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Directorate of Energy Markets and Security (EMS)

The Directorate of Energy Markets and Security takes a comprehensive approach to energy market analysis – including oil, gas, coal, nuclear, electricity and renewable energy – and energy security policies. It also initiates and monitors key policy issues raised by new developments such as regulatory reform and market liberalisation.

In terms of security policies, EMS includes the action unit, ready to assess the impact of any supply disruption in the context of the global oil market and to co-ordinate the IEA response should the need for emergency action arise. This requires both the constant monitoring and forecasting of market developments together with regular reviews, preparation and testing of oil emergency policies and procedures in member countries. In response to guidance from the member country energy ministers, EMS is also developing gas security policy analysis. The office has four divisions:

  1. Oil Industry and Markets Division (OIMD)
  2. Emergency Policy Division (EPD)
  3. Energy Diversification Division (EDD)
  4. Renewable Energy Division (RED)

Oil Industry and Markets Division (OIMD)

The Oil Industry Markets Division follows short- and medium-term developments in the international oil market, looking in detail at world oil supply, demand, refinery, biofuels, inventory and price developments. Forecasts through to the end of the following year are published monthly in the Oil Market Report (OMR), while projections for the next five years are published yearly in the Medium-Term Oil Market Report (MTOMR).

The benchmark status of the OMR has been gained through scrupulous attention to detail in the analysis and forecasts. Supply estimates are compiled using field-by-field data wherever possible. Projections are then made by looking at individual decline rates of oil fields and new project developments together with the contributions of NGLs, CTLs and biofuels. Naturally this supply analysis also looks at production capacity and investment in OPEC and non-OPEC countries, together with close monitoring of above- and below-ground factors that may affect future supplies.

Supply of crude oil is only one side of the equation. Refined product availability has played an important role in determining the level of oil prices in recent years, and the IEA has met this challenge by stepping up its refinery analysis. Global refinery capacities, expansions, outages and margins are monitored, together with technological and yield improvements, shifts in product specifications and the changing crude slate, to provide a guide to future product supply markets.

Oil demand is looked at in similar detail. Forecasts all over the world build on the extensive work of the IEA Energy Statistics Division, which compiles and standardises submissions from IEA member and non-member countries, together with extensive data-gathering and checking from OIMD analysts. The IEA forecasting model incorporates economic growth projections from the OECD, IMF and other institutions, together with the influence of prices, to project demand by product and by country up to five years forward.

Through its close examination of issues that affect oil stocks and prices, OIMD also looks at other topical issues in the oil market, such as the influence of speculation, liquidity, benchmark evolution and forward price structures. The impact of geopolitics, weather, legislative issues, together with increasing interfuel competition, are further issues that are considered in the analysis - both from a supply and demand perspective, but also for their impact on investment and price. The results of this work are reported to IEA member countries through the Standing Group on the Oil Market (SOM), helping member countries to respond promptly and effectively to changes in market conditions and to highlight areas which may be of interest to policy makers. The SOM works closely with the Standing Group on Emergency Questions (SEQ) on oil market and emergency issues. The Division also makes regular reports on these issues to the IEA Governing Board and other internal committees.

Contact this division: Anne.Mayne@iea.org


Emergency Policy Division (EPD)

EMS is also responsible for all aspects of IEA emergency preparedness and reports to the Standing Group on Emergency Questions (SEQ).  The following PDF provides full background and explanation of the IEA Response System for Oil Supply Emergencies (pdf). 

The basis for the emergency policy of the IEA lies within the Agreement on an International Energy Program, the treaty upon which the IEA was founded in 1974. The treaty includes the commitment of IEA member countries to hold oil stocks equivalent to no fewer than 90 days of the prior year’s net imports. The treaty also includes an integrated set of emergency response measures for major international oil disruptions, i.e. when supplies are reduced by 7% or more to individual member countries or to the IEA member countries as a group. The treaty defines the following emergency response measures: a drawdown of oil stocks, demand restraint measures, fuel-switching out of oil, surge oil production and the sharing of available supplies.

Depending on market circumstances, there may be a need for emergency response measures for oil supply disruptions below 7%. To accommodate such discretionary action, the IEA developed a complementary set of measures known as the Co-ordinated Emergency Response Measures (CERM). These provide a rapid and flexible system of response to actual or imminent oil supply disruptions. In 1995, the IEA Governing Board made the decision that even in a supply disruption of 7% or more, CERM measures would be considered in conjunction with other emergency response measures. Since then, the IEA has continuously had on-the-shelf response plans which can be quickly tailored to the crisis at hand. CERM measures were effectively used at the time of the first Gulf War (1991) when the IEA implemented a 2.5 million barrels a day contingency plan, most of which was stock draw. In September 2005, the IEA implemented a collective action, which made available to the market 60 million barrels of crude oil and oil products, in response to concerns about interruptions to oil supply as a result of the severe hurricane damage caused by Hurricanes Katrina and Rita in the US Gulf of Mexico. Most recently, IEA officials consulted closely with US Department of Energy officials in managing their response to Hurricanes  Gustav and Ike in August/September 2008.

To ensure the potential of IEA member countries for rapid and effective response to oil emergencies in changing oil market conditions, the SEQ conducts a regular cycle of Emergency Response Reviews of IEA member countries, the results of which culminate in a publication on oil security in IEA member countries. In addition, EPD periodically tests and updates the IEA emergency response mechanisms and its contingency plans through its oil supply disruption simulation exercises. These exercises provide thorough training and testing and involve personnel from member countries, the oil industry and the IEA Secretariat. Its most recent exercise featured participation from non-member consuming countries and incorporated a scenario including a major disruption of natural gas supplies.

The SEQ and EPD work closely with the international oil industry, notably through an Industry Advisory Board (IAB) composed of senior supply, refining and transport experts from oil companies operating within IEA member countries. The IAB is available for consultation on issues of emergency response and provides expertise in oil supply and logistics. During an emergency, the IAB advises the EPD on the evolving supply situation and assists in determining the extent of any shortfall in supplies. It also advises the EPD on the design of tests of IEA emergency response systems.

In co-ordination with the IEA Oil Industry and Markets Division, the Energy Statistics Division and certain IEA Standing Groups and Committees, the SEQ and EPD examine oil security issues, including global supply/demand prospects, geo-political risks to the oil market, production capacity and refinery flexibility and emergency response policies and procedures. Seminars, conferences and workshops are held on these issues.

As oil consumption outside IEA member countries is rapidly increasing, the IEA is promoting dialogue and information sharing on oil security policies and measures with non-member consuming countries, such as China, India, ASEAN countries as well as some European countries that are not members of the IEA. With this “outreach” strategy, the IEA endeavors to harmonise measures to be taken by member and non-member countries in times of a significant supply disruption in order to enhance the impact of such measures.

Contact this division: epd@iea.org


Energy Diversification Division (EDD)

EDD undertakes analysis of coal, gas and electricity – including renewable and nuclear generation – in the context of energy market developments.  This division monitors key policy issues raised by regulatory reform and market liberalisation in the energy sector.  Security of supply and the environmental impact are also key topics.  Recent work in the electricity sector has analyzed investment trends in the generation sector, and work on transmission investment and demand side responses will be published shortly.

Since 2006, EDD has published an annual Gas Market Review, analyzing developments in natural gas pipeline and LNG (liquefied natural gas) markets over the medium term.  EDD is currently working on fulfilling the IEA mandate to provide advice to member countries on gas security policies and measures, in collaboration with other parts of the IEA.
 
EDD also oversees IEA collaboration with The Coal Industry Advisory Board (CIAB).  The purpose of the CIAB is to assist the IEA in the practical implementation of the “Principles for IEA Action on Coal”- measures aimed at ensuring a ready supply and trade of coal to underpin energy security.

EDD also works on these issues relating to non-member countries.  For example, EDD is completing a major study on clean coal use in China.  Developments in gas and electricity in key dialogue countries such as Russia are studied closely.
EDD reports chiefly to the Standing Group on Long-Term Co-operation (SLT), but also on specific topics to the Standing Group on Oil Markets, and the Standing Group on Global Dialogue (SGD).

Contact this division: edd@iea.org


Renewable Energy Division (RED)

Previously part of the Energy Technology Office of the IEA, the Renewable Energy Unit (REU) was moved to the Directorate of Energy Markets and Security in September 2008 as part of the IEA response to a changing world energy framework and in recognition of the need to accelerate the large-scale penetration of renewable energy technologies into the market to reduce CO2 emissions.

The REU was formed in 1999 to provide support to the Working Party on Renewable Energy Technologies (REWP), a sub-body of the Committee on Energy Research and Technology, and to act as an interface with the ten IEA renewable energy technology Implementing Agreements.

The unit has recently been given division status to reflect the ongoing and increasing activity of the IEA in this field and has been renamed the Renewable Energy Division (RED). Its mission today is to promote the development and deployment of cost-competitive renewable energy technologies (including bioenergy, geothermal, hydropower, ocean, photovoltaics, solar heating and cooling, solar power and chemical energy systems, and wind) into the mainstream energy market in an attempt to address emerging major global energy challenges such as climate change, energy security, access to energy, and supply of affordable energy to enable economic growth.

Its objectives are to:

  • assess renewable energy technology progress and status for successful, competitive market introduction in electricity, heat and transport fuel markets;
  • provide verified information and analysis of renewable energy policies and markets to assess the potential contribution of renewable energy technologies to a future sustainable world energy system based on the IEA shared goals of energy security, economic growth and environmental protection;
  • assess system-related aspects of very large-scale renewables integration in energy markets; and
  • support the REWP and renewable energy Implementing Agreements in reaching their technology development and deployment objectives, and in outreach to non-member countries.

Related IEA Links:

Oil Market Report On-Line
Oil
Energy Security
Natural Gas
Electricity
Regulatory Reform
Renewable Energy
Renewable Energy Publications