Energy Perspectives for Eurasia and the Kyoto Protocol

In collaboration with the World Energy Council (WEC), IIASA conducted a five-year study of long-term global and regional energy perspectives. Using IIASA's integrated modeling framework, the study explores a broad range of energy developments and their consequences, such as the likely financing needs and environmental impacts. This paper summarizes the main features and findings of the study focusing on implications of global perspectives for Euroasian regions. One of the important results of the study is the need for further energy integration in Eurasia to achieve both goals of supplying the energy services needed for economic development and reducing the adverse impacts on the environment at all scales. Clean fossil fuels would continue to be an important sources of these energy services and would lead to further decarbonization of energy. This, however, requires the emergence of large interconnected energy grids in Eurasia and implies a drastic energy geo-political shift. Such developments could dramatically improve the match between demand and supply for hydrocarbons (oil and gas) and in the long-term promote even further integration of Europe and Asia. e.g., through gas and electricity networks. Such ambitious Eurasian energy grids would bring large economic benefits to gas (and energy) exporting regions and would enable healthier economic development throughout the region by the provision of cleaner and more flexible energy forms to most of the citizens. Financing would be a challenging problem but only probably during the initial phases of the long-term construction of Eurasian energy grids. After a few successes private financing is likely to be attracted because of the high potential economic benefits. A possible, but very speculative initial financing scheme is proposed in the paper involving global carbon dioxide trading permits. Should the Kyoto emissions reduction agreement be implemented, Russian federation is likely to acquire a large "emission bubble" by 2010. Tentative estimates made at IIASA indicate that the "bubble" might be as large as 300 MtC annually for the territory of the former Soviet Union (mostly Russia and Ukraine) during the first two decades of the next century. (For a more detailed discussion of specific numbers for Russia and Ukraine, see paper by Victor, Nakicenovic and Victor, also presented at the Snowmass Workshop.) The paper calls for further analysis of new Eurasian energy grids and possible financing mechanism that would lead to lower carbon intensities in Asia as well as lower adverse environmental impacts at all scales.