IEEJ：May 2016○ｃ IEEJ 2016

Special Bulletin
A Japanese Perspective on the International Energy Landscape (272)

May 19, 2016

At the “Global Energy Summit 2016”
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn May 17, I had an opportunity to participate in an international conference titled“Global Energy Summit 2016” in London. Participants in the conference sponsored by global law
firm Dentons numbered more than 200 including many energy lawyers. In the conference, experts
made presentations and panel discussions on present and future energy and environmental problems.
I made a presentation on China’s energy and environment strategy in the final session on COP21(Conference of Parties to the United Nations Framework Convention on Climate Change) and China,cosponsored by Dentons and the Atlantic Council, a U.S. think tank.
The conference led me to reaffirm that the range of energy problems is very wide. Usually,
I deal mainly with oil, gas and electricity industry people, energy policy makers and energy experts.
However, a very wide range of people engage in the energy industry, involving a wide range oftechnologies and laws. When enterprises implement contracts and transactions in the energy market,legal procedures are required. Government-to-government negotiations and arrangements also
involve legal aspects. This is the same case with international and domestic deals. In this sense,
energy problems cannot be separated from legal measures. The conference gave me an interesting
opportunity to infer what legal experts’ matters of interest are in regard to energy problems forpresent and future business chances. In the following, I would like to summarize impressive pointsof discussions for me in this respect at the conference.
The first interesting point was that energy lawyers were greatly interested in climatechange and the Paris Agreement at the COP21. In an address to the opening session of theconference, Professor Sir David King, the British foreign secretary’s special representative forclimate change, emphasized the importance of the climate change problem, the significance of theParis Agreement and the importance of future climate change initiatives including energy measures.
Participants in the conference indicated great interest in how the future of energy would change or betransformed through the enhancement of climate change initiatives and how such change ortransformation would lead to great business chances.
A key topic regarding the transformation was renewable energy. Citing the International
Energy Agency’s the latest “World Energy Outlook” and other reports, participants noted that
renewable energy investment was commanding the largest share of the power generation sector’s
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IEEJ：May 2016○ｃ IEEJ 2016

investment last year and that renewable energy would become the most important electricity sourcein the future electricity mix. Given these points, these participants discussed great expectations onrenewable energy and relevant business chances. Although there were discussions on the greatexpectations, technological development supporting the expectations and the reduction of power
generation costs of renewable energy, the participants did not take much time to discuss actual
challenges for renewable energy such as how to overcome the problem related to renewable energy’s
supply intermittency and how to cope with total renewable energy costs including those for measures
to deal with the intermittency. In this respect, I felt that an optimistic tone was too dominant for thediscussion on renewable energy.
Second, interesting arguments were seen on present energy market challenges and relevantbusiness chances while energy market transformation attracted interests as a long-term issue. In asession on Middle East problems, participants took up problems regarding economic sanctions on
Iran and Saudi Arabia-Iran relations. As Iranian crude oil comes back to the international market in
the wake of an end to the sanctions, upstream development and other business chances in Iran are
surely attracting attention. While the sanctions have yet to be lifted completely with various
uncertainties seen, Iran’s presence has been steadily increasing. Given new developments in Saudi
Arabia concerned about Iran’s growing presence, including the announcement of the Vision 2030
initiative for reducing dependence on oil and diversifying the economic structure, arguments wereseen about new expanding business chances. This may mean that business chances are abundanteven in the Middle East plagued with geopolitical volatility.
Third, participants made arguments about the great presence of China. In the final session,
four panelists including me made presentations on China’s climate change and energy strategy andits implications from various angles, followed by active questions and answers. As energy demand
growth has slowed down amid economic deceleration under the so-called “New Normal,” China
cannot be expected to restore high growth in the past. If China with one of the largest energy markets
in the world transforms the energy market under a strategy to reduce carbon emissions, tackles air
pollution and enhances energy security, it would exert great influences on the whole of the world.
Such large-scale transformation can be expected to include great opportunities.
Participants in the conference also made arguments indicating their strong interest in theimplications of China’s foreign strategy symbolized by the so-called “One Belt and One Road”
initiative, as well as the transformation of the giant market. An analysis at our institute shows that
global energy sector investment through 2040 will total $52 trillion in a scenario whereenvironmental and energy security measures would be enhanced. Of the total, China will account for$10.6 trillion, India for $4.8 trillion and other Asian countries for $6.4 trillion. Asian investment will
total about $22 trillion. The sum will expand further if investment in the Middle East, Africa andEurope subject to the “One Belt and One Road” initiative is added. I felt that participants in theconference were highly interested in what foreign investment China would implement under theinitiative.
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To understand energy problems covering very-wide-range and interdisciplinary aspects,
we must deepen expertise and expand the range of our knowledge and understanding. My
participation in the conference was very significant for leading me to become conscious of this point.
Contact: report@tky.ieej.or.jp
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