APEC Energy Working Group Business Network

Summary Record
EWG 18, Wellington, New Zealand, November 18-19,1999

The eighteenth meeting of the APEC Energy Working Group was held in Wellington, New Zealand, on 18-19 November 1999. Australia and New Zealand co-chaired the meeting.

Delegates from Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Peru; the Philippines; Singapore; Chinese Taipei; Thailand; and the United States of America participated in the meeting. Representatives from the EWG and APEC Secretariats also attended, and PECC and APERC were represented at the meeting. Representatives from Colombia and Venezuela attended as guest participants.

Representatives from the EWG Business Network participated in Agenda Items 1 and 2 only.

1: Approval of the Meeting and Opening Address

The agenda for the meeting was approved.

In their opening remarks, the Meeting Co-Chairs noted that the key issues for discussion at EWG18 would include arrangements and agenda topics for a proposed 4^th APEC Energy Ministers’ Meeting in 2000; implementation of commitments for improving the investment climate for energy developments, including natural gas projects; and consideration of a potential energy policy contribution to the APEC Leaders’ Statement for Brunei 2000.

2: Report from the 2nd Meeting of the EWG Business Network

The Chairman of the EWG Business Network (EBN) provided members with a report of progress made by the EBN at their 2^nd meeting (EBN2) held in Wellington, New Zealand, in September 1999. Members discussed the issues raised in the report with the EBN representatives present, and as previously agreed, deferred any decisions to be made until Agenda Item 3.

3: Proposals arising from the 2nd Meeting of the EWG Business Network

After EBN representatives had left the room, members discussed appropriate action to be taken regarding the proposals arising from the report of EBN2.

3.1: APEC Energy Principles

Members discussed the proposal to develop a statement of APEC Energy Principles. The proposal prepared by the EBN was based on existing initiatives and principles that have been endorsed by APEC Energy Ministers. Members saw merit in developing a statement for consideration by APEC Economic Leaders at their next meeting in Brunei in 2000, but wanted to ensure such a statement added value to the 14 Non Binding Energy Principles already agreed upon. The EWG Secretariat was asked to prepare a draft of the document, which would be circulated to members for consideration at EWG19. The revised draft would have a clearly defined rationale and a more appropriate title. If agreed at EWG 19, the revised document could be presented to Energy Ministers for consideration and endorsement, and subsequently APEC Economic Leaders in 2000.

(Under Agenda Item 7 the approach agreed was revised)

Action Arising/Next Steps

Actions as per Agenda Item 7.

3.2: Harmonising Economic and Environmental Objectives of Energy Policy

Members noted the EBN proposal to develop a draft work program on this topic for consideration at EWG19.

Action Arising/Next Steps

Members noted the EBN proposal to develop a draft work program on the issue of harmonising economic and environmental objectives of energy policy for consideration at EWG19.
The EWG Secretariat to circulate a framework of the proposed work program to members when developed by the EBN.
The EWG agreed to ask that the EBN take account of past and ongoing EWG work on this issue.

3.3: Implementation Committee

Thailand presented a report to members on the outcomes of the previous week’s visit by a panel of experts selected by the Implementation Committee (the "Visit Team") to advise on ways to successfully implement the natural gas industry reforms. This visit was arranged at the Thai Government’s invitation and was reported to be a very positive and useful exercise. It was agreed that the Thai visit provided a good test case and benchmark for future invitations and visits.

The EWG Secretariat presented a report on the process for the visit including suggestions for funding and structure of future visits.

Members discussed the issue of the structure and funding arrangements for the proposed Implementation Committee for Natural Gas and IPPs. It was agreed that a flexible and ad hoc approach should be adopted for the structure and funding arrangements for future invitations and visits by Visit Teams.

The agreed approach to future visits will be:

The EWG Secretariat receives an invitation from a member economy for a Visit Team.
The EWG Secretariat forwards the invitation to EWG Members asking that a Visit Team be formed. EWG Members would consult with their EBN representatives for the purpose of identifying the Visit Team composition.
The Visit Team established would develop arrangements for the specific visit in consultations with the hosting economy.
Colombia asked about the possibility of seeking a Visit Team to their economy. The EWG Secretariat advised that it was likely to be possible but as a Guest Economy this would need to be confirmed.

It was agreed that no standing Implementation Committee would exist.

Action Arising/Next Steps

Members noted the report from Thailand on the recent Visit Team, and agreed that it would serve as a good test case for future invitations and visits.

Members agreed to adopt an economy specific approach to the structure and funding arrangements for future visits by Visit Teams to discuss natural gas and power industry reforms.
The EWG Secretariat to seek clarification as to whether Guests are eligible to participate in the Visit Team activity.

4: Secretariat Reports

Members noted the reports from Mr Yang Yafei of the APEC Secretariat, and Mr Michael Schwager, Manager EWG Secretariat.

Action Arising/Next Steps

Members agreed to provide the EWG Secretariat with any contributions to the next EWG Newsletter, especially details of any EWG related publications, by no later than 30 November 1999.

5: Notable Energy Developments since EWG17

In advance of the meeting, member economy delegations provided brief overviews of the main energy developments that had occurred in relation to their respective economies since EWG 17.

Action Arising/Next Steps

Members noted the reports and agreed to continue the practice of circulating papers on notable energy developments between EWG meetings. Members were asked to also provide electronic versions of these papers to the EWG Secretariat in future.

6: Pledge and Review

Members noted the latest contributions to the voluntary pledge and review program received from Canada; Japan; Malaysia; Mexico; New Zealand; the Philippines; Singapore; Chinese Taipei; and the United States. The program is aimed at improving energy efficiency in the supply, delivery and use of energy through, inter alia, sharing information and experience in achieving improved energy efficiency; and developing indicators and databases that will enable the measurement of performance over time.

It was agreed that members would report annually on progress on implementing the pledge and review arrangements rather than reporting at every EWG meeting, commencing with EWG19.

Action Arising/Next Steps

Members noted the contributions to the pledge and review program from Canada; Japan; Malaysia; Mexico; New Zealand; the Philippines; Singapore; Chinese Taipei; and the United States.
Members agreed to report annually on progress on implementing their pledge and review at the first meeting of each year, beginning with EWG 19.
Members agreed that the future of the initiative would be put on the agenda for further discussion at EWG19.

7: Natural Gas Action Strategy

Members discussed the draft Natural Gas Action Strategy developed by the EWG Secretariat based on the agreed recommendations from the Oakland Investment Workshop and from the EWG Business Network. Members felt that the idea of a Natural Gas Action Strategy should be broadened and that a strategic framework should be prepared for all major EWG initiatives. The general view was that this document could also form the basis for the energy statement discussed at Agenda Item 3.1 in that a possible statement to Ministers and to Leaders could be drawn from the strategic framework. The United States undertook to prepare such a document. In relation to the natural gas component of the text, the US would consult with Japan. The revised document will be presented at EWG19 for further consideration by members.

Action Arising/Next Steps

United States, consulting with Japan in respect to the natural gas component, to prepare a draft strategic framework document for discussion at EWG19.
Members agreed also to consider at EWG19 what might appropriately be drawn from this document to go forward to APEC Energy Ministers and APEC Economic Leaders.

8: Presentation on EWG TILF Project "Assessing the Impact on the Energy Sector of Liberalising Trade and Investment in APEC Member Economies"

Members considered the presentation by Dr Roger Stuart and Ms Karen Schneider of the Australian Bureau of Agricultural and Resource Economics (ABARE) on the preliminary findings contained in the draft report for the above TILF project. Members agreed to submit comments on the draft report by 17 December 1999. The final report will be circulated to members by late February 2000.

Action Arising/Next Steps

Members noted ABARE’s presentation.
Members agreed to provide comments on the draft report to the project overseer, Mr Alderson of Australia, by 17 December 1999.

9: Program on Best Practice in Energy Services

Members considered and discussed the proposed work program on Best Practice in Energy Services prepared by the United States. Comments from the Chair of the EBN on the proposed work program were received and noted by members.

Members expressed the view that the work program should be an exclusively EWG activity, in consultation with the EBN. It was generally agreed that the linkages to the World Trade Organisation (WTO) were inappropriate and should be removed and should be directed to the APEC Committee on Trade and Investment, and that scope of the work program should be more focussed and trimmed down. The United States agreed to revise and consolidate the proposed work program for members’ consideration at EWG19.

Action Arising/Next Steps

The United States undertook to revise and trim down the proposed work program on Best Practice in Energy Services with proposals for funding of the program included, and resubmit to EWG19 for members’ consideration.
Members agreed to reconsider the revised proposed work program at EWG19 and, if agreed, proceed to implementation.

10: Policy Dialogue (EWG Members only - No Observers or Guest Participants)

Members held an "in-camera" policy discussion on the topic "The Role of Electricity Reform in the APEC Region", as chosen at EWG17. As previously agreed, no notes were taken on the discussions under this item, which was aimed at fostering an understanding amongst members of this key energy policy issue and its implications.

The topic agreed for the next policy dialogue at EWG19 is:

Energy technology

incentives for innovation,
bringing innovative technology into the marketplace
role in assisting government to meet environmental goals.

11: Year 2000 "Millennium Bug" Computer Date Problem (Y2K)

At EWG members’ request, the Energy Regulators’ Forum (ERF) submitted an updated report titled Year 2000 Computer Date Problem - Effects on Short-Term Energy Security in APEC Economies, for members consideration. The revised report recommends that members take independent action as they consider appropriate, drawing as needed from the strategies adopted by other economies, to prepare for possible Y2K computer date problems. A report from the Energy Experts Meeting on Y2K in Tokyo was also tabled. Japan commented that the meeting was a very successful information exchange. Both reports were noted by Members.

The United States requested that Australia and New Zealand communicate their Y2K experience during the roll-over to 1 January 2000 with the rest of the APEC community.

Action Arising/Next Steps

Members noted the revised reports by the ERF and the Energy Experts Meeting on Y2K in Tokyo.

12: Progress on other Key EWG Initiatives

The Chair presented outlines of progress on four key EWG initiatives not covered elsewhere on the agenda:

12.1: Environmentally Sound Energy Infrastructure Project (07/99)

It was suggested that the inclusion of some examples of significant technology transfer cases would be useful. The project overseer, Canada, agreed to incorporate these.

Action Arising/Next Steps

Members noted the outline of EWG Project 05/2000.
The project overseer, Canada, agreed to incorporate case examples of significant technology transfer into the study.

12.2: Training & Communication Program for Energy Regulators on the Benefits of Structural Reform Project (02/2000T)

Action Arising/Next Steps

Members noted the outline of EWG Project 02/2000T.

12.3: Strengthening Operational Aspects of APEC Energy Micro-Economic Reform Project (04/2000T)

It was suggested that consideration be given to how timing could be better coordinated for projects such as 02/2000T and 04/2000T.

Action Arising/Next Steps

Members noted the outline of EWG Project 04/2000T.
The project overseer, Australia, agreed to examine opportunities for synergies in implementation of projects 02/2000T and 04/2000T.

12.4: Seminar/Workshop on Promoting Trade and Investments in the Energy Sector among APEC Economies through Early Voluntary Sectoral Liberalisation (07/2000T)

Members noted the Chair’s outline of this project, and the links between this project and 04/2000T.

Action Arising/Next Steps

Members noted the outline of EWG Project 07/2000T.
The Philippines and Australia, project overseers of Projects 07/2000T and 04/2000T respectively, agreed to consult on the linkages between the two projects.

13: Proposed 4^th APEC Energy Ministers’ Meeting

The United States presented its outline for a Fourth Energy Ministers’ Meeting (EMM4), which the US Secretary of Energy proposes to host in the week of 8-12 May 2000. The US noted that the 1999 APEC Economic Leaders Meeting in Auckland endorsed the market strengthening activities of APEC and that they envisaged EMM4 would continue to promote that theme.

The rationale for EMM4 was to send a strong message to APEC Economic Leaders on the 3Es (energy, environment and economy), placing energy on the global agenda in 2000. It would also provide an opportunity to obtain Ministerial endorsement of the considerable progress made by the EWG since Ministers last met in Okinawa in October 1998. Enhanced security in regional energy markets would be one outcome of such a meeting.

The US explained that three products were envisaged as a result of EMM4. These would be:

a clean energy statement, including the important role of technology,
an energy statement for consideration of APEC Economic Leaders, and
a Ministerial Declaration.

It was envisaged by the US that EMM4 would be conducted over one and a half days, with a full day of dialogue between Ministers and the APEC business community, followed by a half day Ministerial Meeting. Further, that a Steering Committee would be established to prepare for EMM4, with an initial meeting to take place in the second or third week of January 2000, and a second meeting back-to-back with EWG19 in March 2000.

Members welcomed the United States’ offer to host a meeting of APEC Energy Ministers in May 2000, and agreed to nominate representatives to the EMM4 Steering Committee and advise the APEC Senior Officials’ Meeting of these arrangements.

Action Arising/Next Steps

Members welcomed the United States’ offer to host the 4^th APEC Energy Ministers’ Meeting in May 2000.
Members agreed to hold an EMM4 Steering Committee meeting in the second or third week of January 2000, and a second meeting back-to-back with EWG19 in March 2000.
Members agreed to forward their nominations of representatives to the EMM4 Steering Committee to the EWG Secretariat by 17 December 1999, for advice to the US.
The EWG Lead Shepherd would advise the APEC SOM of this arrangement.

14: Report of the Meeting of the EG Chairs, Chair of SGES and APERC

Members noted the progress reports prepared in advance of the meeting by each of the Expert Groups, the Steering Committee on Energy Standards (SGES), and APERC. Members also noted the report presented by the EWG Secretariat on the outcomes of the Meeting of the Chairs of these groups on 17 November 1999 in Wellington.

Action Arising/Next Steps

Members noted the progress reports from the Expert Group Chairs, the SGES Chair and APERC President, and the outcomes of their third meeting on 17 November 1999.
Members supported the three new research activities for 2000 proposed by APERC.
Members agreed to nominate specific contacts for each EWG sub-fora where they have not already done so.
Members agreed to a recommendation that the EWG write to the APEC Budget and Management Committee and ask for an amendment to the project evaluation and reporting procedures with respect to the requirements for evaluation questionnaires.
Members agreed to forward comments to the EWG Secretariat on the preliminary recommendations contained in the report of the SGES by 17 December 1999.
Members agreed that any project selection process adopted under agenda Item 15 would apply to both self-funded and APEC-funded projects.

15: Effectively Addressing Priority Issues Identified by Ministers

The EWG is considering ways of improving its organisation, procedures and project selection process to more effectively address Ministerial priorities, as well as its wider activities.

15.1: EWG Structure

Members considered the discussion paper provided by Canada which looks at the current EWG structure and operation and its appropriateness, and raises some issues for members’ consideration, including: the need for a more strategic and cohesive framework for EWG activities; the closer interaction between the EWG and APERC; the potential for enhancing the links with the Expert Groups; and whether there should be two separate processes for evaluating project proposals, that is, one for policy work and one for ECOTECH work.

Members provided various comments noting that both organisational and procedural issues required more careful consideration. It was also agreed that APERC was a valuable resource for progressing EWG and Ministerial priorities.

It was noted that a more vigorous project selection process would provide another means to address this issue. This latter issue was discussed further under Agenda Item 15.2.

Action Arising/Next Steps

Members agreed that the following processes discussed at this meeting would assist the EWG to more effectively addressing Ministerial priorities:

the development of a strategic framework, or "mission statement"
the EWG’s proposed Annual Operational Plan
enhancements to the project selection process, including the development of criteria
an APERC planning seminar to be held in conjunction with EWG19 as a means to provide closer interaction with the EWG
more closely reviewing the Expert Groups’ terms of reference every two years with a view to improving the focus of their work on Ministerial priorities
APERC could convene seminars on energy restructuring in selected economies involving EWG members and private sector representatives.

Members agreed to revisit this matter at EWG19.

15.2: Reform of the EWG Project Selection Process

This issue was the subject of a discussion paper tabled by the EWG Secretariat for members’ consideration, and was also covered in the Canadian discussion paper. Members supported the proposed reforms of the project selection process, which are intended to deliver projects that are:

of high quality with a more strategic focus on the core objectives of APEC by responding to the APEC Leaders and Ministers priorities and directives;

results and/or beneficiary oriented (outcomes delivered should benefit most, if not all APEC member economies);

of maximum value and make more effective use of limited resources; and

prepared in accordance with BMC guidelines.

Action Arising/Next Steps

Members agreed to the following specific reforms of the EWG project selection process, which will take effect from 2000 (for projects proposed for 2001):

Expert Group Chairs are to discuss and identify potential project proposals that reflect the EWG’s focus at the 2nd Expert Group Chairs’ meeting each year.
all project proposals would need to have a sponsoring economy and at least two other member economies as project co-sponsors (ie. three co-sponsors).
all project proposals will require EWG endorsement and will be considered on an exceptions basis at the first EWG meeting each year.
a transparent set of selection criteria and a priority ranking form is to be developed by the EWG Secretariat and will be distributed to members for consideration out-of-session before EWG19.
Project proposals would not be considered unless they had been circulated to members at least two weeks in advance of meetings of the EWG.

16: EWG Operational Plan

The EWG Secretariat circulated in advance of the meeting a draft Operational Plan for the EWG for 2000, as agreed at EWG17. Members discussed the draft document and offered some suggestions for improving the document.

Action Arising/Next Steps

The EWG Secretariat agreed to develop a revised draft EWG Operational Plan, in consultation with Expert Group Chairs, for circulation to members by 17 December 1999. The revised document would incorporate potential performance indicators and a proposal for timing of consideration of future Operational Plans.
Members agreed to provide comments to the EWG Secretariat on the revised draft EWG Operational Plan for 2000 by 31 January 2000, with a view to obtaining endorsement at EWG19.

17: Date and Venue for Next Meetings

Members welcomed the APEC Secretariat’s offer to provide a venue for EWG19. Details of timing, venue and host for EWG19 will be advised at a later date.

18: Other Business

Japan reported that the APEC Oil Supply and Demand Security Seminar held in Tokyo on 4-5 November 1999 was constructive and well attended with 18 member economies represented.

Follow-up issues identified at the seminar were that additional attention needed to be paid to information sharing on exploration and development technologies; and further sharing of data on oil markets amongst members.

The Chair of the Expert Group on Clean Fossil Energy, presented an update on the integration of their oil and gas program. He indicated the desire of the Expert Group to be of assistance to the EWG and asked the EWG members to forward contact details for participants in their oil and gas program.

Action Arising/Next Steps

Members noted Japan’s report of the APEC Oil Supply and Demand Security Seminar.
Members agreed that the Expert Group on Clean Fossil Energy address the follow-up issues from the seminar and include these issues in the development of their oil and gas program in cooperation with other Expert Groups and APERC.

19: Document Access

Members agreed that the Summary Record and other documents from this meeting not classified as "Restricted-Draft" could be released to the public immediately after the meeting.

20: Summary Record of Eighteenth Meeting

The Summary Record of the meeting was agreed.

Concluding Remarks

Members recorded their appreciation for the hospitality they had enjoyed in New Zealand, for the work of New Zealand, the co-Chairs and the EWG Secretariat in making the meeting such a success.

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