Acting as energy policy advisor for its 26 member countries in their efforts to ensure reliable, affordable and clean energy for their citizens, the International Energy Agency, IEA, was founded during the oil crisis of 1973-74. While its initial role was to coordinate measures in times of oil supply emergencies, the energy markets have changed and so has the IEA. Executive director Claude Mandil has widened the focus of the agency – which is part of the OECD family – to well beyond oil crisis management. Today the agency works on broad energy issues, including climate-change policies, market reforms, energy-technology collaboration and outreach to the rest of the world.

90-day oil stocks
IEA member countries today hold oil stocks equivalent to at least 90 days of net oil imports.
“Our members stand ready to take cooperative measures to meet any oil supply emergency, and the IEA will then coordinate those measures,” explains Claude Mandil.

He was appointed Managing Director of Gaz de France in 1998 and then Chairman and CEO of the Institut Français du Pétrole in 2000 prior to being asked to lead the IEA in 2003. The measures he refers to include, for example, stock draw, demands for energy consumption restraint, fuel switching and surge production.

“Although the world has changed since we were founded more than 30 years ago, we still have an important role to play,” he emphasises, pointing at recent examples such as when hurricanes struck the US Gulf of Mexico in September 2005, damaging refineries and disrupting supply systems. Another ‘worst case’ scenario is one in which Iran stops its oil exports of 2.7 million barrels a day.

“We are well prepared for such events. If we weren’t, the world could soon be facing a major catastrophe. The IEA has developed a safety net based on cooperation and international solidarity. This is only possible as long as the countries are prepared and willing to cooperate with us,” he says, mentioning the situation that occurred in 2003 when Venezuela experienced strikes and unrest and the US started its military operations in Iraq. The world was facing a situation involving insufficient oil production. OPEC was contacted and Saudi Arabia was asked if it was willing to increase its production, which it did.

“The strategic stocks are only supposed to be a last way out,” explains Claude Mandil.

The three Es
The IEA today has a staff of around 170, mainly energy experts and statisticians from the member countries. However, as the world has changed since the IEA’s foundation, the agency’s current work is based on the three Es; Energy supply security, Economic growth and Environmental protection.

“As far as energy policy is concerned, all countries need to stand on these three legs. If not, the whole energy policy will suffer and energy poverty cannot be avoided,” states Claude Mandil. He is ashamed of the present situation, in which 25% of the world’s population – 1.5 billion people – have no access to electricity and are totally untouched by progress.

“However, this is not mainly an economic or technical problem. A key issue is poor governance, which results in little interest in investing in these countries,” he says.

At the other end of the scale he refers to Norway as a good example. The IEA last year commended the Norwegian energy policy for its exemplary management of Norway’s resources.

“Norway’s transparent and forward-looking management of its petroleum resources provides a good example to other countries. The skilful development of Norway’s large oil and gas resources has made the country Europe’s largest exporter of oil and gas and a significant contributor to Europe’s security of supply. But Norway is now facing challenges as the growth in energy consumption is outpacing that of onshore production and real difficulties must be overcome if the Kyoto target is to be met without compromising security of supply,” he says.

The IEA aims to help governments worldwide to understand the nature of a good energy policy.

“A sound energy policy is good for all the three Es at the same time. And all the three Es are equally important. Any government failing to realise this is running the risk of collapsing its energy policy,” claims Claude Mandil continuing: “The world needs more investments in all the three Es.”

Chinese power sector reform
The IEA also pays attention to non-member countries to help them improve their energy policy. The three giants – India, China and Russia – are on its list, as are Indonesia, South Africa, Brazil and Mexico, among others, all of which are facing difficult situations.

“Take China, for instance. Every two years, China adds as much power-generation capacity as the total energy production in France or Canada. The country is now the biggest electricity consumer in the world after the US and its needs are still growing. With its rapid rate of expansion, China’s power sector is unique. At the same time, it shares many challenges that other countries have long grappled with: How to reflect the full costs of generating electricity in prices to consumers while increasing access to this essential commodity? How to provide stable and secure power economically? How to reduce the environmental burdens of generating power? Taking on these challenges, Chinese policy will have implications for energy markets and for pollution that affect all of us,” says Claude Mandil.

Two years ago, the IEA and Chinese officials agreed that applying the lessons of liberalisation from other countries to China’s specific circumstances could help to refocus and re-energise this country’s power-sector reforms. An IEA study published this summer was the result of that effort, and it came at a time when the country is deliberating on a new comprehensive energy law as well as on revisions to its electricity law. Since China first embarked on an effort to gradually liberalise its power sector, great progress has been made, according to Claude Mandil.

“China should be congratulated for this,” he says, stressing, however, that “important challenges remain. Too much electricity is wasted by consumers and by networks, so too many power plants are being built to meet this demand. Too much fuel is wasted in generating power, and too much pollution is released as a result.”

Energy efficiency is vital
And this brings us over to the next topic which is very close to Claude Mandil’s heart: Energy efficiency.
“Large amounts of energy savings are available at a low cost,” he claims, strongly urging governments to increase their energy efficiency efforts. “If today’s policy continues, the world’s CO2 emissions will be increased by a factor of 2.5 by 2050. However, if we radically change our energy use by utilising the technology available today, the emissions in 2050 will only have increased by 6%,” he says.

At the G8 meeting in Gleneagles, Scotland, last summer the IEA was asked to play a major role in delivering the summit’s Plan of Action. Six key priorities were identified, and energy efficiency was one of these. Among other things, energy efficiency best practice studies were called for, and an IEA study on lighting was recently published.
“Without rapid action, the amount of energy used for lighting will be 80% higher in 2030 than today. However, if we simply make better use of today’s efficient lighting technologies and techniques, global lighting energy demand need be no greater at that time,” Claude Mandil says, adding: “This important work shows that the potential for energy savings in lighting is simply enormous and can be achieved using technologies that are not only readily available in the market but also economically competitive during the product’s life cycle. Moreover, more efficient lighting also results in lower CO2 emissions.”

He also mentions a range of other efforts we all could – and should – make, such as checking energy consumption
levels when we buy new appliances: limiting the standby consumption to 1 Watt for electrical appliances would reduce the peak electricity load by 20GW, the equivalent of approximately twenty large power plants. Furthermore, the IEA recommends the adoption of more energy-efficient lighting and regular monitoring of the tyre pressure in our cars to ensure a far more efficient use of energy. “We need diversification, and we need a lot more research into and development of renewable energy sources. A sustainable energy future is possible, but only if we act urgently and decisively to promote, develop and deploy a full mix of energy technologies,” concludes Claude Mandil.