211. Memorandum From Henry Owen of the National Security Council Staff to President Carter1
SUBJECT
- Summit Energy Initiative
1. Problem. Recently you reviewed alternative State–DOE–Treasury and OMB proposals for international support of development of alternative energy sources, indicated your preference, and said that any consultation with other Summit countries should be tentative.2 We have consulted on that basis. It is clear from this consultation that no initiative will be seriously considered by other Summit countries unless they know what the US Government’s position is. We need to communicate that position this week to the other Summit countries’ planners, so as to get decisions in time for the final Summit declaration-drafting session on June 15.
2. Background. We need at the Tokyo Summit to act on two fronts: restraint of oil consumption to meet the short-term problem, and ac-celerated development of alternative energy sources to deal with the longer-term problem. First priority should go to immediate oil demand restraint, about which I am writing you separately.3 But if that’s all we do at Tokyo, the Summit’s only message will be one of belt-tightening; there will be no light at the end of the tunnel. To generate longer-term hope of reducing our dependence on the OPEC cartel, we need to take some visible and promising action on the production front. (See attached article by Art Okun at Tab A.)4
We have tentatively sounded out other Economic Summit governments on two proposals to this end: an International Energy Finance Corporation, which would lend capital to the first commercial-scale projects using promising technologies; and an unfunded international consultative body to promote such projects, as proposed by OMB. Your cool reaction to the corporation proposal sets that idea aside. Finance ministries of at least two other governments were also opposed to creating such a corporation now. The Japanese doubt that we can get [Page 658] agreement in Tokyo to start with anything more ambitious than the OMB proposal.
This proposal offers an opportunity for modest constructive action without committing us or any of the other countries now to increased expenditures. It would create an International Energy Technology Group, whose small staff would search out opportunities for joint or parallel action to accelerate energy demonstration and commercialization projects involving use of new technologies. It would seek to arrange project financing by governments and private capital markets, much as an investment banker does. Each member government would be free to decide whether it did or did not wish to join in providing financial support for a proposed project. The Group would be guided by a Board consisting of the member countries’ energy ministers.
The only expenditures required from the US (or from other members) would be for very limited planning and administrative support. If we decided to contribute to a project, we would draw on the regular DOE budget or the Energy Security Trust Fund.
Other nations with the desire and capability to aid new technology projects would be invited to join this Group. If some OPEC countries joined, the Group would promote producer-consumer co-operation in pursuing the one energy objective that the industrial and OPEC countries appear to share: slowing depletion of oil reserves. The Group could, for example, engage such key oil producers as Saudi Arabia and Venezuela together with industrial countries in developing such new sources of energy as Venezuelan heavy crude.
3. Conclusion. We should indicate to our Summit partners our willingness to join them at the Tokyo Summit in appointing a steering committee to establish an International Energy Technology Group, with the understanding that the steering committee’s plan would have to be reviewed by governments before the Group comes into being. We should suggest this action to increase supply as a complement to, not a competitor with, proposals to reduce demand. Hence we should not use bargaining chips to secure Summit acceptance of this proposal which may be needed to secure agreement on proposals for demand restraint.
4. Recommendation
That I be authorized to transmit the proposal for an International Energy Technology Group in the manner described above to the Economic Summit Preparatory Group for consideration at its final meeting June 15. State, Treasury, DOE, and OMB concur.5
- Source: Carter Library, National Security Affairs, Staff Material, Special Projects File, Box 32, Henry Owen, Summit: Tokyo. Confidential. Sent for action. Initialed by Carter and Brzezinski.↩
- See Document 205.↩
- Not found.↩
- Not found. In this paragraph Carter underlined “belt-tightening” and wrote in the margin “should be main message.”↩
- The President checked the Approve option and initialed. The proposal was transmitted in telegram 143818 to Tokyo, June 5. (National Archives, RG 59, Central Foreign Policy Files, D790255–0185)↩