Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

123. Memorandum From Secretary of State Vance to President Carter¹

Washington, June 7, 1977.

SUBJECT

• Summit Follow-up on Energy

The Summit Communiqué² includes three energy items which require follow up:

1. National and joint efforts to limit energy demand and increase and diversify energy supplies;

2. Exchange of technology and joint research and development in energy; and

3. The two-month nuclear study to develop terms of reference for the international fuel cycle evaluation, and the subsequent longer-term evaluation.

I. Limitation of Demand and Increase Supply

Our international efforts to limit energy demand and increase and diversify energy supplies will focus primarily on the Paris-based International Energy Agency (IEA) which was established in 1974, following the oil embargo and price rise. The 19 country IEA is the principal forum for energy cooperation among industrialized countries. Six of the seven Summit participants are IEA members. Although France is not a member, it has shown some willingness to associate itself with IEA activity through its membership in the European Community. We will work with France and its EC partners to increase the level of French participation.

The IEA member countries have agreed to reduce dependence on imported oil through national and joint efforts. The Summit communiqué and the prior announcement of the U.S. National Energy Program³ have given strong political impetus to this cooperative action. Member countries have tentatively agreed on a Ministerial meeting this fall. We plan to work for agreement on the following measures at that meeting:

—A joint commitment to hold total oil import demand by member countries to not more than 26 million barrels a day by 1985 (if no additional energy measures are enacted, member countries are projected to import 31 to 36 million barrels a day by 1985).

—Agreement on a set of general principles aimed at the elimination of wasteful use of energy, greater coal utilization, expansion of nuclear power with appropriate controls, and increased energy research and development.

—Agreement to review the group objective annually and the contribution of each country towards achieving it.

The National Energy Plan will be the U.S. contribution to this cooperative venture.

There are uncertainties surrounding future oil production levels of OPEC members, particularly Saudi Arabia. Saudi Arabia has accommodated to the demand of the industrialized world for oil over the last few years by substantially increasing production and it is essential that they continue to do so. Our ongoing bilateral contacts with Saudi Arabia including the recent visit by Prince Fahd indicate such energy policies will continue if the industrialized countries make serious efforts to conserve energy.

In the North-South dialogue we are attempting to convince oil producing countries of their responsibility to provide adequate and stable supplies of energy during the energy transition period and to increase their sense of interdependence with the industrialized countries and their economic viability.

If oil importing developing countries can develop their indigenous energy resources, this will add marginally to the world energy supply. To spur such development, we are working to enable the World Bank to expand its lending for energy development. This new bank lending would also induce greater flows of private capital for the same purpose.

II. Research and Development

Summit participants agreed on the need for more exchange of technology and joint research and development directed at more efficient energy use, improved recovery and use of coal and other conventional resources, and the development of new energy sources.

In the IEA, we have said we are ready to intensify cooperation with industrialized countries in conservation, coal combustion and conversion, and renewable sources, such as solar energy.

We now need to develop concrete research proposals for coordination at the fall IEA Ministerial. We are considering the possibility of investment in key energy research and development projects in other countries in return for agreement to make similar contributions to U.S. programs.

We also want to achieve intensified coordination of national energy research and development programs to enable countries to share the high cost of research and development and avoid needless overlap and duplication of efforts. Such cooperation will be difficult because our ability to influence private companies’ decisions on access to their technology is severely limited. We will wish to maintain discretion regarding the transfer of government-owned technology, particularly relating to nuclear energy.

We want to try to involve OPEC countries and more advanced developing countries, such as Brazil and India, in expanded energy research and development cooperation with industrialized countries in the IEA. The new participants in IEA projects would be asked to share equitably in the costs and benefits of these projects.

To meet the needs of LDC’s for technical assistance, the U.S. has proposed as part of the North-South dialogue the establishment of an International Energy Institute (IEI). The IEI would address the need for increased flows of energy technology to LDCs by providing up-to-date information on relevant technology and facilitating access to it. It would also provide needed technical assistance in assessing resource potential, developing energy strategies, training technicians and managers, and promoting and facilitating exploration.

A program proposal for the examination of non-nuclear alternatives of energy for developing countries has been submitted to you in support of the U.S. non-proliferation policy. This program has the elements of an energy research cooperation program plus a broader conventional energy resource definition element. This program would advance our non-proliferation goals, demonstrate concern about the quality of life in developing countries, and improve our knowledge of conventional energy resources.

[Omitted here is discussion of international fuel cycle evaluations.]

1. Source: National Archives, RG 59, Central Foreign Policy Files, P770118–1948. Confidential. The memorandum was sent under cover of a June 7 memorandum from Vance to Owen. (Ibid., P770118–1947) On May 20, Owen had sent a memorandum to the Secretary requesting an outline for the President of “plans for following up the Summit decisions about energy.” (Ibid., P770118–1953)
2. The Joint Declaration issued on May 8 at the conclusion of London Economic Summit included sections on “World Economic Prospects,” “Balance of Payments Financing,” “Trade,” “Energy,” and “North/South Relations.” For the text, see Public Papers of the Presidents of the United States: Jimmy Carter, 1977, pp. 819–824.
3. See footnote 3, Document 122.