IEEJ：March 2017○ｃIEEJ 2017
Special Bulletin
A Japanese Perspective on the International Energy Landscape (314)March 13, 2017

Discussion on Long-term Energy Outlook in Paris
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn March 9-10, I had an opportunity to discuss crude oil price problems, the presentinternational energy situation and long-term energy outlook issues in several meetings in Paris withexperts from the International Energy Agency and French energy companies. Using as a basis fordiscussion “Asia/World Energy Outlook 2016” 1 (hereinafter referred to as the IEEJ outlook)released by the Institute of Energy Economics, Japan last October, I had a vigorous discussion withthem on various issues.
Due to space constraints, I here refrain from describing details of the IEEJ outlook. At themeetings in Paris, the participants exchanged various interesting views on the IEEJ outlook’s four
key points -- (1) the significance of Asia including the Association of Southeast Asian Nations, (2)impacts of energy supply disruptions (physical supply shortages), (3) innovative technologies andother measures to address climate change, and (4) nuclear power generation’s effects on the so-called
3E’s (energy security, environmental protection and economic efficiency). (For an overview of theIEEJ outlook, see A Japanese Perspective on the International Energy Landscape (294).) The
following summarizes impressive points to me in the meetings.
As for future Asian and ASEAN energy supply and demand, it was pointed out that how future
economic growth would be and how economic structures would change would be important. China,
India and ASEAN will undoubtedly drive global energy demand growth. However, future economic
growth patterns will greatly influence the degrees of energy demand growth and the selection ofenergy sources. I felt anew that it would be important to further collect and analyze information on
individual Asian economies to develop a long-term energy supply and demand outlook.
On ASEAN on which the latest IEEJ outlook focuses, the meeting participants indicated theirinterests in three points -- (1) ASEAN attracts attention from energy stakeholders in the world as thenext growth center following China and India and is expected to expand energy demand over a longtime, (2) demand will substantially increase for coal as a realistic choice, and (3) demand will berobust for fossil fuels as a whole including oil and gas. Due to the energy demand growth, ASEAN’s
carbon dioxide emissions and dependence on energy imports will increase, making relevant nationaland regional policy initiatives important. In the meetings in Paris, many views and questions werepresented on the feasibility of and real constraints on the regional initiative to develop a regional
power grid network which was highlighted in the IEEJ outlook. Questions also came on the1

http://eneken.ieej.or.jp/whatsnew_op/161021teireiken.html
1IEEJ：March 2017○ｃIEEJ 2017
possibility of Japan’s grid connection with Russia and South Korea, indicating interests from wider
viewpoints.
As for the analysis of energy supply disruptions, I had expected that some would question why
such an analysis was made at a time when crude oil prices have plunged from levels above $100 per
barrel amid oversupply. Unexpectedly, however, no such question or view came in themeetings inParis, indicating that the meeting participants shared interests in the potential significance of futureenergy supply disruptions in consideration of the destabilization of the Middle East and uncertainties
about the new U.S. administration’s foreign policy. As for the IEEJ outlook’s analytical approach of
focusing on physical energy shortages rather than price hikes caused by supply disruptions, many
meeting participants indicated interests in the approach as a unique one. At the same time, however,they pointed to difficulties in understanding the unfamiliar approach and to doubts about energy
supply disruptions’ very great economic effects presented as a result of the analysis, indicating
various problems in discussing energy supply disruptions. We may have to deepen our analysis andrework our description.
Subject to the most vigorous dialogue at the meetings in Paris was the IEEJ outlook’s analysis
on climate change. First, the IEEJ outlook’s concept of minimizing the combination of greenhousegas emission mitigation, climate change adaptation and climate change damage costs attracted
attention as providing an economic analysis and a new viewpoint. At the same time, however, it wasnoted that projections would widely vary depending on how “damage” would be defined or whatdamage would be included. It was also pointed out that damage could involve the problem of values.
Second, meeting participants shared the view that innovative technology development would besignificant as a long-term response to climate change. They particularly indicated great interests in
why the IEEJ outlook focuses on an option of combining CCS (Carbon Capture and Storage) with
CO2-free hydrogen and how other innovative technologies should be interpreted. Their strong
interests in the IEEJ outlook led me to feel that the outlook’s analysis of climate change should bedeepened and refined. Regarding an analysis of innovative technologies’ impacts, I felt that more
understandable analyses and explanations are required on how the IEEJ outlook’s routine “Advanced
Technologies Scenario” has been developed and what the borderline is between innovative and othertechnologies.
The IEEJ outlook presented four nuclear energy scenarios, analyzed their respective impacts on
the 3E’s and pointed to nuclear energy’s contributions to the 3E’s. In this respect, I felt that themeeting participants shared a view that nuclear energy as well as renewable energy may be required
to make contributions to climate change measures as these measures are enhanced in the future. On
the future course of nuclear energy, however, the meeting participants noted that there would bevarious problems including concerns about nuclear safety, how to secure public acceptance ofnuclear power plants and how to position nuclear energy in electricity market deregulation. They
also pointed out that Asia as a whole is expected to expand nuclear power generation but includes
Japan and Taiwan plagued with uncertainties about nuclear power generation and that how to securepublic acceptance may grow even more important in China and India expected to substantially
increase nuclear power generation. They argued that these points should be taken into account for
any analysis. How to respond to various uncertainties is a key challenge in developing a long-term
2

IEEJ：March 2017○ｃIEEJ 2017energy supply and demand outlook. Taking advantage of this kind of meetings to deepen
understanding on where problems exist, what the problems are and what approaches are required
may contribute to developing a better, more meaningful long-term outlook.
Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3