Bridging the gaps in global energy governance.

Author:Florini, Ann

Energy constitutes a rich, but underexplored, arena for global governance scholars and policymakers. The world is currently on an unsustainable and conflict-prone track of volatile and unreliable supply of energy fuels, vulnerable infrastructure, massive environmental degradation, and failure to deliver energy services to an enormous proportion of the global population. Changing to a different path will be a monumental global governance endeavor that will require bridging multiple issue areas, regimes, and policy silos. Meeting that challenge will require a greatly expanded research agenda aimed at understanding the institutions, interests, and concerns that do and could shape global energy governance. In this article, we lay out key energy-related global issues and explore some of the connections among them to suggest an initial research agenda for global governance scholars. KEYWORDS: global governance, energy policy, global energy governance, energy security.

ISSUES CONNECTED TO THE PROVISION OF ENERGY SERVICES AND THE DEPLOYMENT of energy technologies form a common thread across many of the most pressing global problems, cutting across geopolitical, environmental, and economic dimensions. Yet although the international relations, governance, and global policy literatures address energy concerns to some degree, they still reflect policy structures and remain divided into silos, handicapping efforts to adequately understand how energy policy and technology concerns cross domains. As energy concerns come to feature ever more prominently, such divides pose a serious impediment to the prospects for effective global governance on a variety of issues.

Even a cursory assessment makes clear that contemporary global energy governance arrangements are falling far short of meeting pressing needs to foster efficient markets, deal with externalities (notably, but not only, climate change), extend access to energy services to the billions of people not adequately served by markets, and address the many trade-offs involved with improving energy security. Indeed, as numerous studies have documented in recent years, the world is currently on an unsustainable and conflict-prone energy track of volatile and unreliable supply, brittle and vulnerable energy infrastructure, massive environmental degradation, and failure to deliver energy services. As former head of the International Energy Agency Claude Mandil notes, a continuation of existing trends in energy production and use is "not compatible with reality." (1) Changing to a different track is, however, a monumental governance endeavor. Few if any countries have effective energy governance arrangements and policies, and the global rules that shape and constrain national policy choices are an incoherent and inadequate mishmash.

Improved global energy governance will need to address numerous interrelated areas, covering issues normally dealt with in distinct scholarly and policy silos:

* Geopolitics and security questions, including competition for energy re sources, the nuclear nonproliferation regime, and terrorism and other cross-border threats to vulnerable energy infrastructure;

* The global environmental politics of energy, including climate change and other negative externalities that transcend national borders;

* The international political economy of energy, including the investment agreements, trade rules, and intellectual property rights regimes that influence energy choices and capital flows;

* Economic development policies and foreign assistance programs that shape energy policies and investments;

* Emerging issues in global governance and resource management that have major energy implications, such as water and agriculture.

Each of these areas is the subject of a considerable literature, but for the most part existing analyses do not explicitly connect them to broader questions of global energy governance. That is starting to change, with new works that indicate a startling lack of effective global rule making even within, much less across, policy silos. (2) Such key institutions as the International Energy Agency and the International Atomic Energy Agency (IAEA) are hobbled by inadequate resources and mandates even by the often dismal standards of intergovernmental organizations, despite technically competent staffs. Dries Lesage, Thijs Van de Graaf, and Kirsten Westphal's work on the G8 concluded that it has "failed to exert global political leadership" where most needed. (3) Although the G8 has contributed to expanding the scope of the International Energy Agency and establishing a global organization to promote energy efficiency, overall it has proven incapable of producing effective global energy governance because of competing interests within the institution, a dearth of effective monitoring and mechanisms to ensure compliance, and an inability to accommodate nonmember countries. Given the absence of alternative overarching global energy governors, this failure leaves a void not easily filled, and it points to the urgent need for a rich investigation of global energy issues and institutions, with careful attention to the connections among them.

Geopolitics and Security

Energy issues lie at the heart of major geopolitical flash points and security concerns. The renewed great game of major power rivalries in Central Asia, the degree of Russian willingness to play constructive roles in world affairs, the conundrums of the Middle East, the likelihood of the use of nuclear weapons, and terrorist threats are all lightly intertwined with energy policy decisions. Below, we highlight a few of the leading issues.

Resource Competition

Modern economies and modern militaries depend heavily on oil, natural gas, coal, and uranium, which are often imported. The resulting pattern of extensive international trade in energy sources--particularly oil--triggers major security concerns whenever supplies are concentrated or production capacities constrained. Such tensions figure heavily in many of the twentieth century's major wars, including World Wars I and II, the Gulf War, and the Iraq War, and underlie key current conflicts. (4) The International Energy Agency's emergency oil stockpile system, born of the first oil crisis in 1973-1974, has for decades helped mitigate fears of deliberate cutoffs. But that system is showing its age--it is limited to members of the Organisation for Economic Co-operation and Development (OECD), excluding such major new oil consumers as China and India. Although demand for oil eased with the global financial crisis, recovery will quickly restore the tight conditions of recent years. Moreover, China's strategy of investing overseas to secure access to oil raises concerns that it is pursuing a mercantilist rather than market-based approach to energy security. Now resurging are fears that interstate competition over energy resources could turn contentious, even violent.

But such conflict is not inevitable. Recent scholarship has argued that major changes in oil markets since the 1970s have rendered international conflict over oil far less likely. Andreas Goldthau and Jan Martin Witte comprehensively document the transformation from long-term fixed contracts between specific suppliers and consumers--the pattern that prevailed at the time of the first oil crisis--to a more open free global market in oil at present. (5) That change, they argue, has altered the trade of energy from a mercantilist, zero-sum game fraught with the potential for interstate conflict to a positive-sum market that merely needs better institutionalization to overcome the fundamental problem of energy security. They suggest that the "rules of the game" structuring these markets underpin an effective form of "global governance" that promotes financing for energy investments, hedges risk, and facilitates international agreements. While they identify areas for improvement, Goldthau and Witte assert that a number of existing institutions--such as the Agreement on an International Energy Program, the International Energy Forum, and the Energy Charter Treaty--suffice to correct market failures and set rules and standards for market exchange, if governments use them correctly.

Goldthau and Witte have made an important, and needed, contribution to understanding one part of the energy governance puzzle. At present, however, the peaceful and economically rational approach that they present remains a distant prospect. On the demand side, the opacity of Chinese energy policy raises fears that the oil China is contracting to buy from many sources could at some point be directed solely to China, rather than traded on global markets. On the supply side, the world's known oil reserves are concentrated in a handful of largely volatile and uncomfortably unpredictable countries; notably, in the oil rich countries of Russia, the Middle East, Nigeria, and Venezuela. As long as oil continues to be the single largest source of primary energy supply and virtually the sole source of transportation fuel for most of the world, investigating the interplay of geopolitics and resource markets will be a crucial component of the global energy governance research agenda.

Nuclear Energy and Nonproliferation

An extensive literature already exists assessing this most developed of international regimes dealing with energy issues. (6) That regime, centered on an intergovernmental organization (the IAEA) and a fairly comprehensive treaty (the Nuclear Non-Proliferation Treaty [NPT]), is clearly under severe stress, just when nuclear energy is proving popular as a response both to soaring energy demand and to the need to develop less carbon-intensive energy sources. In 2008, more than 440 nuclear power plants operated in thirty-one countries and supplied about 15 percent of the world's electricity, and over sixty additional countries, including Egypt, Indonesia, and Turkey, have formally expressed...

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