AOMORI — Energy ministers from the Group of Eight nations on Sunday agreed on the establishment of a new international framework aimed at facilitating energy-saving measures to temper climate change and soaring fuel costs, at a time when crude oil is closing in on $140 a barrel.
Japan, which hosted the one-day meeting, and the other G8 members — Britain, Canada, France, Germany, Italy, Russia and the United States — decided to set up the International Partnership for Energy Efficiency Cooperation and invited China, India, South Korea and other countries to participate in the initiative.
In the northeastern city of Aomori, the G8 powers and the three Asian countries, which are responsible for about 65 percent of the world’s energy demand and carbon dioxide emissions, said they share “serious concerns over the current level of oil prices.”
“Recognizing the crucial role of financial and macroeconomic policies in resolving current economic issues, all of us responsible for energy policy should work together,” said a joint statement by energy ministers of the 11 countries.
This is the first time that energy ministers from the G8, China, India and South Korea have met all together and discussed pending issues.
Crude oil prices have more than doubled since the start of 2007 and hit a new record above $139 per barrel on Friday in New York, scoring the largest-ever single-day gain of more than $10.
In addition to climate change, soaring food and oil prices are increasing the risk of economic and political instability on a world scale, especially in developing countries, and they will be central agenda items at the G8 summit to be held in Hokkaido on July 7 to 9.
The 11 countries, including resource-scarce Japan and the world’s second-largest oil producer Russia, discussed intensively what to do with the turbulent oil market, such as underlining the importance of increasing investment and sharing oil data between consuming and producing countries.
But when it came to singling out the main cause of the turmoil, delegates refrained from going into details, Japanese officials said, taking into consideration their different economic positions.
The United States and some other leading economies, which have been calling on developing countries to cut their subsidies on fossil fuels to control demand, believe the imbalance of supply and demand is the chief cause.
China and some European countries share the stance that the massive inflow of speculative money from hedge funds and other powerful investors is primarily driving prices higher.
The statement stopped short of making a clear judgment on speculative investment in commodities.
Gist of joint statement for energy talks
The following is the gist of the joint statement issued Sunday at the end of an energy ministers’ meeting of the Group of Eight nations — Britain, Canada, France, Germany, Italy, Japan, Russia and the United States — plus China, India and South Korea.
The ministers share serious concerns over the current level of oil prices.
The ministers agree to set up the International Partnership for Energy Efficiency Cooperation, a forum to promote international cooperation for the improvement in energy efficiency.
The ministers support further analysis of oil market determinants.
Promotion of energy efficiency is essential for enhancing energy security and mitigation of climate change.
The 11 nations will promote efforts to improve energy efficiency through nationally and voluntarily determined measurable energy efficiency goals and action plans.
The ministers recognize that so-called sectoral approaches could be useful methods for improving energy efficiency.
Renewable energies have significant potential to improve energy security and mitigate climate change.
The ministers note that a growing number of countries have expressed interest in nuclear power generation as a means of addressing climate change and energy security concerns.
“Determinants of oil prices are complex and considered by many to include shorter-term factors such as supply policies of some producers and blocs, inventory levels and geopolitical tensions,” the statement said. “We support further analysis of oil market determinants.”
The ministers said they hope that fruitful dialogue on oil markets will be held at a meeting of finance ministers of the G8 countries this Friday and Saturday in Osaka.
The new multilateral platform is aimed at promoting the sharing of best energy-saving practices. It will be voluntary, but the G8 countries hope this kind of initiative, making fast-growing economies involved on an equal footing, is essential to addressing climate change and energy security.
The International Energy Agency, formed by 27 leading economies, will contribute to the new platform, also called IPEEC.
China and India together will account for nearly half of the entire expansion in global energy demand between 2005 and 2030, according to the IEA, which China and India are not yet part of.
“Needless to say, climate change and energy issues are two sides of the same coin,” Japanese industry minister Akira Amari told his counterparts from the G8 and the three Asian countries. “It is essential that we solve the issues in a comprehensive manner.”
“To adequately address these twin challenges, in my view, we simply must increase the level and breadth of investment all around the world,” U.S. Energy Secretary Samuel Bodman said at a joint news conference after the meeting.
“That means promoting aggressive investment in renewable energy and other alternative energy technologies, as well as the development of hydrocarbon resources,” Bodman said.
The G8 countries also underscored the importance of pushing innovative technologies, most notably carbon capture and storage technology, adding that they will aim to launch 20-large scale projects globally by 2010.
The agreement on energy-efficiency cooperation is still general.
But the countries shared the position that they will do their best to realize the potential for improving energy efficiency through “nationally and voluntarily determined measurable” goals and action plans.
For example, Japan’s Ministry of Economy, Trade and Industry has created a plan to improve national energy efficiency by 30 percent by 2020. China is seeking to improve its energy efficiency by 20 percent in the five years through 2010.
The countries also recognized the usefulness of the so-called sectoral approach to improve energy efficiency, analyzing CO2 reduction potentials and identifying applicable technological steps for each key consuming segment, such as power, transportation and residential.
The 11 countries said, “We will work collectively on the practical development” of the approach, which has been pushed by Japan.
By the end of this year, the countries will decide on IPEEC’s terms.
Meetings under the partnership will be of a high-level nature, the declaration of the establishment said, adding that IPEEC will make public a summary report of its activities and plans at least once a year.
Japan is hoping it will begin operating by around next year’s G8 summit meeting in Italy, the officials said.