IEEJ: November 2012 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (111)

November 15, 2012

Future of Energy Markets and Roles of Technology
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn November 12 and 13, the Emirates Center for Strategic Studies & Research hosted its
18th annual energy conference in Abu Dhabi of the United Arab Emirates. After an opening session,
there were four panel sessions where two keynote speeches were given along with presentations by
12 panelists, followed by panel discussions. Under the theme of "Technology and the Future ofEnergy," conference participants discussed impacts of various new energy technologies andtechnological advancement on all the energy markets, while paying attention to technologicalpotentials and challenges.
This was the third time for me to take part in the annual conference. While themes had
been selected from key current topics for earlier conferences, the latest gathering attracted attention
by putting forward the roles, effects, constraints and challenges of technology as a united theme. In
the first speech of the conference, I presented a comprehensive report on how the future picture ofenergy will change in line with technological advancement, while introducing our institute's
Asia/World Energy Outlook, reviewing the global situation and focusing on Asia and the Middle
East in particular. After my speech, experts on various individual technologies made presentations.
Technological advancement, diffusion, and development persistently continue in global
energy markets. Sometimes, technological breakthroughs can dramatically and rapidly change theglobal energy situation. In this sense, the conference focused on energy technologies that are now
significant for the world, particularly the Middle East. But technologies covered by the conference
ranged very broadly, including those for unconventional oil and gas resources development,
renewable energy for various areas, nuclear power generation, energy conservation, and effective
fossil fuel uses, such as carbon capture and storage.
At the conference in the Middle Eastern emirate of Abu Dhabi, participants madeenthusiastic discussions on how the advancement and global diffusion of technologies fordeveloping oil sand and other unconventional oil resources, and deepwater oil and gas resources willchange international oil and gas supply and demand, and affect oil and gas producing countries in
the Middle East. Technological advancement has dramatically increased the potential of
unconventional resources development, reducing the possibility of the world’s shifting away fromfossil fuels in view of peak oil and other constraints on fossil resources. At the same time, however,this development could lead a growing number of unconventional oil and gas supply sources toglobally emerge and compete against the Middle East. In this sense, the Middle East has no choice
but to grow alert. The Middle East is strongly interested in how the United States’ envisioned
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IEEJ: November 2012 All Right Reserved“Energy Self-sufficiency” through the development of unconventional resources would affect theMiddle East. Conference participants also argued that how to enhance the Middle East's
interdependent relationship with Asia, which is set to substantially increase its dependence on oil
imports, would become a major challenge for the Middle East.
Conference participants also indicated their great interest in renewable and nuclear energy
as non-fossil energy options from the technological viewpoint. Given that the conference took placein the UAE, presentations and discussions on nuclear energy were particularly interesting. The UAE,
which is the first Arab country to introduce nuclear power generation, is recognizing the importanceof introducing more advanced technologies to enhance safety after the Fukushima accident. OtherMiddle Eastern countries considering introducing nuclear energy are doing the same. In this respect,many conference participants argued that the Middle East should build on lessons from theFukushima accident to introduce the latest and best technologies, and take technological and policymeasures to simultaneously achieve “the 3S”, namely Safety, Security, and Safeguards. They also
noted that nuclear safety would be important, particularly for the Middle East and Asia wherenuclear capacity is expected to grow substantially.
On renewable energy, conference participants indicated great expectations and pointed tosome problems. Renewable energy is expected to diffuse as domestic and clean energy. Ongoing
technological advancement has heightened expectations of renewable energy technologies as new
advanced energy technologies. But there are problems, such as high costs and intermittent/unstablesupply, which remain as major technological and economic challenges. In addition to these points,
conference participants indicated concerns over emerging difficulty with regard to policy support
measures for the feed-in-tariff system as seen in Europe. At the conference, attended by manytechnology experts, a dominant view was that technological breakthroughs would be expected toboost the role of renewable energy. But some noted they cannot brush off some constraints andproblems regarding renewable energy. Particularly, the Middle East has difficulties in diffusingrenewable energy because of its abundant oil and gas resources and very low domestic energy prices.
Some conference participants noted that while additional technological advancement and cost
reduction would be required to further diffuse renewable energy, policy support would have to be
based on higher policy/strategic perspectives, including the diversification of energy sources inoil/gas-dependent economies, the development of knowledge/technology-oriented economies,
environmental protection, and the diversification of the energy supply structure.
Conference participants indicated great interest in the importance of energy conservation
technologies, attracting my attention. At the third session of the conference, experts in the power
generation, construction/housing, transportation/communication, and industrial sectors madepresentations respectively on the present conditions and roles of technologies for energy efficiency
improvements and energy conservation (as well as the potential diversification of energy through therenewable energy introduction), followed by active discussions on these matters. Behind the active
discussions may have been great concerns over the Middle East’s urgent policy problems, such ashow to address growing domestic energy demand and how to hold down energy demand growth
without affecting economic growth, development, or living-standard improvements. As a matter ofcourse, not only technological problems, including the development, introduction, and diffusion of2

IEEJ: November 2012 All Right Reserved
advanced technologies, but also non-technology problems, such as policy measures and publicawareness, are important for energy conservation. From economic and market perspectives, someconference participants said that, given that it would be very difficult to promote energy
conservation even amid very low energy prices in the Middle East, no optimism could be warrantedon energy conservation in the region.
The Middle East, in which the conference took place, includes many countries that havevery plentiful oil and gas resources and have taken advantage of these resources for theirdevelopment. They also have problems and difficulties due to such abundant fossil fuel resources.
Impressing me was the fact that the Middle East places great hopes on the development anddiffusion of new technologies to help resolve those problems.
Contact: report@tky.ieej.or.jp
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