Speakers: Deger Saygin, Industry programme lead, Green Finance, Investment and Global Relations Division, and Eugene Mazur, Policy Analyst , Environment Directorate (OECD) Presentation at the 2nd meeting of the Working Party on Climate Change (WPCC) held online on 12-13 March, 2024.

1. Revision and consolidation of the OECD
Recommendations related to energy
General Directions
WPCC, 12 March 2024
Deger Saygin
Eugene Mazur
Environment Directorate

2. 2
> Recommendation concerning the Reduction of Environmental Impacts from Energy
Production and Use [OECD/LEGAL/0149] (1976)
> Recommendation on the Reduction of Environmental Impacts from Energy Use in the
Household and Commercial Sectors [OECD/LEGAL/0157] (1977)
> Recommendation on Coal and the Environment [OECD/LEGAL/0173] (1979)
> Recommendation on Environmentally Favourable Energy Options and their
Implementation [OECD/LEGAL/0221] (1985)
Four OECD Recommendations related to energy
→ They cover extraction, conversion and supply of primary energy sources and
efficient energy use in buildings – only a limited share of the energy system and
only some technologies

3. 3
> Transformation of energy systems in the last 40 years, driven by technological change,
economics, access to energy resources, or superior energy service for consumers
> Energy supply security and affordability challenges
> The energy sector is central to climate change mitigation and international
commitments to net zero
Why revise and consolidate them?
→ OECD standards related to energy must reflect the clean energy transition and be
consistent with the Paris Agreement goals

4. 4
EPOC PWB 2023-24 highlights that promoting energy savings and accelerating the uptake of
renewable energy sources is key to a more secure and decarbonised energy system
> Green finance and investments (CEFIM), sustainable infrastructure (SIPA), Environmental Performance Reviews,
Green Growth Policy Reviews
> Horizontal Project on Climate and Economic Resilience
> Environment-Economy Modelling (links with the IEA modelling platforms)
Beyond EPOC, across various other OECD bodies, with some examples:
> Country-specific policies and data on fossil fuel support and energy taxation
> Country-specific Economic Surveys
> Policies on decarbonisation of buildings and industries through different technologies
> Public finance flows and financing instruments used for clean energy transition
> Just transition impacts
IEA analysis, data and policy recommendations are focused on clean energy transition
OECD work on clean energy

5. 5
> EPOC Standard-Setting Action Plan (2017)
> OECD ENV Ministers (2022) invited EPOC to work on environmental standards
> EPOC (2023) instructed the WPCC to draft a revised and consolidated Recommendation related
to energy in consultation with other EPOC subsidiary bodies, other OECD committees, as well as
in close collaboration with the IEA
Mandate to revise and consolidate the
Recommendations

6. 6
Maintaining and updating pertinent elements of the
existing Recommendations (1)
Recommendation concerning the Reduction of Environmental Impacts from Energy Production and Use
[OECD/LEGAL/0149]
> Integration of environment and energy policies
> Inclusion of externalities into energy pricing
> Promotion of energy efficiency
> Encouraging combined heat and electricity generation
Recommendation on the Reduction of Environmental Impacts from Energy Use in the Household and Commercial
Sectors [OECD/LEGAL/0157]
> Management of energy demand and promotion of energy efficiency in buildings
> Improving energy distribution system and use of clean fuels in high-density urban areas
> Considering environmentally desirable energy systems in land-use planning in urban areas

7. 7
Recommendation on Environmentally Favourable Energy Options and their Implementation [OECD/LEGAL/0221]
> Developing methods of energy and environmental analysis
> Identifying and reducing barriers to the implementation of environmentally favourable energy options
Recommendation on Coal and the Environment [OECD/LEGAL/0173]
> Limited relevance for remaining but diminishing coal use in the energy sector
Maintaining and updating pertinent elements of the
existing Recommendations (2)

8. 8
Five building blocks:
> Promoting low-carbon energy options
> Implementing energy efficiency and demand-side management
> Improving power system flexibility
> Systemic innovation for clean energy transition
> Building a more secure and affordable energy system
Scope of the proposed revised and consolidated
Recommendation on clean energy transition (1)

9. 9
Promoting low-carbon energy options
> Focusing on the entire energy system, including both power and end-use sectors
> Substituting fossil fuels with renewables, low-emission fuels and carbon-free energy sources such as nuclear
> Switching to sustainable biomass and synthetic feedstocks and raw materials based on low-carbon hydrogen and
captured CO2
> Shifting to a circular economy by increasing reuse and recycling, and reducing product demand
> Decarbonising remaining power plant assets and CO2-intensive industrial production processes through CCUS
Implementing energy efficiency and demand side-management
> Adopting best energy efficiency practices in households, public and commercial buildings and in manufacturing
processes
> Operational strategies to transform heating and cooling, as well as electricity-consuming applications
Scope of the proposed revised and consolidated
Recommendation on clean energy transition (2)

10. 10
Improving power system flexibility
> Enabling a more flexible power system through e.g. energy storage and more flexible thermal power plants
> Modernising and expanding the transmission and distribution grid using decentralised generation, electrification
and digitalisation
Systemic innovation for clean energy transition
> Enhanced R&D for capital-intensive and less-mature technologies to facilitate large-scale investments
> Innovation in enabling investment conditions (regulations, business models, energy market design) and financing
Building a more secure and affordable energy system
> Managing the challenges related to new infrastructure needs, significant reliance on renewable power and changing
dynamics of international trade of low-emission fuels, biomass and critical minerals
> Addressing the justice, inclusiveness and equity aspects of clean energy transition
> Phasing out fossil fuel subsidies
Scope of the proposed revised and consolidated
Recommendation on clean energy transition (3)

11. 11
> Written comments on the general directions paper until 29 March
> Secretariat will prepare a first draft revised and consolidated Recommendation for
consideration during the WPCC meeting in late 2024
> Work on the draft Recommendation on clean energy transition (2025):
> Review by WPCC
> Consultations with the WPFIEG and other relevant OECD committees (Regional
Development Policy Committee, Committee for Industry, Innovation and
Entrepreneurship)
> Consultations with the IEA
> Transmission of the draft revised Recommendation to EPOC for approval
> EPOC to consider the draft revised Recommendation in 2026 with a view to
approving and transmitting it to Council for adoption the same year
Next steps