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Analysis: Why the APEC environmental goods list is worth the region's energy

15 January 2014

APEC economies are working to reduce tariffs to five per cent or less on a list of environmental goods by 2015 and in 2014 will explore opportunities for building on this initiative within the World Trade Organization. In an interview, Dr Phyllis Genther Yoshida, APEC Energy Working Group Lead Shepherd, explained the list’s significance. Dr Yoshida, who is also the US Deputy Assistant Secretary of Energy, further discussed how it fits with APEC’s broader work to improve energy efficiency and lower greenhouse gas emissions.

APEC Bulletin: What is your general take on the global energy outlook and its implications for the US and other APEC economies?

Yoshida: The world is really changing in a lot of ways. Those who were suppliers are now consumers. Those who were consumers are now suppliers. This is due to a lot of changes in technology and a lot of new ways to access resources that didn’t exist before. So what we would’ve said five years ago about the global energy outlook is a lot different than what we would say now.

The picture is getting more complicated, but there are still some things that remain the same. This year, in 2013, probably about 80-83 per cent of all energy used will be fossil fuels.  And certainly by 2035 it will go down but it will only go down to about 75 per cent.

At the same time, there are still 1.3 billion people in the world without access to energy. So, all of these issues keep percolating along while we’re seeing technology being able to advance things like shale gas. We always knew it was there but we couldn’t access it commercially.  And solar, wind, etc. are really becoming economically viable in a lot of places.

For gas, it’s certainly a good transition for fuel because there’s about half as much CO2 as other fossil fuels. In the United States, our CO2 output has actually gone down over the last few years, partly because of the switch to natural gas from coal and some other fuels that have higher CO2 emissions and also because we’ve become much more energy efficient.

APEC Bulletin: One of the big initiatives within APEC is the environmental goods list. What are your thoughts on its significance?

Yoshida: APEC has really taken the lead on environmental goods and services. The idea really is to get the tariffs on certain products that are environmentally friendly and support the use of clean energy so that they’re easily spread and then deployed throughout the region—easily sold, easily traded.

The Energy Working Group is not in charge of the environmental goods list but we’ve certainly provided technical advice to the APEC Committee on Trade and Investment in terms of what the product categories are, what’s really new versus old, and what would make the most difference.

At this point, there is still room to keep growing the list because, while it’s fairly easy to define that a solar panel, for example, belongs on a list of environmental goods and services, it is a lot harder to define many specific products that promote energy efficiency. So, hopefully, as time goes on, more and more of those types of products will be included.

APEC Bulletin: There is a list of 54 goods. A lot of discussion has centered on what to include on it. Can you talk about where we are now?

Yoshida: Fifty-four goods are what all economies agreed to in 2012. When the agreement goes into effect in 2015, the highest tariff that will be applied to these goods in the APEC region will be five per cent, but many economies will opt to maintain tariffs that are lower. That should really encourage the deployment of these technologies throughout the region.

We haven’t any tangible effects yet because the tariff cuts won’t go into effect until 2015, so there’s still lots of implementing work to do. But APEC is taking a leadership role on this.

The World Trade Organization has also been looking to do something on environmental goods and services for years. But APEC managed to sort of hopscotch and pull something together in a short timeframe. We hope that the World Trade Organization follows APEC on this issue.

APEC Bulletin: 2015 is the implementation target. How much work still needs to be done?

Yoshida: Economies will have to take a hard look at their tariff schedules to determine how they wish to implement the tariff cuts. Some economies may choose to create new tariff lines, some may choose to reduce tariffs on existing lines and some economies are already in compliance with the commitment. A portion of 2014 will be dedicated to working together to ensure all economies implement the agreement in a transparent manner.

APEC Bulletin: What kind of boost could the goods list have for the agenda of the Energy Working Group?

Yoshida: It definitely will help because one of the big issues we look at is deployment. And when it comes down to deployment, you have to look at standards, and you have to look at trade barriers.

So, the more trade you have and the easier it is to do that trade, the more of those products get deployed around the entire region— which builds markets, which means more get deployed. It’s sort of self-reinforcing.

See related video: Building APEC Low Carbon Model Towns

APEC Bulletin: Are you involved in the tariff reduction work itself? Who is driving the list from an implementation standpoint?

Yoshida: That’s the Committee on Trade and Investment. What we do much more of is standards research. That means, if you’re using a window that claims to be of a certain amount of efficiency, we make sure that it’s measured the same way—that efficiency is measured the same way around the entire region so that when you do have trade, you know what you’re getting.

APEC Bulletin: When it comes to energy efficiency, where does the APEC region as a whole stand?

Yoshida: Efficiency is really getting better. A lot of things are used in transportation. So, as cars get much more efficient, the amount of energy they require, even for the same size of a car, goes down. We’re learning how to manufacture things much more efficiently so that plants and various industrial facilities are using less but producing the same amount that they used to.

The other thing that is helping efficiency is really getting testing standards in place so that if you buy a refrigerator that claims that it doesn’t use as much energy, you can be assured as a consumer that this is true. So, as APEC, we do a lot of work on standards and conformance, and research testing which ultimately helps trade, it helps the market, helps investment and helps the consumers.

APEC Bulletin: You have energy efficiency and then you have emissions. How even is improvement in these areas?

Yoshida: Actually, in a lot of places that have become more efficient, CO2 emissions have gone down. The US is a good example. CO2 emissions are going down here and in a lot of other parts of the world they are too. But they’re still way too high.

What we do in the Energy Working Group, we speak in terms of energy efficiency, clean energy and sustainability, and how that impacts the climate and how might what we do lessen the effect on energy systems of events like the recent typhoon in the Philippines. Was it caused by climate change? Was it stronger because of climate change?  We asked the same question about Hurricane Sandy in the United States.

The job of the energy community is to build resilience in the system so if these events happen you are better protected. And at the same time, of course, anytime you build efficiency into products, you have lower emissions.

APEC Bulletin: How does this figure into the deliverables that come out of the Energy Working Group?

Yoshida: We have a huge portfolio. We actually have the largest portfolio of projects of any APEC working group. We look at efficiency. We have something called Energy Smart Communities where we look at smart grids, smart transportation, smart buildings and what we call smart people-smart jobs because people need the workforce skills to be able to deal with these new technologies. All of that is energy efficiency.

We look at where the holes are that need to be filled and try to do joint research, do demonstration projects, etc., and really get the whole region understanding what’s possible and how to manage it.

APEC Bulletin: What does “smart” mean in this context?

Yoshida: What it really means is that you’re using a lot of information technology and sensors so that you’re getting real time supply and demand data so it’s much easier to manage who needs how much energy when and provide it - very, very finely down to minutes as opposed to hours in terms of ramping energy up and down.

APEC Bulletin: You talk about lowering emissions and the fact that some economies are making progress and others have more work to do. How much more needs to be done?

Yoshida: Every economy is going to be different because their resource base is different and their size is different. For example, we have several economies that are really based on exports of raw materials. Their energy levels are just going to be naturally higher, but they’re moving in the right direction.

So, what we look at is not what each economy per se is doing but where the group moving together is going and that seems to be fairly on track. We’re a little off of that goal of a 45 per cent reduction in energy intensity by 2035, but we’re well on our way. It’s moving in the right direction so that as new technology comes on board over the next few years, practices change. We really think that we can reach that goal.

See related news: APEC strives to raise energy efficiency, cut emissions

APEC Bulletin: There’s the APEC Energy Ministerial next year and the next Energy Working Group meeting is in Kunming, China. What are your expectations?

Yoshida: We do a ministerial every two or so years when there have been enough changes in the region that we need to take a look at and decide what our priorities should be for the next few years.

We will be working very hard on our new strategic plan, leading up to the Energy Ministerial that will be in Beijing in 2014 [2-3 September], so that we can tell our leaders what it is we would like them to do to help us to help the region to come together and move forward.

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