services companies are:   Schlumberger (United States), Halliburton (United 
States), Aker (Norway), Weatherf ord International (United States) and Transocean (United States)  
(UNCTAD 2007). 
13 IEA, 2008. 
14 Ibidem . 
15 UNCTAD, 2007. 
16 IEA, 2008. 
17 Ibidem.  S/C/W/311 
 Page 5 
 
 
   
 
Gas Transport  
 
The gas transmission and distribution sectors present characteristics different from oil and more similar to 
electricity.  Like electricity, the gas sector has been tr aditionally dominated by state-owned vertically integrated 
utilities, which produced, purchased, stored, transported and delivered gas to the end users.  Reforms aim at 
introducing competition by allowing the emergence of various independent producers and distributors;  they 
entail the privatization of former state-owned monopolies and the vertical separation of the production, 
transmission/distribution and marketing segments (so-called "unbundling"), which leads to the creation of a 
transportation services market separate from the commodity market.  The intent behind such restructuring "is to 
ensure that a firm cannot exploit its monopoly role in transmission and/or distribution to cross-subsidize or 
otherwise favour an affiliate engaged in a competitive segment like marketing or production".18  T h e  m o s t  
extreme form of vertical restructuring requires complete ownership separation between each activity;  other 
forms may include separate account or legal separation of the various entities.  Vertical unbundling may have to 
be complemented by horizontal restructuring, i.e., preventing the domination of a market segment by a dominant 
firm. 
 
Promoting competition is most feasible in the produc tion and marketing segments.  In transmission and 
distribution, which are subject to natural monopolies, regulation must prevent the incumbent from abusing its 
monopoly position.  This means in par ticular that pipeline companies must en sure that gas shippers benefit from 
mandatory, non-discriminatory and open  access (so-called "third party access" ) to the transportation network.  
Third party access  (TPA) may take two forms:  (i) under negotiated  access, access terms the regulator lets 
suppliers and customers determine most access terms and co nditions;  (ii) these terms and conditions are set by 
the regulator under a regulated  access system.   
 
Other important elements of a competition policy progr amme include the establishment of an independent 
regulator, safeguards to prevent anti-competitive behavi our, regulatory transparency and dispute resolution 
mechanisms.   
 
 
 B. C
OAL 
16. Coal is the world second most important fuel after oil and accounts for 26 per cent of global 
energy use.19  Coal reserves are abundant and geographica lly dispersed as coal is mined commercially 
in more than 50 countries.  The five main producers are China, the United States, India, Australia and 
South Africa.20  More than 60 per cent of the coal produced  worldwide goes to electricity generation;  
about 30 per cent is consumed by industry, in partic ular steel and cement, and some 4 per cent goes to 
residential and commercial sectors.21  The IEA expects coal production to rise by almost 60 per cent 
between 2006 and 2030, and warns that large inve stments are needed in prospecting and in new 
mining projects.  Most of this increase will be need ed to meet energy needs in developing countries, 
in particular China and India.22 
17. The coal sector consists of a chain of interre lated activities, which starts with exploration 
activities.  This involves creating a geological map of the area, carrying out geochemical and 
geophysical survey, and exploration drilling.  Mining  will then start if the results of these exploration 
activities indicate that coal can be economically re covered.  Services provided to the coal industry 
                                                      
18 USITC, 2001. 
19 IEA, 2008. 
20 World Coal Institute, Coal Facts 2008 , at www.worldcoal.org . 
21 Energy Information Administration (EIA), Official Energy Statistics from the US Government, 
International Energy Outlook 2009, at http://www.eia.doe.gov/oiaf/ieo/coal.html . 
22 IEA, 2008. S/C/W/311 
Page 6  
 
  include removal of overburden, stripping the mi ne face, auguring or culm bank mining, drilling 
services, mine tunneling, and shaft sinking.  Ot her activities include supply and installation of 
ventilation control devices, conveyor belt installation a nd maintenance, etc.  Over short distances, coal 
is normally transported by conveyor or truck.  Trai ns and barges are used for longer distances.  Coal 
can also be mixed with water to form a coal sl urry and is then transported through a pipeline.
23     
18. Coal burning emits significant quantities of gr eenhouse gas (GHG) emissi ons.  For instance, 
coal used for electricity generation is responsible  for some 20 per cent of global GHG emissions.  On 
the other hand, coal is cheap as compared to othe r energy sources and reserves remain vast.  In the 
context of the fight against climate change, it will be necessary to develop and implement on a large 
scale clean coal technologies to reduce GHG emissi ons.  Experts view carbon capture and storage 
(CCS, see below) as being a promising technology to  "decarbonize" the coal sector and ensure its 
sustainable use.24 
C. RENEWABLE ENERGY  
19. Renewables are commonly understood to include  hydro, solar (photovoltaic and thermal), 
wind, geothermal, wave, tide, ocean and biomass (solid, liquid).25  Some renewable energy 
technologies, such as hydropower, windpower, biomas s combustion and geothermal power have been 
in use for centuries.  Second generation technologies,  including solar heating and cooling, biofuels, 
wind power, and solar photovoltaic, are now on the ma rket, as a result of R&D investments initiated 
by developed countries in the 1980s, in  the wake of the first oil shoc k.  Third-generation technologies, 
which include concentrating solar power (CSP), ocea n energy, enhanced geothermal systems, are still 
at the development stage.26   
20. When taking into account traditional biomass, developing countries are the main renewable 
users.  Developed countries are the main users of "new" renewables, such as solar and wind energy.  
Nevertheless, a number of developing countries, which face increasing energy needs, are turning 
towards wind and solar energy in order to divers ify their supply sources.  Over 60 countries have 
implemented some kind of support mechanisms for promoting renewable power generation, including 
a number of developing countries (Brazil, Chile, E gypt, Mexico, the Philippines, South Africa, Syria 
and Uganda).27   
21. For the time being, renewable energy is ofte n not competitive with conventional energy 
sources and their development is dependent on public support, in particular for research and 
development (R&D).  However, should social an d environmental costs caused by fossil fuels be 
internalised, some renewable sources, such  as wind, would already be competitive. 
22. Between 2004 and 2008, worldwide annual investme nt in renewable energy has increased 
fourfold to reach US$120 billion.  It is estimat ed that some US$120 billion was invested in 
renewables in 2008, primarily in wind, solar PV  and biofuels.  Between 2004 and 2008, renewable 
power capacity increased by 75 per cent, excluding large hydropower renewable.  Capacity in 
developing countries represents 43 per cent of the tota l increase, most of which being in China and 
India.  In 2008, added power capacity from re newables in the United States and the European 
Community exceeded for the first time added capacity  from conventional power (i.e. gas, coal, oil and 
nuclear).28  Excluding traditional biomass use, renewa bles represented some 7 per cent of global 
                                                      
23 Information in this paragraph comes from World Coal Institute, at www.worldcoal.org . 
24 IEA, 2008b. 
25 For a more detailed description of renewable energy sectors, see Annex 1. 
26 IEA, 2006. 
27 REN21, 2009. 
28 Ibidem.   S/C/W/311 
 Page 7 
 
 
  primary energy needs in 2006 and are expected to increase to at least 10 per cent in 2030.  Total 
investment in renewable energy supply for the pe riod 2007-2030 will amount to some US$5.5 trillion, 
the greater part being devoted to electricity generation.29   
23. The renewable energy sector involves a range of different service suppliers, including  
architecture, engineering, construction, technical  testing and analysis, management consulting, 
services related to management consulting, and research and development services.  For the time 
being, private sector R&D for renewables energy  sources is overall limited and focuses on large 
hydropower, wind and solar.   
24. The renewable energy sector is composed of big firms, which operate in the capital-intensive 
segments of the sectors, and of small- and medium sized entities targeting niche markets.  Active 
government policies in favour of renewable energies te nd to contribute to the emergence of renewable 
energy goods and services suppliers, which benefit from favourable conditions to gain experience on 
the home market and are then in a good position to compete on foreign markets.  Firms from the United States, Germany, Spain, Denmark or Japan have  the lead in the renewable energy sector;  they 
benefited from pro-renewable policies put in pl ace by their governments at the end of the 1980s.
30  
More recently, several developing countries have al so set targets for renewable energy use, which 
contributed to the emergence of national firms.  Large renewable energy industries exist in several 
developing countries, for instance, Argentina, Botswa na, Brazil, China, India, Malaysia, Nepal, South 
Africa and Thailand;  some of them have  significant export potential for renewables.31       
D. NUCLEAR ENERGY  
25. Nuclear energy provides about 16 per cent of electricity worldwide.  New capacity is 
currently under construction in different parts of th e world.  Faced with concerns related to energy 
security, need to abate CO2 emissions and rising fossil fuel prices, a number of countries are reconsidering the role of nuclear in their energy  mix.  However, public acceptance and final waste 
management remain two important difficulties for th e further development of this energy source. 
26. Nuclear energy activities involve: (a) extrac tion of uranium from open pit or underground 
mining methods;  (b) the conversion of uranium oxi de into uranium hexafluoride, which possesses the 
required chemical purity for enrichment;  (c) enrich ment through gaseous diffusion or gas centrifuge;  
(d) fuel fabrication, where the en riched uranium is used to produ ce the final fuels elements to be 
placed into the reactors;  (e) use of the fuel in the reactor to produce secondary energy from nuclear 
reaction;  and (f) reprocessing and storage (final dis posal) of high-level waste.  From a WTO point of 
view, it may not be easy to draw the line be tween goods production and services supply as far as 
certain of these activities are concerned.   
27. Moreover, and perhaps more importantly, nucl ear energy raises specific safety and security 
concerns.  The production, transformation and disposal of nuclear fuels are subject to strict safety and 
environmental regulations in all countries.  Specific re gulations also exist to ensure that no material in 
the civil fuel cycle is used for military purposes.  In the Doha Development Agenda (DDA) services 
negotiations, several Members have expressed the view  that nuclear energy should not be associated 
with energy trade in general.  It is not clear, how ever, whether this implies that nuclear trade should 
be subject to specific provisions or whether Members consider that GATS Articles XIV and especially XIV bis provide sufficient scope for action.  Article XIV bis of the GATS includes, among 
the security exceptions,  actions that Members consider necessary to protect essential security 
interests "relating to fissionable and fusionable materials or the materials from which they are 
                                                     
 
29 IEA, 2008. 
30 USITC, 2005. 
31 Martinot, 2002;  Mukherjee & Goswami, 2009. S/C/W/311 
Page 8  
 
  derived."  One question here is whether "essential"  security interests could be at stake in the 
international trade of nuclear energy services for pacific purposes, also considering the potential 
spillovers in the military field. 
E. E
LECTRICITY  
28. Until the 1980s, the traditional structure of the electricity sector consisted of vertically-
integrated state-owned enterprises, detaining a monopoly position over a determined region, and 
responsible for the whole chain of activities:  power  generation, transmission over high voltage lines, 
distribution to end-consumers thr ough low voltage lines, as well as ot her activities related to selling 
electricity to end-consumers.   
29. The provision of electricity has various unique characteristics explaining why, for a long time, 
markets were not seen as appropriate to guarantee re liable and affordable delivery.  By its nature, 
electricity is difficult to store, but must neverthe less be available on demand, which itself fluctuates 
constantly.  An entity responsible for matchi ng supply and demand and ensuring the technical 
integrity of the network must therefore be establis hed.  Finally, power needs to be transported over 
networks which are costly to duplicate, thus leadin g to a situation of natural monopoly.  The direct 
involvement of governmental entities in the sect or was deemed necessary to ensure the proper 
functioning of electricity markets, protect consumers from possible abuses resulting from monopoly situations, ensure universal service as well as the integrity of the grid.       
30. Since the end of the 1980s, several countries,  including Argentina, Australia, Chile, Norway, 
Spain, Sweden and the United Kingdom started to promote competition in their electricity sector.  
Reforms have been facilitated by technological i nnovations:  (i) the introduction of "combined cycle 
gas turbine generators" (CCG)
32, which has diminished fixed costs as compared to other generating 
technologies, and (ii) development of communicati ons technologies that fac ilitate coordination among 
suppliers of electricity.  Other factors include rela tive price changes, which made natural gas cheaper 
than other fuels, as well as a general political clim ate to replace state control with privatization and 
market regulation in various sectors of the ec onomy starting at the beginning of the 1980s.33    
31. Liberalization in the electricity sector shares many characteristics with the telecommunication 
sector, although it is more complex, due to the tec hnical and economical characteristics of electricity.  
Stated purpose of promoting competition is to improve efficiency and lower prices for final 
consumers.  Liberalization has started in the seg ments of generation and commercialization to end-
users, but is more difficult in the transmission and distribution segments.34  Policies adopted in 
reforms of the power sector include five main st eps:  (i) privatization of state-owned utilities and 
assets;  (ii) vertical separation of generation,  transmission, distribution and commercialization 
activities ("unbundling");  (iii) horizontal separatio n (in particular, limiting industry concentration 
among generators);  (iv) ensuring equal access to transmission and distribution infrastructures (non-discriminatory third-party access);  and (v) establishment of an independent regulator.
35  
32. The unbundling and privatization of the electri city sector allowed important services to 
emerge for private suppliers.  While power genera tion would appear to entail the production of a 
                                                      
32 In a CCGT, a gas turbine generator produces elect ricity;  the heat released in the process is 
transformed in steam which will generate additional electricity thanks to a steam turbine. 
33 USITC, 2000. 
34 A survey of investment protection agencies (IPAs) in developed and developing countries shows that 
almost half of them were actively promoting foreign invest ment in electricity generati on.  However, the share of 
IPAs promoting investment in electricity distribution and transmission was 17 per cent and 19 per cent respectively (UNCTAD, 2008). 
35 USITC, 2000.  S/C/W/311 
 Page 9 
 
 
  good,36 a number of services are directly related to the construction, maintenance and operation of 
generation plants.  Transmission and distribution netw orks must be constructe d, expanded, maintained 
and operated.  The existence of competing generato rs led to the creation of a wholesale electricity 
market, providing business opportunities for services providers.  The possibility for end-customers to choose among various electricity re tailers allowed the creation of a retail electricity market.  Other 
services related to commercialization of electric ity include installation, metering and billing. 
33. Around 100 countries allowed for private participa tion in their electricity sector between 1990 
and 2005.  Private investment in generation plan ts has the biggest share, between US$11 billion and 
US$14 billion in 2003-2005.  Investment in dist ribution fluctuated between US$1.5 billion and US$3 
billion since 2001.
37  Countries are more reluctant to open th is segment, which is also riskier for 
investors because it involves the politically sensitiv e discussion about the prices paid by the final 
consumer. 
34. The world's largest electricity firms, which ar e also actively investing abroad, are primarily 
from developed countries.38  They benefit from technological, financial and project management 
expertise.  There is nevertheless considerable scope for developing country companies to invest 
abroad and several of them, in particular those from Brazil, India, Malaysia, Singapore and Thailand 
have started doing so, mainly in other developing countries.39   
35. According to the IEA, global investment in the power sector over the period 2007-2030, 
including generation, transmission and distribution is US$13.6 trillion, which represents over half of 
all energy-sector investment.  Some US$6.8 trillion is required for generation,  and another 6.8 trillion 
is needed for transmission and distribution netw orks, of which two-thirds goes for distribution.40 
F. OTHER ENERGY -RELATED SECTORS  
36. In the global effort to mitigate climate change, increasingly stringent environmental 
regulations are being implemented, which directly  concern the energy sector.  In addition to the 
promotion of renewable energy, other measures are being considered with a view to reducing energy 
consumption or limit CO2 emissions.  Carbon capture  and storage (CCS) and energy efficiency are 
among the main ones. 
1. Carbon Capture & Storage 
37. Carbon capture and storage (CCS) refers to t echniques aiming at capturing CO2 before it is 
released into the atmosphere and storing it on a long- term basis into geological sinks, such as depleted 
oil wells or deep saline aquifers, whether onshore or  offshore.  CCS technology is appropriate for big 
stationary CO2 sources and could contribute to curb emissions from heavy industrial sectors, for 
example steel, cement or oil refineries, but also power generation plants.  CCS could also make the 
use of coal more environmentally friendly.  CCS is considered to be an important tool, together with 
increasing use of renewable energy so urces, to reach GHG abatement targets.41 
                                                      
36 If electricity is considered to be a good – a presumption which seems to be shared by most Members 
– generation of electricity is not covered by the GATS.  If we consider that electricity is a service, generation 
would fall under the GATS. 
37 Tenenbaum & Izaguirre, 2007. 
38 The six largest electricity firms are: EDF (Fra nce), Electrabel (Belgium ), Enel (Italy), E.ON 
(Germany), RWE (Germany) and Vattenfall (Sweden).   
39 UNCTAD, 2008. 
40 IEA 2008. 
41 See Carbon Capture & Storage:  Assessing the Economics , McKinsey & Company, 2008. S/C/W/311 
Page 10  
 
  38. In a first instance, the CO2 is cap tured, i.e., separated from the fl ue gases or fossil fuels, at the 
point of emission;  it is then compressed and transp orted, by pipeline or tanker, and finally injected 
into a suitable geological formation where it will be stored permanently.  The principle of capturing 
and re-injecting CO2 is not new as it  has been used in th e oil extracting industry to enhance recovery 
from declining oil fields, but more experience is needed to use these technol ogies in an integrated 
manner for the purpose of CCS.  CCS is viewed as  a medium term technology (2020-2030) as it has 
not reached commercial maturity yet.
42  There are only four large scale commercial CCS projects in 
operation today, in Norway (two projects), Algeri a, and the United States.  Moreover, several WTO 
Members are planning large-scale CCS demonstration projects (Australia, Brazil, Canada, China, EC, 
Norway, South Africa and United Arab Emirates).43 
39. CCS entails various services relating to the captu re, compressing and transport of the CO2.  
Identifying suitable storage sites also requires expl oration, mapping, and assessment.  The site must 
then be prepared, which entails drilling activities.  Once the CO2 has been injected, the site must be 
closed and monitored on a relatively long-term basis to  ensure that there is no  leakage.  The oil and 
gas business possesses an advantage for the devel opment of CCS projects since it has already the 
technical expertise needed for assessing potential re servoirs and the behaviour of the CO2 injected 
therein.  Several companies have invested in R&D to develop CCS technologies with a view to 
commercial applications and some of them already offer CCS-related services.44 
2. Energy efficiency and related services 
40. Concerns related to high oil prices, energy secur ity and climate change have pointed to energy 
efficiency as an important tool in the promotion of new energy policies.  To put it simply, energy 
efficiency refers to the endeavour to satisfy th e same energy needs with less energy.  Energy 
efficiency measures can be applied across sectors such as construction, transport and industry.  
Examples include insulating homes to diminish he ating consumption while maintaining the same 
temperature inside, using fluorescent instead of inca ndescent lights, etc.  Even though figures differ, it 
is estimated that energy efficiency could contribut e to reducing global CO2 emissions by at least one 
fifth.45 
41. Firms specialized in energy efficiency sell goods and related services. They also provide 
different services aiming at developing and implementing projects resulting in energy savings.  Energy efficiency-related services include environm ental engineering, energy audit, construction 
services, etc.   
III. WHAT ARE ENERGY SERVICES? 
A. D
EFINITION OF ENERGY SERVICES UNDER THE GATS 
42. Neither the MTN.GNS/W/120 nor the CPC46 contain a separate section for energy services. 47  
Nevertheless, energy-related activities are covered by  these classification instruments.  In the W/120, 
                                                      
42 IEA, 2007. 
43 IEA, 2009. 
44 See, for instance, Schlumberger ( http://www.slb.com/content/servi ces/additional/carbon/index.asp? ), 
Halliburton ( http://www.halliburton.com/ps/default.aspx?navid=1333&pageid=2768 ). 
45 IEA, 2009b;  ECT, 2007. 
46 For the purpose of this Note, "CPC" is understood to refer to the CPC prov. 
47 The CPC provides, in its Annex I, a compendium of energy related-products listed under different 
headings in the CPC, includ ing energy-related services.  They include: retail sale of motor fuels (61300); sales 
on a fee or contract basis of fuels, metals, ores, timber, building materials and industrial and technical chemicals (62113); wholesale trade services of solid, liquid and gaseous fuels and related products (62271); retail sales of 
fuels oil, bottled gas, coal and wood (63297); transpor t services via pipeline: transportation of petroleum and  S/C/W/311 
 Page 11 
 
 
  three sub-sectors refer explicitly to energy.  They are found in "Business Services" (two sub-sectors 
under "Other Business Services") and under "Pipeline Tr ansport" in the "Transport Services" chapter, 
and are defined as follows: 
1.F.h. Services incidental to mining    883 + 5115 
CPC 883 covers "services rendered on a fee or contact basis at oil and gas fields, e.g., 
drilling services, derrick building, repair and dismantling services, oil and gas well 
casings cementing services". 
Exclusion :  Mineral prospecting services, o il and gas field exploration and 
geophysical (e.g., seismic) a nd geological surveying services are classified in class 
8675 (Engineering related scientific and technical consulting services). 
CPC 5115 (Site preparation work for mi ning) includes "tunnelling, overburden 
removal and other development and preparati on work of mineral properties and sites, 
except for mining oil and gas".  
Exclusion :  Construction services incidental to oil and gas mining are classified in 
subclass 88300 (Services incidental to mining).  
1.F.j. Services incidental to energy distribution  887 
These are "transmission and distribution services on a fee or contract basis of 
electricity, gaseous fuels and steam and hot water to household, industrial, commercial and other users". 
Exclusion
:  Transport services via pipeline on a fee or contract basis of petroleum and 
natural gas are classified in subclass 71310. 
11.G.a. Transportation of fuels    7131 
The CPC definition includes "transportation via pipeline of crude or refined 
petroleum and petroleum products and of natu ral gas".  Transportation of coal slurry 
is explicitly covered unde r "Transportation of ot her goods" (CPC 7139). 
43. "Services incidental to mining" focuses on oil and gas, which implies that similar activities in 
the field of coal mining would be covered under "site  preparation work for mining".  The explanatory 
note contained under CPC 883 provides limited in formation as to which activities are actually 
included.  Like other Chapter 88 activities which ar e related to production processes, this sub-sector 
raises the difficult question of where to draw th e line between actual mining and services "incidental 
to" mining (see below).  In 2003, several delegatio ns proposed a more deta iled illustrative list of 
activities which could fall under this heading, in cluding:  on land site preparation, on land rig 
installation, drilling, drilling bits services, casing and tubular services, mud engineering and supply, 
solids control, fishing and downhole special operati ons, wellsite geology and drilling control, core 
taking, well testing, wireline services, supply and operation of completion fluids (brines), supply and 
installation of completion devices, cementing (pressure pumping), stimulation services (fracturing, 
                                                                                                                                                                     
natural gas (71310); services incidental to mining (88300); manufacture of coke, refined petroleum products and 
nuclear fuels, on a fee or contract basis (88450); services incidental to energy distribution (88700).  Among the administrative services the CPC also  include: administrative fuel and en ergy related services (91132) and 
administrative mining and mineral resources, manufacturing and construction related services (91133). S/C/W/311 
Page 12  
 
  acidising, and pressure pumping), workover and we ll repair services, plugging and abandoning of 
wells.
48   
44. Definitional issues also arise in relation to "ser vices incidental to energy" distribution.  The 
definition in CPC 887 seems to suggest that transmission and distribution per se  are covered.  On the 
other hand, this definition does not provide exam ples of the activities considered to be services 
"incidental" to energy transmission and distribu tion.  Activities which could be considered as 
"services incidental to energy distribution" include central network control services, and power management and monitoring services. 
45. "Transportation of fuels" (CPC 7131) presumably c overs those activities that are related to the 
actual operation of the pipeline, such as pumping of products, pressure measurement, implementation 
of a "roadmap", billing, etc.  Activities relating to pipeline planning, construction and management 
fall under other service categories of the W/120 (engi neering, construction, technical testing and 
analysis services, etc.).   
46. In addition to these three sub-sectors, other activ ities, which are not necessarily specific to the 
energy sector, can be found under various sections of  the W/120, in particular business services, 
construction, distribution and transport services.  So me of these sub-sectors explicitly refer to various 
energy-related activities, such as:  construction wo rk for long distance pipelines and power lines;  
wholesale trade services of solid, liquid and gaseous fuel s and related products;  retail sale of fuel oil, 
bottled gas, coal and wood;  bulk storage services of liquids or gases;  engineering  design services for oil and gas recovery procedures, the constructi on, installation and/or maintenance of drilling 
equipment, pumping stations, treating and storage fac ilities and other oil field facilities;  etc.  Others 
are more horizontal in nature and energy is one possible end-use:  geological, geophysical and other 
scientific prospecting services;  testing and analysis  services of the chemical and biological properties 
of soil and minerals;  management consulting services,  services related to management consulting, or 
repair services incidental to metal products, machinery and equipment. 
47. Some specific energy-related activities appear not to  have an appropriate entry.  For instance, 
no relevant category exists in either W/120 or the CPC for, respectively, wholesale trade services and 
retailing services of electricity, town gas, steam and hot  water.  Also, there is no explicit reference to 
metering and billing.  Finally, W/120 does not re fer to "Retail sales of motor fuel" (CPC 613). 
48. Thus, it seems that nearly all relevant servi ces along the energy chain find a place in the CPC 
and W/120.
49  Over the past few years, the understandi ng of the energy sector has benefited from 
several rounds of discussions in the Committee on Specific Commitments, as well as from proposals 
tabled by various Members.  This work has allowe d to identify relevant sectors and sub-sectors in the 
W/120 and CPC.  For instance, the collective request on energy services contains an ad hoc  list of 
twelve sub-sectors:  they include activities in business services (such as engineering, management consulting services, technical testing, services incident al to mining, etc.), construction and distribution 
services, and apply to services supplied onshore or offshore.  The request targets energy-specific 
activities for three sub-sectors ("retailing services of  fuel oil, bottled gas, coal and woods", for 
instance).  The other sub-sectors are not energy specific and may have other end-uses.
 50   
                                                      
48 Communication by Chile, The European Communities and Their Member States, Japan and the 
United States, Proposed Guide for Scheduling Commitments on Energy Services in the WTO , JOB(03)/89, 
12 May 2003.  See also the list of activities proposed by Indonesia in its Proposal on Classification of Energy 
Services  – Revision , S/CSC/W/42/Rev.2, 28 April 2006. 
49  See the check-list of energy-related services in Annex II to this Note.  This check-list aims at 
illustrating the main energy-related services found in  the W/120, the CPC, or identified by Members.   
50 See Review of Progress in Energy Services , Communication by the European Communities, 
JOB(07)/208, 5 December 2007.  See also Communicat ion by Chile, The European Communities and Their  S/C/W/311 
 Page 13 
 
 
  49. Except when the nature of an  activity necessarily limits it to certain energy sources (e.g., 
services incidental to mining), classification of energy-related services is source neutral.  This means that, whenever relevant, a definition covers all en ergy sources.  Hence, a commitment on engineering 
services would cover services provided not only in conn ection with conventional energy, but also with 
renewables, for instance.   
50. The rapid development of technologies in the energy sector, in particular those promoted by 
the climate change agenda, to control and mitig ate pollution and to develop clean energy sources 
creates demands for new products.  For instan ce, carbon capture and storage involves various 
services, such as identification of a suitable geological formation, CO2 capture at the point of emission, transport to the reservoir and storage on a long-term basis.  From the point of view of the 
classification, the question might arise whether these activities represent "new" services or whether 
they are already covered in the W/120 and the CPC.   
B. D
ISTINCTION BETWEEN TRADE IN GOODS AND TRADE IN SERVICES  
51. In the WTO system, trade in goods and trade in  services are subject to different agreements.  
On the other hand, the distinction between trade in  goods and trade services is not always easy to 
make in practice in the energy business.  Drawing th e line remains difficult in particular with respect 
to activities surrounding the production of the resour ce:  mining and related activities, as well as 
transformation of the resource (oil refining, gas liq uefaction and re-gasification, for instance).   
52. Division 88 of the CPC provides a list of "servi ces incidental to" various industries, including 
mining and manufacturing.  The explanatory note to Division 88 describes the totality of these 
services as "services rendered on a fee or contract basis by units mainly engaged in the production of 
transportable goods, and services typically related to the production of such go ods".  Hence, although 
these activities are generally referred to as services "i ncidental to", section 88 describes in fact two 
situations, i.e., production on a fee or contract basis  on the one hand and services related to production 
processes  on the other.  These two situations are relevant for the energy sector. 
(a) Production on a fee or contract basis   Production on a fee or contract basis, as 
envisaged by the CPC, is not really a service "incidental to", but is production per se :  
the end-product is a good.  In the CPC, production processes carried out on a fee or 
contract basis, i.e., on the account of a third party, are classified as services.  However, identical processes, when carried out by a producer on its own behalf, are not considered to be services.  Ownership of the raw material processed is thus a 
decisive criterion.
51  The question which arose in the Committee on Specific 
Commitments is whether production "on a fee or contract basis" should be regarded 
as a service under the GATS.  This issue is  important in the energy sector.  For 
instance, section 884 of the CPC refers to  "Manufacture of coke, refined petroleum 
products and nuclear fuel, on a fee or contract basis".  If production on a fee or 
                                                                                                                                                                     
Member States, Japan and the United States, Proposed Guide for Scheduling Commitments on Energy Services 
in the WTO , JOB(03)/89, 12 May 2003;  Indonesia, Proposal on Classification of Energy Services  – Revision , 
S/CSC/W/42/Rev.2, 28 April 2006;  Australia, Canada, the European Communities, Japan, Korea, Kuwait, Norway, Oman, Saudi Arabia, Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu and the 
United States, Statement on Services of Common Interest in the Energy Sector , JOB(06)/17, 3 February 2006. 
51 The explanatory note to services  incidental to manufacturing (CPC 884-885) indicates that "[t]hese 
include manufacturing on a fee or contract basis, i.e., manufacturing services rendered to others where the raw 
materials processed, treated or finish ed are not owned by the manufacturer". S/C/W/311 
Page 14  
 
  contract basis were considered to be a service, this would mean, inter alia , that oil 
refining is subject to the GATS when performed on a fee or contract basis.
52   
(b) Services related to production processes   These services are close to the production 
process, but do not constitute the whole of that  process.  When dealing, for instance, 
with the sub-sector "services incidental to  mining" (CPC 883), the word "incidental" 
conveys the idea that mining itself is not  covered, but only activities related to 
mining.  However, when seen from the point  of view of the industry, it may seem 
artificial to try and determine at which poi nt the resource is "mined" when, as is the 
case with oil and gas extraction, the produc tion process consists of a long chain of 
complex and closely interconnected activiti es, which can be outsourced to several 
actors.    
53. These issues boil down to the question of wh at a service is.  The GATS, which does not 
contain a definition of "service", offers no clear guidance and definitions in the CPC are not conclusive for purposes of the GATS.  Members addressed these issues in the Committee on Specific 
Commitments, but did not reach conclusions on them.
53 
IV. TRADE IN ENERGY SERVICES UNDER THE GATS  
A. APPLICATION OF THE GATS  TO ENERGY SERVICES  
54. All four modes of supply are relevant in the energy sector, although their importance may 
vary depending on the activities concerned.   
55. Owing to technological developments, cross-border trade (mode 1 ) is becoming increasingly 
relevant for the energy industry.  A number of tr ansactions can take place via the internet, as shown 
by the following examples.  In the field of upstrea m oil and gas services, the analysis of geological 
data can be performed by a firm in country X for a consumer in country Y.54  Some companies 
provide remote monitoring and diagnosis services for wind turbines.55    It is also possible to remotely 
control and monitor pipelines.   
56. The relevance of mode 2  may be limited in situations involving the actual movement of the 
consumer or its property.  One example of cons umption abroad may be the repair of energy 
equipment in a foreign country.   
57. Establishment of a commercial presence (mode 3 ) is undoubtedly the most important mode of 
supply for many energy services.  For instance, oi lfield services providers supply most services 
through foreign affiliates because hydrocarbons prod uction takes place over a long period of time and 
within a few regions;  regional affiliates allow fi rms to compete for contracts on a long-term basis 
                                                      
52 Discussions in the CSC indicated that there are diverging views among WTO Members as to whether 
activities such as oil refining, gas liquefaction and re-gas ification are services or production activities.  The CPC 
prov. does not contain a reference to these activities.  They are mentioned in the subsequent versions of the CPC 
(1.0 and 1.1), where they are found in  the category which corres ponds to services incidental to mining of the 
CPC prov.  The latest version of the CPC (version 2) places liquefaction and re-gasification in a sub-class CPC 
67990, entitled "Other supporting trans port services n.e.c.", in the Divisi on 67 of "Supporting transport services" 
and defines them as "liquefaction and re -gasification of natural gas for transportation".  It seems thus to consider 
that these activities are accessories to transport services.  In any case, a ll three versions of the CPC view 
liquefaction and re-gasification as services activities. 
53 Committee on Specific Commitments, Reports of Meetings, S/CSC/M/16 to S/CSC/M/18/Rev.1.  
See also Production on a Fee or Contract Basis , Note by the Secretariat, Job 3973/Rev.1, 29 June 2000. 
54 USITC, 2003. 
55 See http://www.ge power.com/prod_serv/serv/r emote/en/mondiag_serv.htm , 8 May 2009.  S/C/W/311 
 Page 15 
 
 
  (USITC 2003).  The unbundling of energy facilities in the electricity and gas sectors also provides 
investment opportunities.  GATS commitments are al so possible in monopoly situations, for instance 
in gas and electricity transmission and distribution services.  Such commitments could, for instance, 
grant the right to invest in an existing monopoly, which implies elimination of foreign investment 
restrictions, or permit investment in, or opera tion of, a competing service supplier after a date 
specified in the schedule.56 
58. Mode 4  commitments could contribute to facilitating the temporary transfer of intra-corporate 
specialists and managers working for energy compan ies.  The ability to move quickly and temporarily 
key personnel, such as technicians or managerial  professionals, to areas where projects are being 
developed is important for energy firms. 
59. Trade in energy services are af fected by restrictions similar to those found in other services 
sectors, and which may fall under GATS disciplines, in particular GATS Article XVI (market access) and XVII (national treatment).  Measures most commonly pointed at include:  nationality and 
residency requirements;  restrictions on foreign i nvestment, including restrictions on the legal forms 
of doing business, limitations on foreign capital particip ation;  unspecified economic needs tests;  the 
existence of exclusive rights and monopolies, inabili ty to provide cross-border electronic information 
and transactions, discriminatory treatment of fore ign providers (discriminatory tax treatment);  
restrictions on the repatriation of profits.  These measures may exist at national or local level.  In many countries, restrictions apply to the entry and temporary stay of foreign specialists and 
professionals employed by energy services companies.   
60. Other measures affecting energy services include de facto  technology transfer requirements; 
reciprocity requirements regarding explorati on and exploitation of hydrocarbons;  cabotage 
restrictions affecting the operations of foreign providers of offshore ser vices;  and anti-competitive 
practices by recently-merged utilities.  Other problematic measures involve local content requirements for goods and services as well as high customs duties on imports – even for a brief period – of material and equipment needed by energy firms, for instance for oil and gas services.  A recurrent 
concern expressed by energy firms relates to opaque regulatory frameworks, and administrative 
systems which provide scope for corruption and arbitrary business and licensing practices.
57 
61. The energy sector is heavily subsidized.  Subs idies concern all energy sources, may target 
consumers and/or producers and take many different forms (grants, low-interest or preferential loans, 
tax rebates, tax credits, support for research and deve lopment, etc.).  Lack of common definitions and 
methodologies makes it difficult to assess their magnitude and impact.58  Worldwide, fossil fuels 
remain the most heavily subsidised energy source on  a net basis, but government support to promote 
cleaner energy technologies is growing (tax exemp tions or feed-in-tariff, support to research and 
development, etc.).59  Information on the extent to which subsidy programmes may specifically affect 
energy services suppliers is scarce.  Available information suggests that support programmes do not 
primarily aim at favouring certain suppliers (nationa l) over others (foreign), but rather at promoting 
certain types of energy sources or ensuring universal  service.  For instance, in the electricity sector, 
governmental incentive programmes to promote wind en ergy tend to be available to both foreign and 
domestic suppliers.60  Under the GATS, discriminatory subsidies affecting energy service suppliers 
                                                      
56 Information Tool – Energy Services , Information Note by the Secretariat, JOB(05)/204, 
21 September 2005. 
57 For further details on restrictions affecting energy  service suppliers, see, for instance, Mukherjee and 
Goswami, 2009;  United States Trad e Representative, 2009 National Trad e Estimate Report on Foreign Trade 
Barriers;  IEA, 2008;  UNCTAD, 2003;  and USITC, 2003. 
58 The IEA estimated that world subsidies in the energy sector might amount to over US$250 billion 
per year (see 2006 World Energy Outlook ). 
59 UNEP, 2008. 
60 USITC, 2005. S/C/W/311 
Page 16  
 
  would be subject to the national treatment oblig ation in sectors where specific commitments are 
undertaken. 
62. Finally, the exclusion of government procur ement from the scope of GATS Articles II, XVI 
and XVII is not without consequences in the energy sector.
61  Governments at local and central levels 
are often directly involved in the provision and purc hase of energy services, through agencies or state-
owned companies.  Depending on the status and purpose of the entity purchasing energy services, a 
decision may be qualified as government procurement,  and, thus, fall outside the scope of specific 
commitments and the MFN obligation.    
B. SPECIFIC  COMMITMENTS  ON ENERGY  SERVICES 
1. Specific commitments on services incidental to mining, services incidental to energy 
distribution, and pipeline transportation of fuels62 
63. Forty-five Members have undertaken commitments on services incidental to mining  
(CPC 883).  Ten of them have limited the sectoral coverage to advisory and/or consulting services in 
relation to mining.  Five other Members have lis ted different sorts of sectoral limitations.  For 
instance, a commitment is limited to "services on a contract basis for repair and dismantling of 
equipment in oil and gas fields".  Other schedules have excluded "prospecting, surveying, exploration 
and exploitation" or "exploitati on of natural resources".  There are also unspecified sectoral 
limitations expressed through CPC 883**.  Market access and national treatment commitments are overall liberal.  With respect to mode 1, there are eight unbound
63 (out of which six unbound for lack 
of technical feasibility) and two commitments with li mitations.  Mode 3 is even more open with one 
unbound and four commitments with limitations (i ncluding foreign equity limitations and joint-
venture requirements). 
64. Twenty-seven Members have undertaken commit ments on site preparation work for mining 
(CPC 5115), by including a CPC reference under " services incidental to mining", as proposed by 
W/120.  In addition, 47 Members have unde rtaken commitments on CPC 511 under "other" 
construction services, and, hence, also have comm itments on "site preparation work for mining".  
Among them, two Members have explicitly excl uded CPC 5115 from their commitment on "other" 
construction services.  Eleven Members have undertaken commitments on CPC 5115 exclusively 
under "Services incidental to mining".  Finally, 16 Members may be considered  to have overlapping 
commitments since they have commitments on "site preparation work for mining" under both sectors.  In seven of these schedules, the commitments are di fferent in scope, for instance because:  (i) the 
sectoral definition is more narrow in one sector (e.g ., the sectoral definition under "services incidental 
to mining" is limited to advisory and consulting ac tivities);  (ii) mode 1 is fully bound under "services 
incidental to mining", but it remains unbound (for lack of technical feasibility) with respect to the commitment under construction services;  or (iii)  there is a limited mode 3 commitment under 
services incidental to mining, while mode 3 re mains unbound for construction services.  Overall, 
58 Members can be considered to have commitm ents on site preparation work for mining. 
                                                     
 
61 GATS Article XIII:1 stipulates that "Articles II, XVI and XVII shall not apply to laws, regulations or 
requirements governing the procurement by governmenta l agencies of services purchased for governmental 
purposes and not with a view to commercial resale or  with a view to use in the supply of services for 
commercial sale". 
62 Analysis subject to possible interpretative problems with respect to those schedules that do not make 
explicit references to the CPC. 
63 In most of these cases, both market access and national treatment are unbo und.  In one schedule, 
market access is fully bound and nationa l treatment remains unbound for mode 1.  In another schedule, for the 
same mode, market access is unbound and national treatment fully bound.  S/C/W/311 
 Page 17 
 
 
  65. Eighteen Members have undertaken commitments on services incidental to energy 
distribution .  Six Members have limited the sectoral coverage of their commitments:  four of them 
allow only advisory and/or consultancy in relation to  services incidental to energy distribution.  One 
Member has entered an unspecified limitati on (CPC 887**) and anothe r Member limits the 
commitment to gas-related activities.  Market access and national treatment commitments are overall 
liberal.  One Member maintains mode 1 comple tely unbound and two Memb ers have only partial 
commitments for this mode (one Member has lis ted a commercial presence requirement and another 
Member has left national treatment unbound).  Mo de 3 is fully bound, except for three Members 
which have listed limitations, including joint-ve nture requirement, unbound national treatment, or 
mode 3 unbound for distribution of electricity). 
66. Twelve Members have undertaken specific co mmitments on pipeline transportation of fuels .  
No sectoral restriction has been listed and commitmen ts are overall liberal.  Mode 1 has been left 
completely unbound by one Member and two Memb ers have partial commitm ents (one has listed a 
concession requirement and one has left market  access unbound).  Three Members have listed 
limitations under mode 3 (two concession requirement s and one foreign equity limitation).  Also, one 
Member has undertaken a commitment on "design, cons truction, operation and maintenance of oil and 
gas pipelines", found in the "Other  business services" section of its schedule;  the last two activities 
might be considered as relating to pipeline transportation activities. 
67. Apart from some modifications of sectoral descriptions, Members have normally followed the 
W/120 and/or the CPC to schedule their commitme nts in these three sectors.  Nevertheless, two 
Members have undertaken extensive commitments  in the hydrocarbon sector, largely based on a sui 
generis  classification and definition system.   
68. There is one case of additional commitment, which has been undertaken with respect to 
pipeline transportation.  This Member "... commits itself to provide full transparency in the formulation, adoption and application of measures affecting access to and trade in services of pipeline 
transportation."  It further "... undertakes to ensu re adherence to the principles of non-discriminatory 
treatment in access to and use of pipeline networ ks under its jurisdiction, within the technical 
capacities of these networks, with regard to th e origin, destination or ownership of product 
transported, without imposing any unjustified dela ys, restrictions or charges, as well as without 
discriminatory pricing based on the differences in origin, destination or ownership."   
69. Overall, the number of GATS commitments in these three sectors is modest.  Moreover, they 
are due in a very large proportion to Member s which have acceded to the WTO since 1995.   
 Table:  Total number of commit ments vs. accessi on commitments 
 
 Total number of 
commitments  Accession 
commitments  
Services incidental to mining  45 18 
Services incidental to 
energy distribution  18 10 
Pipeline transportation  12 9 
 
  Source :  WTO Secretariat, August 2009. 
 
70. These three sectors are not prone to MFN exemp tions.  Only one such exemption has been 
listed.  It concerns pipeline transportation and allo ws to maintain a reciprocity requirement regarding S/C/W/311 
Page 18  
 
  acquisition by foreigners of rights-of-way for oil a nd gas pipelines, as well as leases in certain mineral 
resources.   
2. Commitments in the other energy-related sectors 
71. The number of commitments in other energy-re lated services varies greatly depending on the 
sector concerned, ranging from 3 (retail sales of motor fuels) to 79 (engineering services). 
Engineering services (79), integrated engineering services (51), management 
consulting services (72), services related to  management consulting (48), technical 
testing and analysis services (54), services incidental to manufacturing (34), related scientific and technical consulting services ( 47), maintenance and repair of equipment 
(50), site preparation work for mining (58
64), general construction work for civil 
engineering (70), renting services related to equipment for construction or demolition 
of buildings or civil engineering works,  with operator (53), commission agents' 
services (40), wholesale trade services (55), retailing services (54), retail sales of motor fuel (3), storage and warehousing (46). 
72. In several schedules, specific references to ac tivities related to the energy sector appear under 
various sectors.  These references aim at excludi ng energy-related activities from a sector, or, on the 
contrary, at explicitly including them.  In most cases, sui generis  definitions are used for that purpose.  
In some schedules, limitations on market access or national treatment specifically targeting energy-
related activities have been listed.   
73. The following are examples of exclusions of en ergy-related activities from the sectoral scope 
of a commitment:  (i) "operation of mines" from a commitment on related scientific and technical 
consulting services;  (ii) off-shore activities from a commitment on related scientific and technical 
consulting services;  (iii) construction of "electric po wer stations and plants for the piping of oil and 
oil products" from the scope of a commitment on cons truction services;  (iv) services related to 
petroleum and petroleum products from commitment s in the distribution sector (two cases);  (v) 
"wholesale trade services of solid, liquid and gaseous  fuels and related products" (CPC 62271) from  a 
commitment on wholesale services;  (vi) services related to petroleum and petroleum products from 
various commitments, in particular engineering and integrated engineering services, related scientific 
and technical consulting services, distribution services, and storage and warehousing services.  
74. Other schedules specifically refer to energy-rela ted end uses in defining the scope of the 
commitment, for instance:  (i) a commitm ent on management consulting includes, inter alia , 
"advisory, guidance and operational assistance servic es concerning management of the transmission 
of non-conventional energy";  (ii) a commitment on technical testing and analysis services applies, 
inter alia , to "prospecting, mining or processing of minera ls";  (iii) one schedule refers to energy-
related activities under "related scientific and techni cal consulting services", i.e. "study and evaluation 
of hydrocarbon deposits", "production analysis cont rol", and "improved recovery of hydrocarbons". 
75. Some commitments contain limitations aimed speci fically at the energy sector, for instance:  
(i) a commitment on related scientific and technica l consulting services has a national limitation, 
under modes 1 and 2, for tax measures that "result in a difference of treatment for expenditures 
incurred in connection with services performed in [that Member] related to the exploration and 
development of a mineral resource, petroleum or natural gas";  (ii) under related scientific and 
technical consulting services, a Member has listed different market access restrictions for on-shore and off-shore oil-field services;  and (iii) in the distribution sector, a Member maintains an economic 
needs test for wholesale and retailing services of gaseous fuels. 
                                                     
 
64 Counting commitments under "services incidental to mining" and "other" construction services.  S/C/W/311 
 Page 19 
 
 
  C. OTHER GATS  ISSUES  
1. The question of ownership of natural resources 
76. It is generally recognized that states have fu ll sovereignty over natural resources situated in 
their territory, including the territorial sea.  With  respect to energy resources, governments have the 
exclusive right to decide whether to exploit, produ ce or develop the resource, whether to allow private 
sector participation, and what types of contractua l arrangements to use in the development of the 
resource (concessions, services agreements, production sharing agreements, etc.).  In the WTO, 
Members have consistently expressed the view that  natural resources were under the sovereignty of 
each Member and that the issue of ownership of en ergy resources remained outside the scope of the 
negotiations.65   
77. In the oil and gas industry, one can distingui sh broadly two types of situations.  Some 
companies are granted exclusive rights to explor e, develop and produce an energy resource and, 
depending on the contractual arrangement negotiate d with the state, they may own the resource 
produced (or a given percentage of it), and may be entitled to market it.  The second category are 
those companies which provide services to other firms in relation to the explor ation, development and 
production of the resource, but do not ac quire ownership of the resource.   
78. The GATS does not explicitly address the issue of ownership of natural resources.  The 
following elements might provide a basis for further consideration: 
(a) Footnote 9 to GATS Article XVI:2(c) excludes from the scope of specific 
commitments "measures of a Member which limit inputs for the supply of services".  It might be argued that natural resources constitute "inputs" for the supply of energy 
services, and are outside the scope of relevant market access commitments.   
(b) As noted above, the production of goods on a company's own account, i.e., performed 
by an entity which owns the raw material, is  deemed in the CPC not to be a service.  
Accordingly, the fact that a firm has a proprietary title on the resource could mean ipso facto  that, with regard to the processing of this resource, it is not a service 
supplier within the meaning of the GATS.   
(c) Article XIV  of the GATS (General exceptions) includes an exception for measures 
"necessary to protect human, animal or plant life or health" (Art. XIV(b)).  It does not contain an exception relating to the protecti on of exhaustible natural resources, which 
would be the equivalent of GATT Article XX(g).   
2. Is there a need for additional rules on energy services? 
79. The energy sector has been traditionally charact erized by large vertically-integrated state-
owned monopolies which own and manage key facilities,  in particular transmission and distribution 
networks.  After unbundling and privatization, these  suppliers may retain a dominant position on the 
market, impede or discriminate among new entrants and skew competition.  Moreover, when competition is introduced in the generation/produc tion and commercialization segments, transmission 
and distribution networks – pipelines and electricity gr ids – tend to remain in the hands of a monopoly 
provider, whether public or private.   
                                                     
 
65 Also, the collective request states that it "does not extend to the ownership of energy resources, 
which remains under the full sovereignty and sovereign ri ghts of each Member, and ou tside the scope of GATS 
negotiations". S/C/W/311 
Page 20  
 
  80. GATS disciplines on monopolies and exclusive suppliers offer only partial remedies.  
Pursuant to Article VIII, paragraph 1, Members shall ensure that a monopoly supplier "does not, in 
the supply of the monopoly service in the relevant market, act in a manner inconsistent with that 
Member's obligations" under Article II (MFN) and its specific commitments.  Paragraph 2 stipulates that "[w]here a Member's monopoly supplier compet es, either directly or through an affiliated 
company, in the supply of a service outside the scope of its monopoly rights and which is subject to 
that Member's specific commitment, the Member sha ll ensure that such a supplier does not abuse its 
monopoly position to act in its territory in a manne r inconsistent with such commitments".  GATS 
Article VIII applies to public and private monopolies.
66  This would mean that when, for instance, 
commitments have been made with respect to some, but not all energy-related activities, Article VIII 
could prevent a monopoly controlling transportation networks from abusing its position to gain a 
competitive advantage in a market outside the scope of its monopoly.  In contrast, Article VIII would 
not allow to address the situation where a former  monopoly supplier retains a dominant position in a 
market segment open to competition. 
81. Article IX deals with business practices which may restrain competition and which do not fall 
under Article VIII.  It provides essentially for Member s to enter into consultations and to exchange 
information on the matter;  it does not contain s ubstantive obligations concerning anti-competitive 
business practices. 
82. Against this background, it might be useful to  consider additional rules for energy services, 
which would complement specific commitments and help to ensure a level-playing field among suppliers.  A relevant precedent is the Reference Paper in basic telecommunication services:  the 
disciplines it contains were developed by interested  Members in order to be made available to all 
Members for adoption on a voluntary basis in the form  of additional commitments.  In a similar vein, 
three Members
67 proposed to develop rules for promoting fair competition in energy networks.  It was 
suggested, inter alia , to consider a Reference Paper for en ergy services modeled on the Reference 
Paper for telecommunication services and including el ements such as:  (i) a regulatory framework 
ensuring transparency in the adoption and implem entation of rules, regulations and technical 
standards;  (ii) non-discriminatory third-party acces s (TPA) to, and interco nnection with, networks, 
grids and other essential infrastructure;  (iii) establis hment of a regulator which is independent of, and 
not accountable to, any supplier;  (iv) non-discrimin atory and timely information on data relevant for 
transportation and transmission of energy, such as prices, transmission capacity, etc.;  and (v) 
requirements preventing certain anti-competitive practices for energy services in general.   
83. Members also remain free to undertake add itional commitments regarding energy-related 
services, whether or not based on a Reference Paper.   In fact, as mentione d above, one Member has 
undertaken additional commitments re garding pipeline transportation. 
V. ENERGY SERVICES IN PREFERENTIAL TRADE AGREEMENTS   
84. A survey of some forty PTAs68 showed that, whether based on positive or negative lists, these 
agreements provide for a greater level of access than current GATS commitments in the three energy 
sectors listed in W/12069, as well as in other energy-related sectors.  The situation varies – sometimes 
quite considerably – from one PTA to another and important differences exist between negative- and 
                                                      
66 GATS Article XXVIII(h) defines a monopoly supplier as "any person, public or private, which in the 
relevant market of the territory of a Member is authorized or established formally or in effect by that Member as 
the sole supplier of that service". 
67 See proposal by the United States (S/CSS/ W/24), Japan (S/CSS/W/42/Suppl.3) and Norway 
(S/CSS/W/59). 
68 This section borrows from Cossy, 2008.   
69 I.e., services incidental to mining, services incidental to energy distribution and pipeline 
transportation of fuels.  S/C/W/311 
 Page 21 
 
 
  positive-list PTAs.70  In the absence of empirical research, it is impossible to say whether preferential 
commitments bind existing levels of access or wh ether they represent real liberalization.   
85. Positive-list agreements are generally modelled  on the GATS, in terms of their obligations 
and of the schedules' structure.  Most of them pr ovide an overall higher level of bindings than the 
GATS schedules as far as energy and energy-related services are concerned.  Nevertheless, the level 
of obligations varies significantly across these ag reements:  while some signatories have made 
important improvement over their GATS commitments,  others hardly go beyond them.  Moreover, the 
same signatory may have a different level of co mmitments across its various positive-list PTAs.  
86. The level of commitments achieved under nega tive-list PTAs tends to be higher than in 
positive-list agreements.  For instance, nearly all the countries having signed negative-list agreements 
with the United States have bound some (in some cases a significant) level of preferential access with 
respect to services incidental to mining, services incidental to energy distribution and pipeline 
transportation of fuels, whereas they have undert aken very few corresponding commitments under the 
GATS.  Most PTA signatories, whether develope d or developing, have listed some kind of 
reservation, reflecting the lack of competition in th e gas and electricity transmission and distribution 
segments.  The level of obligations concerning othe r energy-related services appears to be even higher 
as all countries have consolidated some level of access. 
87. The structure and the type of obligations undertaken in negative-list PTAs present several 
advantages.  The fact that the same disciplines apply to all investments, whether in goods or services, 
may prove useful in the energy sector, where there ar e different views concerning the nature of certain 
activities (such as, for instance, whether refini ng, liquefaction and re-gasification constitute 
production of goods or services).  Disciplines on gover nment procurement contained in certain PTAs 
also represent a plus for the energy sector as th e purchase of energy services by certain public entities 
may well qualify as government procurement pursuan t to GATS Article XIII and would thus fall 
outside the scope of specific commitments and the MFN obligation.  Finally, some PTAs, in particular those based on negative lists, go further than the GA TS in terms of requiring regulatory transparency. 
88. With the exception of NAFTA
71, none of the PTAs reviewed contains disciplines specifically 
directed at the energy sector.  Some agreem ents include provisions which encourage greater 
collaboration in the energy sector, but which do not  appear to entail specific legal obligations 
regarding the supply of energy services.  For example: 
• In their PTA, the European Communiti es and Chile undertake to "consolidate 
economic relations in key sectors such as hydroelectricity, oil and gas, renewable energy, energy-saving technology and rural electrification".  This 
cooperation entails, inter alia , exchange of information, transfers of 
technology, studies and analyses, "involvement of public and private operators from both regions in t echnological development and common-
infrastructure projects, including networks with other countries in the region", possible conclusion of specific agreemen ts, assistance for Chilean institutions 
dealing with energy matters and the form ulation of energy policy (article 22). 
                                                     
 
70 When assessing the respective levels of obligati ons under the GATS and PTAs, the use of different 
systems for sectoral descriptions introduces an element of uncertainty as to the scope of the activities concerned.  For instance, it is difficult to assess the extent to which a reservation for "mining", which is found in various 
PTAs, overlaps with "services incidental to mining" (CPC 883). 
71 Chapter 6 of NAFTA deals, inter alia , with " ... measures relating to investment and to cross-border 
trade in services" associated with energy and basic pe trochemicals goods.  This chapter essentially builds on 
certain GATT obligations. S/C/W/311 
Page 22  
 
  • ASEAN Members have adopted successive "Plans of action for energy 
cooperation" (APAEC), which seeks to  develop the regional power grid 
(improve interconnections), to work towards the realisation of the Trans-
ASEAN gas pipeline, to promote sustainable utilisation of coal, energy efficiency and conservation, etc., and call, inter alia , for "Encouraging a 
conducive environment for greater private sector involvement and 
participation, including securing foreign direct investment". 
• An Annex in the Japan – Indonesia PTA stipulates that both parties agree "to 
consult on risk sharing measures to support investments by investors of Japan in the energy and mineral resource sector in the Area of Indonesia". 
• In a Joint Statement made on the occasion of the signing of the Agreement 
between Brunei Darussalam and Japan fo r an Economic Partnership, the two 
governments "are convinced that the JBEPA will serve as a main vehicle by 
facilitating the free flow of goods, services and investments, improving the 
overall business environment for the private sectors between the two countries and at the same time deepen ing and enhancing cooperation in the 
fields of energy, ...".  The progra mme on energy, attached to the joint 
statement focuses on information exchange and experience sharing on 
various energy-related issues, such as  electricity supply, renewables in 
electricity generation, carbon capture a nd storage, energy efficiency, clean 
coal technologies, etc. 
 
_______________ 
  S/C/W/311 
 Page 23 
 
 
  REFERENCES 
 
 Cossy M., The Liberalization of Energy Services:  Are PTAs More Energetic Than the GATS? , in 
"Opening Markets for Trade in Services – Countries and Sectors in Bilateral and WTO Negotiations", 
J. Marchetti and M. Roy (eds.), WTO/Cambridge, 2008 (Cossy, 2008). 
 Energy Charter Secretariat,  Policy Developments and Challenges in Delivering Energy Efficiency , 
2007 (ECT, 2007).  
International Enery Agency, Carbon Capture and Storage – Fu ll-Scale Demonstration Progress 
Update , OECD/IEA, 2009 (IEA, 2009). 
 International Energy Agency, Progress with Implementing Energy Efficiencies in the G8 , 2009 (IEA, 
2009b). 
 
International Energy Agency, Renewables Information , OECD/IEA, 2009 (IEA, 2009c). 
 International Energy Agency, World Energy Outlook , OECD/IEA, 2008 (IEA, 2008). 
 International Energy Agency, Clean Coal Technologies – Accelerating Commercial and Policy 
Drivers for Deployment , OECD/IEA 2008 (IEA, 2008b). 
 International Energy Agency, Renewable Energy Essentials:  Wind , OECD/IEA, 2008, at 
http://www.iea.org/papers/2008/Wind_Brochure.pdf  (IEA, 2008c).  
International Energy Agency, From 1
st- To 2nd- Generation Biofuels Technologies – An Overview of 
Current Industry and RD&D Activities , OECD/IEA, 2008  (IEA, 2008d). 
 International Energy Agency, Near-Term Opportunities for Carbon Dioxide Capture and Storage , 
OECD/IEA, 2007 (IEA, 2007).  
International Energy Agency, Renewable Energy:  RD&D Priorities – Insights from IEA Technology 
Programmes , OECD/IEA, 2006 (IEA, 2006). 
 International Energy Agency, Renewable Energy – Market and Policy Trends in IEA Countries , 
OECD/IEA, 2004 (IEA, 2004). 
 
Martinot E. et al., Renewable Energy Markets in Developing Countries , Annu. Rev. Energy Environ., 
2002, 27:309-48 (Martinot, 2002).  Mukherjee A. and Goswami R., Trade in Energy Services:  GATS and India , Indian Council for 
Research on International Economic Relations (ICRIER), Working Paper no. 231, 2009 (Mukherjee 
& Goswami, 2009). 
 Musselli I. and Zarrilli S., Oil and Gas Services:  Market Liberalization and the Ongoing GATS 
Negotiations , Journal of International Economic Law 8( 2), 551-581, 2005 (Musselli & Zarilli, 2005). 
 
REN21, Renewables – Global Status Report , 2009 Update, Renewable Ener gy Policy Network for the 
21
st Century (REN21, 2009). 
 Tenenbaum B. and Izaguirre A., Private Participation in Electricity , Gridlines, Public-Private 
Infrastructure Advisory Facility (PPIAF), Note  no. 21, 2007 (Tenenbaum & Izaguirre, 2007). S/C/W/311 
Page 24  
 
   
UNCTAD, World Investment Report – Transnational Cor porations and the Infrastructure Challenge , 
2008 (UNCTAD, 2008).  UNCTAD, World Investment Report – Transnational Corporations, Extractive Industries and 
Development , 2007  (UNCTAD, 2007). 
 UNCTAD, Managing "Request-Offer" Negotiations under the GATS:  The Case of Energy Services , 
circulated in the Council for Trade in Serv ices – Special Session as JOB03/141, July 2003 
(UNCTAD, 2003). 
 
UNEP, Reforming Energy Subsidies – Opportunities to  Contribute to the Climate Change Agenda , 
2008 (UNEP, 2008).  United States International Trade Commission, Renewable Energy Services:  An Examination of US 
and Foreign Markets , USITC publication 3805, 2005 (USITC, 2005). 
 United States International Trade Commission, Oil and Gas Field Services:  Impediments to Trade 
and Prospects for Liberalization,  USITC Publication 3582, 2003  (USITC, 2003). 
 United States International Trade Commission, Natural Gas Services:  Recent Reforms in Selected 
Markets , USITC Publication 3458, 2001 (USITC, 2001). 
 United States International Trade Commission, Electric Power Services – Recent Reforms in Selected 
Foreign Markets , USITC Publication 3370, 2000 (USITC, 2000). 
 
Wälde Th. and Gunst A., International Energy Trade and Access to Energy Networks , Journal of 
World Trade 36(2): 191-218, 2002 (Wälde & Gunst, 2002).  World Bank & UNDP, Potential For Biofuels for Transport in Developing Countries,  Energy Sector 
Management Assistance Programme (ESMAP), World Bank/UNDP, 2005. 
 
 
 
 
_______________ 
  S/C/W/311 
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  ANNEX I 
 
Renewable Energy  
  
A. W
IND ENERGY  
1. Turbines use the kinetic energy in the wind to ge nerate mechanical power.  This mechanical 
power can be used to perform directly certain activ ities (pumping water, for instance), or is converted 
into electricity via a generator.  Most wind tu rbines are built on-shore.  However, off-shore wind 
parks are also being installed;  although they are mo re expensive to build, connect and maintain, they 
can produce up to 50 per cent more electricity than  onshore turbines due to higher and steadier wind 
speeds.  Wind turbines can be employed in small- scale projects (e.g., generating electricity for a 
household or a small community) or in large proj ects (wind parks generating electricity which is 
supplied to the grid).72  Small-scale stand-alone wind systems have the potential to play an important 
role in the electrification of remote regions in developing countries. 
2. By the end of 2008, wind turbines produced more than 1.5 per cent of global electricity 
consumption and more than 80 countries had commercial wind power installations.73  The United 
States and Asia – with China and India as leading countries – are rapidly increasing their share in new capacity.  Wind industry in China and India already plays a role on world markets.    Pakistan and 
Mongolia have also started to install grid-connected  wind-turbines.  In Africa, wind farms exist in 
Morocco, Egypt, Tunisia and South Africa;  Ethiopia, Kenya and Tanzania are planning ambitious 
windfarm projects.  South America has major wind farms in Brazil and Uruguay;  projects are 
reported to be in construction in Argentin a, Brazil, Chile, Costa Rica and Mexico.
74 
3. World generating capacity is growing at 20- 30 per cent per year and annual investment 
topped US$50 billion in 2007.  The IEA predicts that in 2050 wind power could supply up to 12 per 
cent of global demand for electricity.75  Wind power plants at sites with reliable wind resources and 
nearby grid access can be competitive with conventional electricity producers.   
4. Service suppliers in the wind energy industry include large energy and engineering companies 
that supply goods and related services as a "package", and small firms that specialize in the provision 
of certain niche services, such as environmental monitoring and permitting services for wind power projects and wind modelling, mapping and resource assessment services.
76  Services related to the 
installation and operation of wind turbines include wind measurement, site selection, assessment of 
grid requirements and connection, project manage ment, construction and monitoring, servicing and 
maintenance of the facility.77 
B. HYDROPOWER  
5. Hydropower sources generate about 20 per cent of electricity world wide.  Large scale 
hydropower facilities were built in the second half of  the twentieth century in developed countries.  
As their investments have been amortised, they pro duce low cost electricity.  It  is estimated that 
developed countries have used about 70 per cent of their capabilities in this sector.  Suitable sites for 
                                                      
72 USITC, 2005. 
73 REN21, 2009. 
74 World Wind Energy Association, Highlights of the World Wind Energy Report 2008, at 
http://www.wwindea.org . 
75 IEA, 2008c. 
76 USITC, 2005. 
77 See, for instance, http://www.gepower.com/prod_serv/serv_for/wind_turbines/en/index.htm , and 
http://www.vestas.com . S/C/W/311 
Page 26  
 
  large projects remain in developing countries.  China and India are the two countries which recently 
experienced the most significant increase in large hydropower production.
78  
6. In some countries, liberalization of the electric ity sector has contributed to the development of 
small (or micro-hydro)79 hydropower generating plants by independent decentralised power 
producers.  They are used mainly in developing countries and allow to provide electricity to 
communities not connected to a grid.  Small hydr opower can produce power at competitive prices and 
have relatively low operation and maintenance costs.80  China is the main user of small hydro, but 
developments have also occurred in several African and Asian countries.81 
7. The hydropower industry entails a range of  different services:  outage management, 
assembly/disassembly, cavitation repair, site inspection/evaluation, field supervision, project 
execution, field machining, technical direction, engineering, specification writing, data acquisition 
and review, hydrological & hydraulic analyses, devel opment of project layouts, plant selection, cost 
estimates, performance analysis, economic design analysis, economic evaluation, environmental 
studies, permitting studies, construction and reporting.82   
C. SOLAR ENERGY  
8. Solar energy includes three main technologies:  (i) photovoltaic (PV) energy converts sunlight 
into electricity via solar cells usually made of silic on;  it can be used in small applications (pumping 
water or electrifying a fence) or in larger electric PV  systems connected to a grid;  (ii)  solar heating 
gathers the sun's thermal heat through solar collectors and transfers that heat to water or air;  (iii) solar 
power plants (or concentrating solar power) concen trate solar energy with the help of reflective 
mirrors in order to produce steam that will be used to drive turbines and produce electricity. 
9. According to the IEA, solar photovoltaic e xperienced the highest growth between 1990 and 
2006, with a 36.1 per cent annual growth rate, mainly in the European Union.83  Grid-connected solar 
PV is that fastest growing power generation tec hnology and has increased sixfold in global capacity 
since 2004.  In 2008, Spain, the United States, Korea,  Japan and Italy were the main markets.  Other 
segments of the solar markets (such as building-in tegrated PV, thin-film solar PV technologies and 
utility-scale solar PV) have continued to grow.  Ne w concentrating solar power plants (CSP) were 
recently built in Spain and the Un ited States.  Projects are under development in the United States, 
United Arab Emirates, Algeria, Egypt, Israel, Italy, Portugal, Spain and Morocco.84   
10. The solar industry sells manufactured equipmen t and associated services (design, installation, 
maintenance, etc.).  Research and development servi ces also play an important role as companies are 
trying to develop new products allowing to cut costs and maximising solar energy.  
D. GEOTHERMAL  
11. Geothermal resources can be u sed directly (direct use) for heating buildings and greenhouses, 
melting snow on streets, running spas, etc.  For the ti me being, direct use repr esents the largest share 
                                                      
78 REN21, 2009. 
79 There is no agreed definition of "small" or "micro" hydro.  These terms are sometimes used 
interchangeably or a distinction may be made.   
80 IEA, 2004. 
81 REN21, 2009. 
82 See, for instance, Hydro Power Services at http://www.hydropowerservices.com/ ;  and Black & 
Veatch at http://www.bv.com/Markets/En ergy/Hydropower/Default.aspx . 
83 IEA, 2009c. 
84 REN21, 2009.  S/C/W/311 
 Page 27 
 
 
  of the market.  Heat extracted from steam or hot water found in the ground can also be used to 
produce electricity based on steam turbine and generator equipment (indirect use).     
12. Geothermal electricity production grew at an average annual rate of 1.8 per cent between 
1990 and 2006.  The United States is the main elect ricity producer from geothermal sources, followed 
by Mexico and Italy.85  Other countries with significant recent gr owth in this sector include Australia, 
El Salvador, Guatemala, Iceland, Indonesia, Kenya, Mexico, Nicaragua, Papua New Guinea and 
Turkey.86  It is anticipated that geothermal energy could supply more than 5 per cent of the world's 
electricity needs by 2020.    
13. Ranging from exploration, drilling, installati on, maintenance, monitoring, resource 
management, technical and economic feasibility studies, geological surveying and mapping, thermal 
studies, well testing, environmental impact asse ssment, engineering and consulting, geothermal 
energy involves many services, offering opportunities for large and small firms.87 
E. BIOMASS  
14. Biomass is any biological matter, i.e., animal, plant, waste, etc., that is used to produce 
energy.  "Traditional" biomass, which is the most ancient energy source used by human societies, is 
still widely used by rural populations in developi ng countries for cooking, heating and lighting.  
"Modern" biomass energy can be used as transportati on fuel and to produce heat and electricity.  
Biomass (traditional + modern) is the most important  source of renewable energy and is expected to 
remain so for several decades.88  The rest of the section focuses on "modern" biomass. 
15. Biomass energy is used in the road transport sector as a substitute for oil (also referred to it as 
"biofuels").  First-generation biofuels are produced  from food crops, such as corn, sugar beet, sugar 
cane and oilseeds.  Demand for biofuels has more  than tripled between 2000 and 2007, in both 
developed and developing countries.   Biofuels account now for some 1.5 per cent of transport fuels 
and their share could reach 5 per cent by 2030.  Incentive programmes, including specific targets, to 
encourage the use of biofuels have been put in pl ace in countries such as the United States, China, the 
EC, Australia, New Zealand, Colombia, South Af rica, Thailand, Japan, Indonesia, Mexico and 
Canada.  Several developing countri es have their own biofuel industry and produce fuels for local use 
and exports (Brazil, Colombia, India, Thailand).  Concerns regarding the sustainability of first 
generation biofuels (in particular their impacts on food production and prices) brought about interest 
for developing biofuels from non-food biomass, such  as cereal straw, bagasse, or forest residue and 
non-food crop feedstocks.  Second-generation biofue ls have not reached commercial maturity yet.89  
The biofuel industry relies on various services, in cluding engineering, consulting, construction, 
transport, storage, distribution, etc. 
16. Biomass can also be used for electricity generation, for heat production, or for both (then 
termed "co-generation" or "combi ned heat and power" (CHP).  Biomass energy technologies are used 
mainly in industrial facilities (such as pulp and paper manufacturing plants).  The electricity and/or heat produced is/are often consumed on-site.   The su rplus electricity may be sent to the grid, and the 
extra heat (steam) can be used to heat buildings.  The share of biomass in electricity production is 
expected to double by 2030, to reach some 2.6 pe r cent of global power gene ration;  this increase will 
take place mainly in the United States, Europe and China.
90  Industry data indicate that services – 
                                                      
85 IEA, 2009c. 
86 REN21, 2009. 
87 USITC, 2005. 
88 IEA, 2008. 
89 IEA, 2008;  IEA, 2008d;  World Bank/UNDP, 2005. 
90 IEA, 2008. S/C/W/311 
Page 28  
 
  engineering and construction – provided in rela tion to biomass power plants amounted to about 
US$1.7 billion in 2004.
91 
F. OCEAN ENERGY  
17. Ocean energy includes three different technologies, using the movement of tides, current or 
waves to produce power.  This renewable energy s ource is still small compared to others and has 
limited commercial application.  Only tidal energy  has been used commercially to date, mainly in 
France, Canada and China.  Current and wave en ergies are still at the development stage.   
18. Ocean energy services include testing and analysis services associated with potential site 
evaluation, architecture, engineering,  construction and installation services. 
 
_______________ 
 
                                                      
91 USITC, 2005.  S/C/W/311 
 Page 29 
 
 
  ANNEX II 
 
Checklist of main energy-related services  
  
W/120 Sector/ 
sub-sector CPC 
prov. Examples of relevant activities as defined in the CPC 
(non-exhaustive description) 
 
1.A.e Engineering 
services 8672 
(86721-
86729) Advisory and consultative engineer ing services (f. ex., preparatory 
technical feasibility studies and projects impact studies for the 
construction of a pipeline, study of the environmental impact of a 
project);  engineering design services for the construction of 
foundations and building structures;  engineering design services for 
the construction of civil engin eering works (f. ex. dams);  
engineering design services for industrial processes and production 
(f. ex. mine development layout and underground construction, the 
complete civil, mechanical a nd electrical mine surface plant 
installations, oil and gas recovery procedures, construction and/or 
maintenance of drilling equipment, pumping stations, treating and storage facilities and other oilfield f acilities, etc.);  other engineering 
services, such as geotechnical e ngineering services, contamination 
studies, corrosion engine ering services, etc.). 
1.A.f Integrated 
engineering 
services 8673 
(86731-
86739) Integrated engineering services for the construction of transportation 
infrastructure turnkey projects;  in tegrated engineering services for 
the construction of manufacture turnkey projects. 
1.F.c Management 
consulting 
services 865 
(86501-
86509) Advisory, guidance and operationa l assistance services concerning 
methods for improving productivity, reducing production costs and 
improving the quality of production. 
1.F.d Services related to 
management consulting 866 
(86601) Project management services for preparing, running and completing 
a project . 
1.F.e Technical testing 
and analysis 
services 8676 
(86761-
86769) Testing and analysis of the chemical and biological properties of 
materials such as air, water, waste, fuels, metal, soil, minerals;  
testing and analysis services of physical properties;  testing and analysis services of integrated mechanical and electrical systems. 
1.F.h Services 
incidental to 
mining 883 
 
  
5115 Services rendered on a fee or contract basis at oil and gas fields, e.g. 
drilling services, derrick building, repair and dismantling services, 
oil and gas well casings cementing services. Site preparation work for mining (tunnelling, overburden removal 
and other development and preparation work of mineral properties 
and sites, except for mining oil and gas). 
1.F.j Services 
incidental to 
energy 
distribution 887 Transmission and distribution services on a fee or contract basis of 
electricity, gaseous fuels and steam and hot water to household, 
industrial, commercial and other users. 
1.F.m Related scientific 
and technical 
consulting services 8675 
(86751-
86754) Geological, geophysical, geochemical and other scientific consulting 
services as they relate to the location of mineral deposits, oil and gas 
and groundwater by studying the properties of the earth and rock formations and structures (f. ex., se rvices of analysing the results of 
subsurface surveys, the study of earth sample and core, and 
assistance and advice in developing and extracting mineral resources);  subsurface surveying se rvices (gathering services of 
information on subsurface earth formations by different methods);  
surface surveying services (gathering  services of information on the 
shape, position and/or boundaries of a portion of the earth's surface);  
preparation and revision of maps of all kinds. S/C/W/311 
Page 30  
 
  W/120 Sector/ 
sub-sector CPC 
prov. Examples of relevant activities as defined in the CPC 
(non-exhaustive description) 
 
1.F.n Maintenance and 
repair of 
equipment 8861-
8866 Repair services of fabricated metal products, machinery and 
equipment, electrical machinery, etc. 
3.B Construction 
work for civil 
engineering 513 Construction work for dams, long distance pipelines, power lines, 
local pipelines and cables, constructions for mining and 
manufacturing. 
3.E Other  518 Leasing or rental services concerning construction or demolition 
equipment with operator and operational services provided by the 
operator. 
4.A Commission 
agents' services 621 Wholesaling services of fuels by commission agents, commodity 
brokers, etc. 
4.B Wholesale trade 
services 622 Wholesale trade services of solid , liquid and gaseous fuels (e.g., coal 
and lignite, petroleum oils, natural gas, coal gas, etc.) 
- - Wholesale trade 
services of 
electricity, town gas, steam and hot 
water - - - - 
4.C Retailing services 632 Retail sales of fuel oil, bottled gas, coal and wood. 
- - Retail sales of 
motor fuel 613 Retailing services of petroleum refineries products, such as gasoline 
and other motor fuels for internal combustion engines, kerosene, lubricating oil and grease, fuel oil, liquefied petroleum gas put up 
for retail sale and other products of petroleum refineries. 
- - Retailing services 
of electricity, 
town gas, steam 
and hot water - - - - 
11.A.b Maritime 
transport - freight 
transportation 7212 Transportation by seagoing vessels of bulk liquids or gases in 
special tankers. 
11.B.b Internal 
waterways transport – freight 
transportation 7222 Transportation by non-seagoing vessels of bulk liquids or gases in 
special tankers. 
11.E.b Rail transport 
services – freight transportation 7112 Transportation by railway of bulk liquids or gases in special tank 
cars. 
11.F.b Road transport 
services – freight 
transportation 7123 Transportation by road of bulk liquids or gases in special tank 
trucks. 
11.G.a Pipeline transport 
– Transportation 
of fuels 7131 Transportation via pipeline of crude or refined petroleum and 
petroleum products and of natural gas. 
11.G.b Transportation of 
other goods 7139 Transportation via pipeline of coal slurry. 
11.H.b Services auxiliary 
to all modes of 
transport – Storage and 
warehouse 7422 Bulk storage and warehousing services of liquids and gases. 
 
 
_______________ 
  S/C/W/311 
 Page 31 
 
 
  ANNEX III 
 
Specific commitments in energy services  
 
 
Members Services incidental to 
mining Services incidental to 
energy distribution Pipeline transportation 
of fuels 
Albania X   
Argentina X   
Armenia X   
Australia X X X 
Austria X   
Bulgaria X   
Cambodia X X X 
Canada X   
Cape Verde X   
Colombia X   
Croatia  X X 
Dominican Rep. X X  
Ecuador X   
EC X   
Finland X   
FYR Macedonia X  X 
Gambia  X  
Georgia X X  
Hungary X X X 
Indonesia X   
Korea, Rep. of X   
Kyrgyz Rep. X X X 
Latvia X X  
Lesotho X   
Liechtenstein X   
Lithuania  X X 
Malawi X   
Moldova X X X 
Mongolia X   
Nepal X  X 
New Zealand   X 
Nicaragua X X  
Oman X X  
Pakistan X   
Panama X   
Poland X   
Saudi Arabia X X X 
Sierra Leone X X  
Singapore X   
Slovenia  X  
South Africa X   
Sweden X   
Switzerland X   
Chinese Taipei X   
Thailand X   
Turkey X   
Ukraine X X X S/C/W/311 
Page 32  
 
  Members Services incidental to 
mining Services incidental to 
energy distribution Pipeline transportation 
of fuels 
United States X X  
Venezuela X   
Vietnam X   
Zambia X   
    
Total 45 18 12 
Source :  WTO Secretariat, September 2009.  The count is based on an EC-12 schedule. 
 
 
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