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policyGovernments need to set frameworks that enable markets to deliver; as well as to plan strategically for national or regional infrastructure needed to deliver it. Government interventions may create uncertainty and unintended consequences, so policymakers must be sensitive to this and try to manage it with stable, long-term, transparent policymaking. As highlighted in the World Energy Council's (WEC) 2011 Assessment of country energy and climate policies, policy must be evidence-based and rooted in robust, independent analysis of the issues it seeks to address and of the original objectives of the policy intervention. Transparency is vital to help business and consumers to understand the trade-offs that may be involved in adopting specific policies and their broader implications. This should also imply high standards of consultation and public engagement. This is to ensure that draft policies are subjected to rigorous and broad-based assessment, as well as giving those who will be affected by them enough notice to prepare themselves to adapt and comply.Finally, implementation of the policy must be monitored to ensure that it is delivering as intended, including ensuring consistency across policy dossiers. Here it is vital that governments are able to balance the need to provide markets with long-term policy stability against the necessary flexibility to adapt and change policies that are clearly failing. innovationSupportive and stable policy frameworks and the development of open markets, supported by legal frameworks to encourage competition and innovation (by protecting intellectual property) will be key to attracting investment. Support for education in mathematics, science and engineering in schools and universities is essential for the future R&D breakthroughs that will help draw in more investment. Policy needs to be tailored to support the whole innovation chain, including: n invention - funding support for basic research in universities and encouragement of international collaboration;n collaboration - encouraging collaboration between research organisations and the private sector to take inventions out of the lab and turn them into products and services;n competition - supporting competition in product innovation, especially through protection of intellectual property rights (IPR), and developing regulatory frameworks to drive product development and lower costs.IPR encourages firms to value innovation. This is critical not just for companies, but for emerging and developing economies as they build knowledge-driven, high value-added economies and industries. It is also critical to achieving climate change and energy security goals, which cannot be accomplished without massive private sector engagement. Continuous innovation will be essential - but companies must know they will benefit from the large investments R&D which often has to precede innovation.For example, the WEC policy assessment report highlighted the role of energy efficiency programmes including labelling schemes such as the US Energy Star programme. This voluntary labelling scheme for household products and commercial building equipment is widely considered to be a success, not only delivering substantial energy savings and emissions reductions but also important technological innovations, such as efficient fluorescent lighting, power management systems for office equipment, and low standby energy use. This programme or similar ones have been adopted in a number of other regions and countries including the EU, Japan, Canada and Australia. transformational technologiesInnovation can help us deliver both lower emissions and broader access, specifically via two transformational technologies: carbon capture and storage (CCS) and smart grid technology. According to the latest World Energy Outlook 2011 from the IEA, CCS accounts for 18 per cent of emissions savings under the 450ppm scenario, but delaying the deployment of CCS by 10 years would increase the cost of achieving the 450ppm scenario by $1.14 trillion, or 8 per cent more than with timely deployment. For timely deployment, the IEA's CCS Roadmap projects that 3,400 CCS plants will be needed globally by 2050; by that time, developing countries need to account for 64 per cent of all captured carbon dioxide emissions. If these nations are not encouraged and assisted to adopt the cleanest technologies at this crucial stage of their development, they will 'lock-in' sources of carbon dioxide emissions for decades to come. That means developing supportive policy frameworks and providing capital funding support as well as ongoing support through feed-in tariffs or similar measures. Above all, there must be faster progress in rolling out CCS demonstrations to move towards deployment as soon as possible after 2020. Good energy policy should also enhance and increase mechanisms that incentivise energy efficiency in the power generation, transmission, and distribution context. Regulators should consider approving rate recovery or implementing other kinds of recovery mechanisms to incentivise energy " There is no single instrument which can drive the attainment of all three goals of the policy trilemma - energy security, access to affordable energy, and environmental impact mitigation "048 ENERGY SECURITY

efficiency by energy producers as well as end-users. In this context, regulators should consider the substantial capabilities of smart-grid technologies for achieving these objectives.Smart grids help manage electricity supply reliably and efficiently. Without them we will neither be able to maximise the use of renewable power nor achieve effective demand management. Smart grids can help manage intermittency, connection in remote areas, and connection of smaller generation sources; and offer greater flexibility in balancing electricity demand and supply - maximising efficiency in dispatching generation, and minimizing network losses. Smart grids also enable the provision of intelligent data/information flows to end-users and those operating the different elements of the network, and give greater flexibility to help maximise the contribution of renewable generation and minimise inefficiency. When applied together with smart generation, electricity interconnectors, back-up capacity, storage options and demand-side response, smart grids can open up new possibilities in managing power supply and demand, with potentially significant benefits in terms of security of supply, affordability and reduction of greenhouse gas emissions. engaging businessEngaging business in the policy discussion is crucial to ensure the workability of proposed policies, to gather feedback on their effectiveness, and to benchmark against global policy best-practice, since many businesses have a multinational presence and perspective. Effective solutions will only be delivered through unprecedented levels of public-private partnership (PPP), based on clear commitments, transparent policies, agreed outcomes and, crucially, efficient and effective deployment of financial resources. PPPs will be essential to attracting private investment at the necessary scale in major public infrastructure projects. Such approaches offer flexibility in securing diverse sources of up-front finance and funding, and the possibility of risk mitigation (by sharing it between those partners) where otherwise levels of risk may erode the net present value of low-carbon projects.PPPs help where projects are hard to finance on purely commercial terms, including where technology is deployed for the first time in a country (even if successfully demonstrated elsewhere) or where there is a need to simultaneously develop infrastructure, policy frameworks and supply chains. Governments should be active participants, co-funding projects and ensuring that they are aligned with national development priorities and implementation plans, including local capacity building.ConclusionThere is no single instrument which can drive the attainment of all three goals of the policy trilemma - energy security, access to affordable energy, and environmental impact mitigation. And the WEC Policy Assessment of 2011 underlines that no country performs consistently well in achieving all three goals, though several countries do so on two of them. The WEC Policy Assessment aims to help deliver more rigorous evaluations of energy-policy instruments to obtain more reliable evidence on what works and what pitfalls to avoid. The challenge then is to translate global findings about successful policy instruments into local arrangements and settings that work. This translation works best as a dialogue between international energy-policy experts, industry executives, and stakeholders and policymakers from the appropriate jurisdiction. Indeed, transparency in the formulation of policy frameworks may well be one of the best ways of giving confidence to investors through a better understanding of policy drivers and how to manage associated policy risk. This is crucial. The energy sector faces the challenge of making unprecedented levels of investment to broaden access to energy in developing countries; to replace ageing legacy infrastructure in developed countries; and to drive the deployment of cleaner technologies in both. Anything that increases the ease or attractiveness of investment must therefore be a priority for governments. Let us hope they rise to this challenge. The focus of the WEC Policy Assessment reports in 2012 and 2013 will be on what energy business leaders would like from policymakers, and vice versa. Our aim is thereby to help that dialogue contribute more effectively to addressing the daunting challenges of the energy trilemma. nABOUT THE AUTHORJoan MacNaughton, CB, is Chair of the World Energy Council's Assessment of Country Energy and Climate Policies and is Global Adviser on Sustainable Policies at Alstom S.A. She has been an influential figure in the energy policy debate in a variety of roles. These include the positions of Director General of Energy, overseeing the energy agenda during the UK Presidency of the EU and leading work on the energy proposals agreed at the G8 Gleneagles Summit; Chair of the Governing Board of the International Energy Agency; Honorary Fellow and President of the UK's Energy Institute; and Senior Research Fellow at the Oxford Institute for Energy Studies. She is a Companion of the Order of the Bath.Footnote1 International Energy AgencyPictured: Joan MacNaughtonENERGY SECURITY 049