Title: JAPAN-US JOINT STUDY REPORT ON ENERGY SECURITY, CLIMATE CHANGE, INTERACTIONS BETWEEN INTERNATIONAL ENERGY MARKETS AND FINANCIAL MARKETS (EXECUTIVE SUMMARY)
Abstract: 1. Purpose and Significance of the Study International affairs surrounding energy are entering a new era. A number of new issues, such as record-high energy prices, climate change issues, and increasing interactions between financial markets and energy markets, have emerged as challenges and risks to the world. These interrelated risks need to be addressed by developing consistent and comprehensive solutions based on an accurate understanding of international trends. With this awareness, the Institute of Energy Economics, Japan (IEEJ) conducted a joint study with the James A. Baker III Institute for Public Policy of Rice University (BIPP). We reviewed the current issues concerning energy security, climate change, and interactions between financial markets and energy markets, and identified ways to address the emerging challenges and risks in these three areas. Energy is vital for human life and the smooth functioning of society and the economy. International affairs surrounding energy are drastically changing, and new risks and threats are emerging. These include record-high energy prices, growing global demand for energy (particularly in China) and tightening market conditions, intensifying competition for energy resources, geopolitical risks, reemergence of resource nationalism, market power of energy suppliers, and concerns of supply constraints caused by these factors. The strategic importance of energy is increasing, and therefore energy issues greatly affect international affairs and the world economy. Furthermore, climate change and deepening interactions between financial markets and energy markets have emerged as new challenges and risks to energy security. Our first countermeasure must be to achieve the best energy-mix for Japan. This requires raising the share of nuclear energy, which also reduces greenhouse gas emissions, promoting renewable energy, and using Japan's strengths in R&D. Energy conservation is also necessary, for although Japan now leads the world in the energy efficiency of its economy, it must raise that efficiency further to build a more resilient energy demand structure. It is also important to deepen diplomatic ties with oil- and gas-producing countries because oil and gas will continue to be major energy sources for Japan. We must therefore understand what these countries want from Japan, strengthen diplomacy towards these countries, and coordinate and solidify government and private-sector efforts. To reduce the opacity of market transactions, we should strive to integrate energy producers such as Russia and emerging countries such as China with
Publication Year: 2008
Publication Date: 2008-01-01
Language: en
Type: article
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