APEC ENERGY WORKING GROUP CONSOLIDATED REPORT ON IMPLEMENTATION OF by armedman2

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									                                                                      Agenda Item 6.1/Attachment B

      APEC ENERGY WORKING GROUP CONSOLIDATED REPORT
                 TO APEC ECONOMIC LEADERS
            ON IMPLEMENTATION OF EWG INITIATIVES
                        November 2000
Background

At their fourth meeting, in San Diego, USA on 12 May 2000, APEC Energy Ministers agreed to
an Implementation Strategy for the various initiatives agreed by APEC Energy Ministers since
1996. The Implementation Strategy includes a system of voluntary, annual self reports on
implementation progress by member economies for forwarding to APEC Economic Leaders.

APEC Energy Ministers initiatives embody a number of primary principles to guide and assist
the development of APEC‟s individual and collectives activities in the energy sector. The
following report uses these principles as headings to consolidate the individual reports of
member economies that are attached as annexes in accordance with APEC Energy Ministers
instructions.

Primary Principle 1: A common understanding on regional energy issues and future
energy supply and demand trends.

Hong Kong, China continues to support regular exchanges of experience on energy policies with
other member economies.

Japan continues to host and promote the Asia Pacific Energy Research Centre (APERC) with its
extensive research program including the APEC Energy Demand and Supply Outlook. It also
recently hosted the APEC Oil Supply and Demand Security Seminar that discussed the necessity
for emergency preparedness in the region.

The United States continues to produce and disseminate its Annual Energy Outlook and
International Energy Outlook that focus on energy forecasts through to 2020. It also actively
participates in APERC activities and provides research staff to APERC.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles, strengthening policy dialogue in issues
      such as energy security, cooperation with APERC, including undertaking the APERC
      Energy Demand and Supply Outlook, and information sharing on oil markets.

Primary Principle 2: Complementary regulatory, institutional and procedural regimes
with no impediments to trade and investment in energy infrastructure, products and
services.

Hong Kong, China has no impediments to trade and investment in energy infrastructure,
products and services. It has developed energy efficiency labelling schemes based on
international standards. Hong Kong, China continues to work on mutual recognition of
technical testing methods and participates in the APEC MRA on Conformity Assessment of
Electrical and Electronic Equipment.

Mexico has a comprehensive body of law that governs its energy sector. This includes an
Energy Regulatory Commission for the promotion and efficient development of activities such
as supply and sale of electricity, generation, import and export of electricity as well as first hand
sale of natural gas and LPG. It has several Official Standards for Energy Efficiency and is
developing activities to establish system verification and laboratory accreditation units.


                                                                                    EWG20/6.1 Att B
Thailand has amended regulations on foreign business operations to be open and transparent and
has approved minimum energy performance standards for various electrical appliances.

The United States has produced a report examining the challenges it faces this century,
particularly for securing capital to improve and upgrade energy infrastructure, and how incentive
structures and statutory frameworks should evolved to meeting emerging energy needs.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles, and a general policy framework for
      cooperation on energy standards.

Primary Principle 3: Open, efficient and competitive markets for energy services and
products, both within and among economies.

Australia is continuing with its national electricity market reforms, including establishing a
market based mechanism to provide ancillary services such as reliability and quality of supply,
and the progressive introduction of retail contestability for small consumers.

Hong Kong, China has an open energy market and there are no trade or regulatory impediments
to energy-related investment. It is examining introduction of competition in its electricity
market and the possibility of a common carrier arrangement for its reticulated gas.

Japan has abolished legislation that previously restricted importation of refined petroleum
products.

Mexico has undertaken measures to explicitly permit the private sector to construct, operate and
own systems of electric generation and natural gas transportation, storage and distribution. It is
currently considering a proposal for extensive reform of the electricity sector. Through these
reforms it seeks to encourage greater investment and reliable, high quality and competitively
priced electricity.

New Zealand has embarked on a comprehensive electricity reform process involving creation of
a fully competitive generation sector, open access to the transmission grid and full retail
competition. It has also continued gas industry reforms including introduction of information
disclosure regulations, a self regulatory gas pipeline code and a reconciliation code.

Thailand has approved in-principle the introduction of third party access to its natural gas
pipeline system. When the TPA code is completely introduced it will ensure the provision of
non-discriminatory services, with clear and accountable rules and criteria. It has also approved
private participation in the gas pipeline system both domestically and cross-border. It will also
establish a competitive wholesale power pool by 2003.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles, the IPP best practice principles, and
      the Natural Gas Initiative.

Primary Principle 4: Energy pricing principles and practices of member economies which:
(a) reflect the economic cost of supplying and using energy across the full cycle of energy
assets and infrastructure: and (b) have regard to environmental impacts.

Hong Kong, China energy supply industries have no government subsidies and prices are
determined by the private sector taking into account both operating and accounting costs. All
projects are subject to environmental legislation and an environmental impact assessment.


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Thailand has approved in-principle a LPG deregulation plan to reflect world market price by the
end of 2000. LPG is the only petroleum product currently under price regulation in Thailand.
It has also eliminated barriers to entry in the LPG market. Draft legislation, to come into effect
by mid 2002, seeks to ensure tariffs shall be fair with no discrimination and reflects actual costs
of efficient business operations. Tariffs calculations must be transparent and derivation must be
explicit.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles, the IPP best practice principles,
      Environmentally Sound Energy Infrastructure and the Natural Gas Initiative.

Primary Principle 5: Non-discriminatory, transparent and predictable policy, regulatory,
environmental and administrative regimes in the energy sectors of member economies.

Australia has recently announced Government decisions in relation to Australia‟s approach to
greenhouse policy that provide greater certainty for business planning and investment. Key
elements included the a commitment to the pursuit of cost effective measures in order to
minimise the burden for business and the community, and an announcement that Australia will
only implement a mandatory domestic emissions trading scheme if the Kyoto Protocol is ratified
by Australia, it has entered into force and there is an established international trading regime.

Hong Kong, China seeks to ensure its energy needs are met reliably, safely and at reasonable
prices with environmental impact assessment requirements for major projects set out in
legislation.

Japan has been examining reform in is electricity, gas and petroleum sectors including
liberalisation of retail supply to extra high voltage customers and expansion of retail gas supply.
Japan will also abolish regulations concerning supply and demand adjustments in the oil refining
industry during non-crisis periods.

Mexico has an Energy Regulatory Commission that has technical and operational autonomy. It
objectives include promotion and efficient development of supply and sale of electricity,
including transmission and delivery and first hand sale of natural gas and LPG.

Thailand is expected to implement comprehensive legislation from mid-2002 to ensure increased
competition in the energy sector while ensuring fairness and transparency and preventing the
abuse of market power. Other objectives include promotion of efficient use of energy and
natural resources, preventing adverse impact on the environment and the promotion of renewable
energy.

The United States has reiterated its commitment to reliance on competitive markets as the “first
principle” of energy policy. It electricity market is gradually becoming more open and
competitive with rapid increases in non-utility power generation. Its gas market is extremely
open and competitive, with thousands of independent producers, and open, non-discriminatory
access to gas transport. Retail competition is also increasing rapidly.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles, the IPP best practice principles,
      Environmentally Sound Energy Infrastructure and the Natural Gas Initiative.

Primary Principle 6: Cooperation in the development of domestic and intra-regional
energy infrastructure and energy trading networks.




                                                 3                                EWG20/6.1 Att B
Hong Kong, China has cooperated with China on nuclear power production and power storage
power station projects. Strong interconnections exist between the two economies.

Japan has supported other member economies in building and maintaining energy infrastructure
through overseas development assistance loans and technical cooperation.

The United States, Canada and Mexico have established the North America Free Trade
Agreement for the removal of tariff and all other trade barriers in the energy sector between the
three economies.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles and broad technology cooperation
      programs in energy efficiency, renewable energy technology and clean fossil energy.

Primary Principle 7: Sustainable development through the harmonisation of economic
development, energy security and the environmental impacts of energy production and use.

Australia has committed to spend some $1 billion over five years on measures to address climate
change, whilst advancing economic objectives. These include research and commercialisation
support for renewable energy generation, a broad range of measures to improve power
generation and end use energy efficiency, and support for the development of alternative fuels.

Hong Kong, China has banned the use of oil with a high sulphur content and leaded petrol. It
has encouraged flue gas desulphurisation and low nitrogen dioxide burners in power stations. It
promotes demand side managements programs and is encouraging electric and gas powered
vehicles.

Japan has continued to develop its Long Term Energy Supply/Demand Outlook, which aims to
achieve economic development, energy security and environmental protection simultaneously.

The United States continues to place a high value on environmental stewardship, including
development of environmentally friendly technologies and the support of science based
regulatory policies to minimise costs to the energy industry and avoid supply disruptions. It
continues to address global climate change through research and development and a USD 4.1
billion climate change package for 2001. It has also created a National Energy Technology
Laboratory with the primary mission of improving environmental performance of fossil fuels
through technology advances.

      The individual actions above are in accordance with APEC Energy Ministers initiatives of
      the Fourteen non-binding energy policy principles and broad technology cooperation
      programs in energy efficiency, renewable energy technology and clean fossil energy.

Primary Principle 8: Energy supply diversification (including renewable energy) and
improved energy efficiency.

Australia has recently released a Renewable Energy Action Agenda to help industry focus its
efforts on providing clean, reliable low cost solutions that meet customer needs for renewable
energy. Australia has also set a mandatory target to increase the contribution of renewable
energy sources in Australia‟s electricity mix by 9,500 GWh in 2010. The mandatory renewable
energy target will be implemented through Commonwealth legislation and will apply nationally.

Hong Kong, China has a fuel mix policy for electricity generation and has established a study to
look at local application of clean and renewable energy. It has established an Energy Efficiency
Office to pursue energy efficiency initiatives.

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Japan has developed an Oil-Alternative Energy Supply Target of equivalent o 325 million kl of
oil by 2010, and has introduced measures to provide financial support for businesses that use
new energy. Legislation also exists which requires efficient use of energy in factories and the
building sector and energy efficiency standards for appliances and automobiles. Under the
APEC Energy Pledge and Review initiative Japan has committed to the goal of realising energy
saving of 56 million kl by 2010.

Mexico is undertaking various energy conservation and efficiency strategies on both demand and
supply sides, including daylight saving time, energy efficiency standards , improving energy
efficiency in government owned buildings and cogeneration and renewable energy programs.

New Zealand has passed legislation to promote energy efficiency and renewable energy and will
produce a national energy efficiency and conservation strategy by 1 October 2001. Recent
regulation under the Building Code also require insulation in cooler climates, maximum heat loss
levels for hot water systems and limits on building heats loss and lighting levels in commercial
buildings.

The United States has addressed this principle through promotion of initiatives such as energy
efficient vehicles, an Advanced Turbine System Program to develop and test utility scale
turbines to convert gas and other fuels to electric power, promoting appliance codes and
standards, developing alternative fuel technologies.

     The individual actions above are in accordance with APEC Energy Ministers initiatives of
     the Fourteen non-binding energy policy principles, cooperation on energy standards,
     renewable energy development and the pledge and review energy efficiency initiative.




                                                5                               EWG20/6.1 Att B
ANNEX: Australia

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

Principle 3: Open, efficient and competitive markets for energy services and products, both within and among
economies.

National Electricity Market Reform

The Australian National Electricity Market (NEM) is nearing its second full year of operation. The NEM has entered
an exciting stage of its maturation with a range of projects in progress that are expected to fundamentally improve
the market's operation in 2001. Key projects that are expected to be implemented in 2001 include:

   Establishing a market-based mechanism to provide ancillary services (services that ensure the reliability and
    quality of the electricity supply);
   The progressive introduction of retail contestability to consumers with a consumption below 160MWh;
   Implementation of the recommendations from the recent review of the pricing of the transmission and
    distribution services, which include requiring generators to pay for a share of the costs of new network
    investment and embedded generators to receive the benefits of genuine cost savings as a result of their
    investment decisions; and
   A review of the regional boundaries in the market and a closer integration of energy market and network
    services.

Of significance to international investors, private investment in the NEM has also been boosted in the period since
the last APEC EWG meeting with the leasing program of the South Australian electricity assets almost completed.
To date the leasing program has raised over $4 billion. Furthermore it is expected that jurisdictions will complete
their reviews regarding the economic regulations applying to their network infrastructure in 2001.

   The Australian NEM reforms are consistent with the EWG's IPP best practice principles and the fourteen
    non-binding energy policy principles.

Principle 5: Non-discriminatory, transparent and predictable policy, regulatory, environmental and
administrative regimes in the energy sectors of member economies

Greenhouse Policy

In August 2000 the Minister for Industry, Science and Resources, announced Government decisions in relation to
Australia‟s approach to greenhouse policy that provide a greater degree of certainty for business planning and
investment.

Key elements of the decision providing greater certainty for industry were that the Government:

   remains fully committed to honouring Australia‟s international greenhouse obligations;
   recognises the imperative of maintaining the competitiveness of Australian industry to secure strong national
    economic growth and job creation;
   is committed to the pursuit of cost effective measures in order to minimise the burden for business and the
    community so that Australian industry can remain competitive - and will avoid greenhouse policies and
    measures that unduly limit access to the most cost effective greenhouse mitigation options;

   will only implement a mandatory domestic emissions trading scheme if the Kyoto Protocol is ratified by
    Australia, the Protocol has entered into force, and there is an established international trading regime;
   will take great care to avoid greenhouse policies and measures that disadvantage those companies which have
    moved early in undertaking emissions abatement actions, or that discriminate against new industry entrants; and
   will continue to negotiate at the international level for the implementation of the so called Kyoto “flexibility
    mechanisms” (international emissions trading, the Clean Development Mechanism and Joint Implementation)
    so that they operate in an efficient and transparent manner and promote a least cost outcome for industry and the
    economy as a whole - and move to resolve the outstanding methodological issues relating to greenhouse sinks
    as soon as possible.

The Government made these key decisions as part of its deliberations on issues arising from the Liquefied Natural
Gas (LNG) Industry Action Agenda, recognising that many of the greenhouse issues identified were important not


                                                          6                                       EWG20/6.1 Att B
only to the LNG industry but Australian industry more generally. While considerably adding to certainty, the
decisions clearly do not exempt the LNG industry, or other industries, from taking greenhouse gas emissions
mitigation action.

   Australia's greenhouse policy is consistent with the EWG's fourteen non-binding energy policy principles.

Principle 7: Sustainable development through the harmonisation of economic development, energy security and
the environmental impacts of energy production and use.

In the 1997 statement, “Safeguarding the Future: Australia‟s Response to Climate Change”, the Prime Minister
announced a $180 million package of measures to address climate change, whilst maintaining market
competitiveness. This package contains support for research and development and programs aimed at promoting
and enhancing renewable energy sources and energy efficiency in generation and end use.

In addition, the Prime Minister announced in May 1999 a commitment to spend a further $800 million on additional
greenhouse related measures under the “Measures for a Better Environment” package. This package includes $400
million for a Greenhouse Gas Abatement Program commencing in 2000, which aims to deliver cost effective and
large scale abatement across all sectors of the economy, particularly in the first commitment period under the Kyoto
Protocol. The remaining $400 million is to be spent on initiatives including renewable energy generation,
alternative fuels use and energy efficiency.

   Australia's greenhouse gas abatement program is consistent with the EWG's fourteen non-binding energy
    policy principles.


Principle 8: Energy supply diversification (including renewable energy) and improved energy efficiency

Renewable Energy Action Agenda

On 20 June 2000, the Commonwealth Government, in partnership with industry released a strategy known as the
Renewable Energy Action Agenda to help industry focus its efforts on providing clean, reliable and low cost
solutions that meet customer needs.

The objective of the Renewable Energy Action Agenda was to develop a policy framework underpinning growth in
a commercially viable and internationally competitive Australian renewable energy industry with annual sales of
$4 billion by the year 2010. At the time of writing the associated legislation to give effect to the Government‟s
mandatory renewables target is going through Parliamentary processes.

The Renewable Energy Action Agenda sets an ambitious target for growth of the renewable energy industry and
identifies strategies and actions to achieve it. Industry has identified five overarching strategies having strong
linkages between them, to advance its vision. These are:

   Market Development;
   Building Community Commitment;
   Building Industry Capability;
   Setting the Policy Framework; and
   Encouraging a Culture of Innovation

Key initiatives that the Industry has agreed to pursue to significantly increase it share of both the domestic and
export markets are:

   To take action to leverage the effect of the mandated renewable electricity requirement into business
    opportunities for Australian companies;
   To implement an integrated export strategy for the renewable energy industry;
   To provide comprehensive, comparative and independent information to comsumers on renewable energy
    products; and
   To better promote "Green Energy"

Key initiatives that Government and Industry have agreed to pursue are:

   To establish a Working Group to promote the development of the renewable transport fuel industry;
   To encourage energy retailers to include environmental information at relevant purchasing points; and
   To encourage the spread of net metering.



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A key driver for growth of the renewable energy industry will be the level of community awareness and
commitment to the environment and the community's acceptance of renewable energy as a solution to environmental
concerns. To achieve this goal, Government and Industry have agreed:

   To provide more accurate information on the economic, environmental and other characteristics and benefits of
    the renewable energy industry; and
   To implement a community awareness and education strategy aimed at increasing community commitment to
    renewable energy.

Building Industry Capability is another key focus for the Action Agenda. To achieve this goal:

   Industry has agreed to improve the reliability and quality of renewable energy products and services;
   Government and Industry have agreed to work together to address skill shortages and implement a strategy to
    improve access to investment capital and consumer finance to support industry growth; and
   Industry has agreed to work with State and Local Governments and the Community to develop Best Practice
    Guidelines.

Establishing a policy framework to underpin the sustainable development of the renewable energy industry is vital
in the context of this Action Agenda. To this end, the Government has agreed to:

   Continue to work constructively with the international community to resolve the outstanding issues essential to
    the implementation of the Kyoto Protocol;
   Consider continuing its support for the International Greenhouse Partnership Program;
   Work cooperatively with State governments and Regulatory Authorities to accelerate electricity market reform;
   Work with key industry bodies to adopt a best practice approach to disseminating information and facilitating
    renewable energy industry access to existing Government support programs; and
   Support the use of renewable energy in Commonwealth agencies.

Furthermore, Industry has requested the Government to:

   Signal as early as possible whether it will introduce a domestic emissions trading scheme including the broad
    operating principles, timing and the possibility for early action measures in the lead up to implementation; and
   Develop a comprehensive energy policy framework that addresses the full range of national economic, social
    and environment facets of energy supply and use.

In order to encourage innovation in the renewable energy industry, the Government and Industry have agreed

   To encourage a culture of market-driven innovation through:
    - a strong commitment to cost competitive delivery of renewable energy solutions;
    - increasing the amount of market pull research and development; and
    - encouraging greater cooperation and collaboration between industry and the research community.

The Australian Government is now working with industry to implement those actions required to place the industry
on a sustainable long-term growth path.

   Australia's renewable energy action agenda is consistent with the EWG's fourteen non-binding energy policy
    principles.

Mandatory Renewable Energy Target

The Government‟s renewable energy target seeks to increase the contribution of renewable energy sources in
Australia‟s electricity mix by 9,500 GWh in 2010. This is a key policy commitment of the government and was
announced in the Prime Minister's Statement of November 1997, 'Safeguarding the Future: Australia's Response to
Climate Change'.

Specific objectives of the renewables target are:

   to accelerate the uptake of energy from renewable or specified waste product sources in grid-based applications,
    so as to reduce greenhouse gas emissions;
   as part of the broader strategic package to stimulate renewables, provide an on-going base for the development
    of commercially competitive renewable energy; and,
   to contribute to the development of internationally competitive industries which could participate effectively in
    the burgeoning Asian energy market.



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The mandatory renewable energy target will be implemented through Commonwealth legislation and will apply
nationally, with all electricity retailers and wholesale electricity buyers on liable grids (over 100 MW installed
capacity) in all States and Territories contributing proportionately to the achievement of the measure.

The target will be phased in by specifying a number of interim targets, over the period 2001-2010, to ensure
investment does not occur in the final years of the scheme and to allow industry to gradually adjust to the target.
To ensure that the measure is implemented in a cost-effective manner, and to provide investment certainty up to
2010, all retailers and large buyers will be required to collectively maintain the 9,500 GWh of new renewables
between 2010 and 2020.

A regulator, independent from liable parties and accredited renewable energy generators, will be established to
ensure that the requirements of the measure are met, including enforcing the legislation through imposing penalties
and conducting audits. The Government has agreed that penalties for non-compliance should initially be set at
$40/MWh. Penalties will be redeemable if the shortfall is made up within the next three years.

Liable parties would need to annually surrender renewable energy certificates to the regulator equal to their
requirement. Renewable energy certificates will be created on the basis of accredited renewable energy generation
arising from the operation of eligible renewable energy generation assets that deliver renewable electricity to a grid,
end point user or directly to a retailer or wholesale buyer. Those eligible renewable energy generation assets
commencing commercial operation on or after 1 January 1997 will be able to earn certificates for all electricity
provided to the appropriate measurement point, following accreditation by the legislation.

A review to assess the efficiency and effectiveness of the implementation option will occur three years after the
introduction of the measure and be conducted by an organisation independent of the regulator.




                                                           9                                      EWG20/6.1 Att B
ANNEX: Hong Kong, China

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)


Principle 1: A common understanding on regional energy issues and future energy supply and demand trends

    Hong Kong, China has been participating in regional cooperation working for a common understanding on
     regional energy issues and future energy supply and demand trends

    Hong Kong, China supports regular exchange of experience on energy policies with other member economies.
.
     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 2: Complementary regulatory, institutional and procedural regimes with no impediments to trade and
investment in energy infrastructure, products and services

    Hong Kong, China is a free and open market. There are no impediments to trade and investment in energy
     infrastructure, products and services in Hong Kong, China.

    Hong Kong, China has developed energy efficiency labelling schemes based on international standards.

    Hong Kong, China has been working to facilitate mutual recognition of technical testing methods and results
     with other economies.

    Hong Kong, China has been participating in Part I of the APEC Mutual Recognition Agreement on
     Conformity Assessment of Electrical and Electronic Equipment since February 2000.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 3: Open, efficient and competitive markets for energy services and products both within and among
economies

    Hong Kong, China has an open energy market. Private-owned companies supply energy services and products
     efficiently without any franchised from the Government. There are no trade or regulatory impediments to
     energy-related investment.

    Hong Kong, China is examining feasibility of introducing competition in the electricity market and will keep
     under review whether it is possible and desirable to introduce natural gas and a common carrier arrangement
     for reticulated gas.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 4: Energy pricing principles and practices of member economies which (a) reflect the economic cost of
supplying and using energy across the full cycle of energy assets and infrastructure; and (b) have regard to
environmental impacts

    Hong Kong, China has investor-owned energy supply industries which do not operate on a franchise basis.
     There are no Government subsidies and energy prices are determined by the private sector taking into account
     both the operating and depreciation costs.

    Energy related projects and operations are subject to environmental legislation and all major energy projects
     are required by law to go through environmental impact assessment before construction.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 5: Non-discriminatory, transparent and predictable policy, regulatory, environmental and
administrative regimes in the energy sectors of member economies

                                                        10                                     EWG20/6.1 Att B
    Hong Kong, China‟s energy policy seeks to ensure that the energy needs of the community for its economic
     and social development are met reliably, efficiently, safely and at reasonable prices; to minimise the
     environmental impact of energy production; and to promote the efficient use and conservation of energy.

    Hong Kong, China provides regular submissions on regulatory arrangements for the energy sector to the
     APEC Energy Regulators Forum.

    Requirements for major projects of the energy sector to conduct environmental impact assessment before
     construction are set out in laws.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 6: Cooperation in the development of domestic and intra-regional energy infrastructure and energy
trading networks

    Hong Kong, China has cooperated with China in electricity production in nuclear power station and power
     storage power station projects. Strong interconnection between the two places has been constructed.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 7: Sustainable development through the harmonisation of economic development, energy security and
the environmental impacts of energy production and use

    Hong Kong, China has taken measures to minimise environmental impact including the ban on use of oil with
     high sulphur content in 1990, the ban on use of leaded petrol in 1998, the use of flue gas desulphurisation and
     low nitrogen dioxide burners in power stations to reduce emissions, the use of low-sulphur coal and natural
     gas for electricity generation and the introduction of ultra low sulphur content diesel for motor transport.

    Hong Kong, China has pursued the promotion of Demand Side Management Programmes in consultation with
     the power companies.

    Hong Kong, China has been working continuously with local electricity and oil supply companies to examine
     the feasibility of introducing electric and gas-powered vehicles. All new taxis are required to use LPG from
     the end of 2000 and all diesel taxis will be phase out by end 2005.

     - This is consistent with the EWG’s 14 non-binding energy policy


Principle 8: Energy supply diversification (including renewable energy) and improved energy efficiency

    Hong Kong, China has been adopting a mix of coal, gas and oil for electricity generation.

    Hong Kong, China has established a committee for commissioning a study in local application of clean and
     renewable energy.

    Hong Kong, China has established an Energy Efficiency Office under the Electrical and Mechanical Services
     Department to pursue energy efficiency initiatives, as well as other energy-related issues, including building
     energy codes, energy audits, energy management, energy efficiency labelling for domestic appliances. In
     addition, demand side management has been pursued with the power companies to encourage efficient use of
     electricity.

     - This is consistent with the EWG’s 14 non-binding energy policy




                                                        11                                       EWG20/6.1 Att B
ANNEX: Japan

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

Principle 1: A common understanding on regional energy issues and future energy supply and demand trends

    Japan has promoted the APERC in cooperation with APEC economies to make APEC Energy Demand and
     Supply Outlook. The APERC is tackling with the revision of the Outlook reflecting the recovery from the
     Asian Economic Crisis and future energy demand trends. The revised Outlook will be completed by the
     spring of 2002.
    Japan held the APEC Oil Supply and Demand Security Seminar in Tokyo, November 1999 to share the view of
     future oil supply and demand outlook and discuss the necessity for emergency preparedness in APEC region.

    -    These operations are consistent with the EWG’s 14 non-binding energy policy principles.


Principle 2: Complementary regulatory, institutional and procedural regimes with no impediments to trade and
investment in energy infrastructure, products and services

No specific issues.


Principle 3: Open, efficient and competitive markets for energy services and products, both within and among
economies

    Japan abolished the Provisional Measures Law on the Importation of Specific Petroleum Refined Products on
     March 1996 to liberalize importation of petroleum refined products.

    -    This operation is consistent with the EWG’s 14 non-binding energy policy principles.


Principle 4: Energy pricing principles and practices of member economies which :(a) reflect the economic cost of
supplying and using energy across the full cycle of energy assets and infrastructure :and (b) have regard to
environmental impacts

No specific issues.


Principle 5: Non-discriminatory, transparent and predictable policy, regulatory, environmental and
administrative regimes in the energy sectors of member economies

    Japan has been examining regulatory reform in the energy sectors such as electricity, gas and petroleum
     described below;
    Japan has been attempting to introduce further competition into the electricity market and has been
     re-examining the electricity rate system and deregulation of requirements for establishing rates in the
     unregulated sector. The revised Electricity Utility Industry Law and relevant rules, which include liberalization
     of retail supply to extra-high voltage customers and introduction of a new rate system, were entered into force
     in March 2000.
    Japan has been attempting to introduce further competition into the gas market and has been re-examining the
     gas rate system. The revised Gas Utility Industry Law and relevant rules, which include expansion of the scope
     of liberalization of retail supply and re-examination of regulatory procedures for reducing the gas rate, were
     entered into force in November 1999.
    Japan will abolish the regulations concerning supply and demand adjustments in the oil refining industry
     during non-crisis period. At the same time, in order to ensure the stability of oil supply, Japan reinforces
     measures such as oil stockpiling for emergency preparedness and support for purchasing assets in the field of
     upstream sector. To implement these policies, the necessary amendment of the laws and other organizational
     changes will be made.

    -    These operations are consistent with the EWG’s 14 non-binding energy policy principles.


Principle 6: Cooperation in the development of domestic and intra-regional energy infrastructure and energy
trading networks

                                                         12                                      EWG20/6.1 Att B
    Japan has supported with APEC economies in building and maintaining energy infrastructure by ODA(Yen)
     loan and technical cooperation.

    -   This cooperation is consistent with the EWG’s 14 non-binding energy policy principles.


Principle 7: Sustainable development through the harmonization of economic development, energy security and
the environmental impacts of energy production and use

    Japan is now under deliberation of the revision of Long-Term Energy Supply/Demand Outlook reflecting
     recent trend of low GDP growth rate, the delay of the introduction of new nuclear power stations and recent
     high growth rate of energy demand in private and transportation sectors. The Long-Term Energy
     Supply/Demand Outlook aims to achieve economic development, energy security and the environmental
     protection simultaneously. New Outlook is expected to be published by the next spring or summer.

    -   This operation is consistent with the EWG’s 14 non-binding energy policy principles.


Principle 8: Energy supply diversification (including renewable energy) and improved energy efficiency

    The latest Oil-Alternative Energy Supply Target was developed (Cabinet Decision, Sept.1998) with the
     approval of the National Energy Council of Ministers, after the issuance of the revision of Long-Term Energy
     Supply/Demand Outlook compiled in June1998. The target of the total amount of the oil-alternative energy
     supply (coal, nuclear, natural gas, new energy , etc.) in FY2010 will be equivalent to 325 million kl oil. The
     share of alternative energy among Total Primary Energy Supply is expected to rise to 53% in FY2010, up 8%
     from FY1996. (This Outlook is now under revision.)
    The Law Concerning Promotion of the Use of New Energy was enacted to accelerate the introduction of new
     energy for achieving the FY2000 and FY2010 targets and prescribes for the following:
    - Formulation and announcement of basic policies on new energy use.
    - Financial support measures for business which use new energy.
    The two oil crisis in the „70s heightened Japanese awareness of the importance of energy conservation. There
     are two laws encouraging energy conservation.
    The Law Concerning the Rational Use of Energy is to ensure the efficient utilization of energy resources in
     such ways as appropriate for the domestic and international socio-economical environment. The law contains
     judgement criteria for factories and the building sector, and energy efficiency standards for appliances and
     automobiles.
    The Law on Temporary Measures to Promote Business Activities for the Rational Use of Energy and the
     Utilization of Recycled Resources was enacted in 1993 to strengthen incentives for energy conservation
     investments in factories and buildings.
    Regard to the “Voluntary pledge and review program, Japan pledged the goal of realizing an energy saving of
     56million kl by FY2010 at the EWG18 in November, 1999.

    -   These operations are consistent with EWG’s 14 non-binding energy policy principles, the voluntary pledge
        and review program and renewable energy development initiative.




                                                        13                                     EWG20/6.1 Att B
ANNEX: Mexico

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

Principle 1:               A common understanding on regional energy issues and future energy supply and demand
                           trends.


Principle 2:               Complementary regulatory, institutional and procedural regimes with no
                           impediments to trade and investment in energy infrastructure, products and
                           services.

 Mexico has an energy legal framework, which is constituted by an important group of laws, rules and other
  dispositions that, first, will help to determine the competence field and organizational functions of the Secretariat
  of Energy and the remaining entities of the sector and; second, will regulate the activities of those in the private
  sector that take part in the energy sector. 1

    Mexico has also an Energy Regulatory Commission Act, which establishes the purposes and jurisdiction of the
    Mexican regulatory body (CRE, for its initials in Spanish). The CRE, as the administrative agency of the
    Energy Ministry, shall have technical and operational autonomy pursuant to this Law.

    Among the main objectives of the Commission is the promotion and efficient development of activities, such as
    the supply and sale of electricity to users of such public service; generation, export and import of electricity by
    individuals; transmission, transformation, and delivery of electricity between entities that provide electric public
    service, and between those entities and the holders of permits for generation, export and import of electricity; as
    well as first hand sale of natural gas and liquid petroleum gas.

 Mexico has implemented several Mexican Official Standards for Energy Efficiency (NOMs). Currently 18
  NOMs are in force, 14 related to electricity consumption and 4 to thermal energy consumption. During 2000
  and in conformity with the 2000 Standarization Program, three new NOMs were updated and three others
  started their approval process. These three NOMs refer to energy efficiency for non-residential buildings,
  commercial refrigeration and room air conditioners.

    Mexico is also developing activities to establish system verification and laboratory accreditation units.


Principle 3:               Open, efficient and competitive markets for energy services and products, both
                           within and among economies.

 Mexico has performed important efforts in order to foster private investment in those activities non-reserved to
  the State 2 . In such way, Mexico has identified, analyzed and encouraged investment opportunities in

1
  Summarized list of legal dispositions relevant to the energy sector:
General faculties are established in the Political Constitution of Mexico.                                  Sectoral
faculties are indicated in the following legal documents, mainly:
Federal Law of the State-Owned Entities
Federal Register of Business Procedure (regulatory improvement)
Electric Power Laws and Regulations
Ruling of the National Commission for Energy Conservation
Nuclear Energy Laws and Regulations
Hydrocarbons and Oil Laws and Regulations
Natural Gas and LP Gas Laws and Regulations
Mexican Official Rules Dossier issued in the Energy Sector


2
 The legal reforms explicitly permit the private sector to construct, operate, and own systems of electric
generation and natural gas transportation, storage, and distribution.


                                                           14                                      EWG20/6.1 Att B
   sub-sectors such as gas, electricity and petrochemicals, in order to properly cover those markets and satisfy the
   increasing internal demand.

 Considering that Mexico's society and economy needs are growing rapidly, the electricity sector needs to
  guarantee the investments required for its continuous development. In order to continue to grow, raise the
  standard of living of all Mexicans, and maintain our international competitiveness, President Ernesto Zedillo,
  presented a proposal to the Congress in order to reform the Mexican electricity industry. Such proposal
  considers among other objectives: to continue to supply reliable, high quality and competitively priced electricity
  in order to drive greater economic growth; to attract more investment from all sectors in order to strengthen the
  development of our electricity industry; and to reaffirm the role of the State in an electricity industry
  strengthened with greater participation and competition. Mexico's legislative bodies will retake the discussion
  on the electricity reform initiative in the short term.

Principle 4:              Energy pricing principles and practices of member economies which (a) reflect the
                          economic cost of supplying and using energy across the full cycle of energy assets and
                          infrastructure; and b) have regard to environmental impacts.


Principle 5:              Non-discriminatory, transparent and predictable policy, regulatory, environmental
                          and administrative regimes in the energy sectors of member economies.

    Mexico has an Energy Regulatory Commission (CRE, for its initials in Spanish), which is the administrative
     agency of the Energy Ministry, and has technical and operational autonomy.

    Among the main objectives of the Commission is the promotion and efficient development of activities, such
     as the supply and sale of electricity to users of such public service; generation, export and import of
     electricity by individuals; transmission, transformation, and delivery of electricity between entities that
     provide electric public service, and between those entities and the holders of permits for generation, export
     and import of electricity; as well as first hand sale of natural gas and liquid petroleum gas.


Principle 6:              Cooperation in the development of domestic and intra-regional energy infrastructure and
                          energy trading networks.


Principle 7:              Sustainable development through the harmonization of economic development, energy
                          security and the environmental impacts of energy production and use.


Principle 8:              Energy supply diversification (including renewable energy) and improved energy
                          efficiency.

 Mexico has undertaken important strategies in order to achieve national priorities on energy conservation, energy
  efficiency, and environmental protection. These policies are implemented through a) activities and programs to
  improve energy efficiency in the use of energy, and b) activities and programs to improve energy efficiency in
  the supply of energy.

 Activities and programs to improve energy efficiency in the use of energy, encompasses the following areas:
  daylight savings time, energy efficiency standards, incentives and market-transformation programs,
  installation-oriented programs, residential sector, energy efficiency in federal government buildings, industry,
  municipal services, and state-owned energy industry. Activities and programs to improve energy efficiency in the
  supply of energy, are cogeneration and renewable energy programs.




                                                         15                                     EWG20/6.1 Att B
ANNEX: New Zealand

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

   Electricity industry: From the late 1980s the Government embarked on a comprehensive reform process. This
    involved breaking-up the state's generation arm to ensure a fully competitive generating sector, separating out
    the transmission grid to ensure open access for competing generators, establishing a wholesale market whereby
    spot prices are set competitively every half-hour, separating ownership of lines businesses from retailing and
    generation, and introducing full competition among retailers for all consumers.

    - Outcomes to date include:

    - Generation: Prices have fallen 15-20% (real) over 10 years to 1999 reflecting efficiency gains. On average
        wholesale prices have fallen further since March 1999 (30%). There has been significant new private sector
        entry (gas and geothermal);
    - Transmission: Prices have fallen by around 10% (real) since 1994;
    - Distribution and retail: Some cross-subsidies have been removed; wide competition is taking hold;
        companies are commercially sustainable; overall, real prices have increased by under 10% since 1994.

   Electricity industry Inquiry: In February 2000 the new Government established an inquiry into the electricity
    industry. The Government's objective was to ensure that electricity is delivered in an efficient, reliable and
    sustainable manner to all consumers. The Inquiry looked at what changes are needed to ensure New Zealanders
    have the best possible electricity system. It focused on distribution and retailing, the wholesale market and the
    transmission grid.

    - The Inquiry report was presented to the Government in June 2000. The Government is soon to announce
       decisions on the Inquiry‟s 53 recommendations.


   Gas industry: Recent developments on restructuring and regulatory reform include the introduction of
    information disclosure regulations (work is underway on enhancing these along the lines of the enhanced
    electricity information disclosure regulations), a self-regulatory gas pipeline access code, and a reconciliation
    code.


Principle 8: Energy supply diversification (including renewable energy) and improved energy efficiency.


   Energy efficiency and renewable energy: A new Act of Parliament reinforces the Government's infrastructure
    for energy efficiency and provides a statutory framework for setting new strategic directions. Passed in May
    2000, the Energy Efficiency and Conservation Act provides the legislative basis for promoting energy
    efficiency and renewable energy. The Act, inter alia, charges the Minister of Energy with developing a national
    energy efficiency and conservation strategy (to be issued by 1 October 2001).

   The Government has recently passed regulations enhancing energy efficiency provisions under the Building
    Code. This increases insulation requirements in the cooler parts of the country, sets maximum heat loss levels
    for hot water systems and limits on building heat loss and lighting levels in commercial buildings.




                                                          16                                      EWG20/6.1 Att B
ANNEX: Thailand

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

Principle 2: Complementary regulatory, institutional and procedural regimes with no impediments to trade and
investment in energy infrastructure, products and services

   Thailand has amended the regulation on foreign business operation to be transparent and open to foreign
    business. The new Foreign Business Operation Act, B.E. 2542 (1999) classifies types of business that allow
    foreigners to engage with the permission of a Royal Decree or to hold up to one-half of total shares.

    -   This amendment is consistent with the EWG’s 14 non-binding energy policy principles.

   Thailand has approved the “Minimum Efficiency Performance Standards: MEPs” in order to establish the
    “Thailand Energy Efficiency Standards Regime.” The MEPs will be in effect for six electrical appliances: air
    conditioners, refrigerators, motors, ballasts, compact fluorescence, and fluorescence tubes.

    -   This initiative is consistent with the EWG’s 14 non-binding energy policy principles.


Principle 3: Open, efficient and competitive market for energy services and products, both within and among
economies

   Thailand has approved in principle the introduction of the Third Party Access (TPA) to the natural gas pipeline
    system currently owned by the Petroleum Authority of Thailand (PTT). TPA will be introduced on the pipeline
    system where excess capacity is available and on new pipelines. When the TPA code has been completely
    introduced, it will ensure the provision of non-discriminatory services, with a clear and accountable rules and
    criteria.

    -   This reform is consistent with the EWG’s 14 non-binding energy policy principles and the Natural Gas
        Initiative.

   Thailand has approved the extent of private participation in the gas pipeline system both within and among
    economies. New pipelines not specified in the Pipeline System Master Plan are open to competition. These
    include pipeline connecting the Gulf of Thailand to Ratchaburi pipeline, the Natuna pipeline (Indonesia) and
    other new pipelines. Moreover, there are pipelines for which the Petroleum Authority of Thailand may enter
    joint ventures with Petronas Co. of Malaysia and other private companies. These include pipelines from the
    Thailand-Malaysia Joint Development Area (JDA) resources to Songkhla pipeline (Thai pipeline) and from
    JDA to Malaysia pipeline.

    -   This reform is consistent with the EWG’s 14 non-binding energy policy principles and the Natural Gas
        Initiative.

   Thailand has determined to establish the competitive wholesale Power Pool by 2003. Retail competition would
    be introduced initially for certain customers and gradually expanded to cover a wider group of customers.
    Generation companies would bid into the wholesale “pool” and be dispatched in accordance with the lowest
    bids offered which satisfy demand for that period. Retailers would have non-discriminatory access to the
    transmission and distribution network, with a regulated Transmission and Distribution access tariff paid to the
    relevant network service providers.

    -   This reform is consistent with the EWG’s 14 non-binding energy policy principles and the IPP Best
        Practice Principles.


Principle 4: Energy pricing principles and practices of member economies which: (a) reflect the economic cost of
supplying and using energy across the full cycle of energy assets and infrastructure: (b) have regard to
environmental impacts

   Thailand has approved in principle the LPG (Liquefied Petroleum Gas) deregulation plan so as to reflect its
    world market price beginning at the end of 2000. LPG is the only petroleum product still under price
    regulation by the government. In practice, the LPG pricing will employ two main approaches: the
    semi-floating system and the fully-floating system. Thailand has also amended the LPG regulation to eliminate

                                                        17                                      EWG20/6.1 Att B
    the barrier to entry to the LPG market and allowing the market margin to gradually adjust to its appropriate
    level.

    -   This reform is consistent with the EWG’s 14 non-binding energy policy principles.

   In the Draft Energy Industry Act, expected to be effective by mid 2002, it states clearly that the determination
    of tariffs by licensed energy service providers shall be based on the fairness of both consumers and service
    providers. There shall be no unjust discrimination. The tariffs should reflect the actual costs of efficient
    business operation. Guidelines on the tariff determination must be inductive to efficiency improvement in the
    business operation. The tariffs should be at the levels enhancing efficient and adequate energy supply to
    satisfy the domestic demand. There must be an announcement and dissemination of the accountable and
    transparent tariffs and the calculation from which the tariffs are derived must be explicit.

    -   This legislation is consistent with the EWG’s 14 non-binding energy policy principles.


Principle 5: Non-discriminatory, transparent and predictable policy, regulatory, environmental and
administrative regimes in the energy sectors of member economies

   Thailand is now in the process of drafting the Energy Industry Act and the formation of a regulatory body. It is
    expected that the Act should be effective from mid-2002 onwards. The objectives of the Act are to: 1) Promote
    adequate provision of energy services, while maintaining security and fairness for both service consumers and
    energy business operators; 2) Protect energy consumers‟ benefits with regard to both tariffs and service quality;
    3) Increase competition in the energy industry and prevent abusive use of power in the operation of
    energy-related activities as well as control and monitor the energy industry to ensure smooth transition to a
    competitive market; 4) Promote fairness, transparency of the provision of energy network system services
    without unjust discrimination; 5) Promote efficient energy business operation; 6) Ensure that the financial rates
    of return on business operations are reasonable for energy business operators and fair for service consumers; 7)
    Promote efficient use of energy and natural resources in the energy industry; 8) Prevent adverse impacts on the
    environment resulting from energy activities; 9) Promote the use renewable energy and energy which has less
    adverse impact on the environment.

    -   This legislation is consistent with the EWG’s 14 non-binding energy policy principles, the Natural Gas
        Initiatives, and the IPP Best Practice Principles.




                                                         18                                      EWG20/6.1 Att B
ANNEX: United States

Individual Report to Leaders on Progress against EWG Initiatives

Primary Principles in Our Initiatives (for inclusion in EWG Report to Leaders)

Principle 1: A common understanding on regional energy issues and future energy supply and             demand
trends.

       The Energy Information Administration (EIA) produces two forecast reports: the Annual Energy Outlook
        which focuses on domestic U.S. energy forecasts through 2020 and the International Energy Outlook which
        focuses on global energy forecasts through 2020. These forecasts are available to other APEC economies
        on the EIA Website and in hard copy. EIA representatives also participate in APERC activities and have
        provided staff to APERC.


Principle 2: Complementary regulatory, institutional and procedural regimes with no impediments to trade and
investment in energy infrastructure, products and services.

       A report, Powering the New Economy, updates and expands on the 1998 Comprehensive National Energy
        Strategy. The report highlights the Administration‟s energy accomplishments and investments, and
        examines the energy challenges facing the nation as we enter the 21st century. This report was prepared in
        the context off a continuously improved understanding of how energy demands of the 21 st century
        challenge the energy infrastructures of the 20th century, of how the New Economy is affecting the
        competition for the capital needed to improve and upgrade our energy infrastructures, and of how the
        government‟s incentive structure and statutory frameworks should evolve to meet emerging energy needs.

Principle 3: Open, efficient and competitive markets for energy services and products, both within and among
economies.

Principle 4: Energy pricing principles and practices of member economies which: (a) reflect the economic cost of
supplying and using energy across the full cycle of energy assets and infrastructure; and (b) have regard to
environmental benefits.

Principle 5: Non-discriminatory, transparent and predictable policy, regulatory, environmental and
administrative regimes in the energy sectors of member economies.

       The report, Powering the New Economy, reiterates a commitment to reliance on competitive markets as the
        “first principle” of energy policy.

       The US electricity market is gradually becoming more open and competitive. As the result of federal
        legislation and pursuant regulations, electricity supplied by non-utility generators has grown from 5 % of
        total generation in 1986 to about 11 %. About half of planned new generating capacity is now being built
        by non-utility generators. At the retail level, where electricity is regulated by states, several states are
        allowing consumers to choose their power supplier on a competitive basis. The federal government has
        proposed comprehensive restructuring legislation to congress that would require states to provide for retail
        competition by 2003 and that addresses reliability and other issues, that maximizes consumer benefits, and
        that avoids some of the problems associated with the state-by-state, piecemeal restructuring currently
        taking place.

       The US natural gas market today is extremely open and competitive. Prices of gas at the wellhead were
        deregulated between 1979 and 1989. Today, there are 24 major producers and some 8,000 independent
        producers of natural gas. The system of pipelines on which producers compete is extensive, with 285,000
        miles of pipe owned by some 140 different companies. Regulation of the pipelines by the Federal Energy
        Regulatory Commission (FERC) ensures open, non-discriminatory access to gas transport for all competing
        suppliers. FERC Order 436, issued in 1985, provided for open access to pipelines by requiring them to
        transport third-party gas. FERC Order 636, issued in 1992, unbundled pipeline sales and transportation
        functions, with transportation remaining a regulated monopoly but sales opened to competition. Partly as
        a consequence, there are now some 260 unregulated independent natural gas marketers which package
        together supply and transport to bring gas to consumers. Local gas distribution utilities, roughly 1,400 in
        number, are regulated by state utility commissions, many of which are opening up functions like billing and
        metering to competition, while continuing to regulate local grids.

       Deregulation of production and marketing, in combination with ready access to long-distance pipelines, has

                                                        19                                      EWG20/6.1 Att B
        had major benefits for all types of natural gas customers. For industrial customers, the real price was
        halved from over $6 per thousand cubic feet in 1983 to about $3 in 1995 in 1999 dollars. The real price
        for utility customers was also halved from about $5 to about $2.50 over the same period. Residential and
        commercial prices, meanwhile, declined in real terms by about a third. Largely in response to lower
        prices, demand has grown substantially, from 16 Tcf in 1984 to 23 Tcf in 1999. In the face of growing
        demand, prices have trended upwards since 1995, with particularly sharp increases since 1999; residential
        prices in the winter of 2000/01 may reach 1986/97 levels. It is anticipated that the higher prices will in
        turn create incentives

Principle 6: Cooperation in the development of domestic and intra-regional energy infrastructure and energy
trading networks;

       In 1994, entered into an agreement with Canada and Mexico–the North America Free Trade
        Agreement(NAFTA)–for the removal of tariff and all other trade barriers.

Principle 7: Sustainable development through the harmonization of economic development, energy security and
environmental impacts of energy production and use.

       Place a high value on environmental stewardship, including by the development of environment-friendly
        technologies and the support of science-based regulatory policies that have enabled the energy industry to
        minimize costs and avoid supply disruptions.

       Are committed to mitigating the environmental impacts of energy production and use on the domestic and
        global environment including by supporting the technologies to produce cleaner fuels; increasing the
        efficient use of conventional energy sources, primarily fossil fuels; and developing alternative sources of
        energy.

       Promote environmental protection through tax incentives.

       Work with other countries to mitigate global climate change, including elaborating rules and guidelines for
        the flexibility mechanisms in the Kyoto Protocol-emissions trading, the Clean Development Mechanism,
        and Joint Implementation.

       Address global climate change through research and development; the Administration has proposed an
        aggressive $4,1 billion climate change package for fiscal year 2001.

       Have created a National Energy Technology Laboratory in 1999 with the primary mission of improving the
        environmental performance of fossil fuels through technology advances.

Principle 8: Energy supply diversification (including renewable energy) and improved energy efficiency.

       Promote energy efficient vehicles, including by the Partnership for New Generation Vehicles, which is
        designed to develop an 80 miles per gallon automobile by 2004, and by the Clean Cities Program, a
        voluntary, locally-based government industry partnership designed to accelerate the deployment of
        alternatively-fueled vehicles in both Federal and local fleets.

       Meet dramatically increased electricity demand in low-cost, environmentally sound ways, including by the
        Advanced Turbine System Program to develop and test utility-scale turbines to convert gas and other fuels
        to electric power; combines heat and power systems; stationary fuel cells (to produce electricity directly);
        and distributed energy resource systems with the goal of enabling interdependent systems to provide at
        least 20 percent of the nation‟s new power by the end of the decade.

       Promote energy efficient use in homes, including by weatherization programs; reducing energy costs to the
        Federal government–the largest nation‟s largest power user; appliance codes and standards for commercial
        and residential equipment; geothermal heat pumps; and demonstration programs for “whole building”
        approaches to new houses.

       Increase the competitiveness of U.S. industry by reducing its energy costs, including by advanced turbine
        systems, reciprocating engines, advanced industrial materials, and industrial assessment centers.

       Economically generate power from renewable energy sources, including by wind energy, photovoltaic,
        geothermal systems.

       Promote cleanly powering vehicles with renewable energy, including by developing alternative fuels
        technologies in partnership with industry and using agriculturally-derived fuels such as ethanol, developing

                                                        20                                      EWG20/6.1 Att B
        automotive fuel cells with low or zero emissions; and a program to introduce cost-competitive hydrogen
        production methods and end-use technologies into the marketplace.

       A Vision 21 program, based on technology advancements in clean fossil energy, for extremely compact,
        efficient and virtually emission free power plants of the future. The concept envisions (1) a multi-product
        approach, with energy plants producing much more than just electricity, including liquid fuels and
        chemicals, hydrogen, and industrial-grade heat; and (2) flexibility in use of fuels.

All of these reforms, programs and activities are also consistent with the EWG’s 14 non-binding energy policy
principles.




                                                        21                                      EWG20/6.1 Att B

								
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