Global energy governance in the G-20: states, coalitions, and crises.

Author:Downie, Christian
Position:Report
 
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There is an emerging consensus among global governance scholars that there is a global energy governance gap. The rapid transformation of global energy markets with a new cast of producers and consumers, which now accounts for two-thirds of global greenhouse gas emissions, has left the existing institutional architecture behind. While there has been some discussion in the emerging literature on the potential role of the Group of 20, there is almost no analysis of what conditions need to be met for the G-20 to act in a significant fashion. This article takes up this task. Drawing on recent scholarship in global governance, environmental politics, and international negotiations, as well as the observations of the author who is a past delegate to G-20 negotiations, it considers the role of the G-20 in global energy governance and identifies the principal conditions that will need to be met if the G-20 is to drive more than piecemeal change. Keywords: global governance, energy, G-20, climate change.

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At the Group of 20 (G-20) summit in Brisbane in November 2014, leaders agreed to reform the global energy governance architecture. This was the first time that G-20 leaders had actively considered whether the existing international energy architecture, largely created in response to the oil shocks of the 1970s and dominated by the International Energy Agency (IEA), is sufficient to meet the rapidly changing demands of the global energy sector, a sector which now accounts for two-thirds of global greenhouse gas emissions. (1)

The global energy sector is experiencing a transformation. Nations that were major energy importers only a few years ago are becoming exporters, exporters are becoming large consumers, and previously small consumers are now the prime source of global demand for oil and gas. China is now the world's largest energy consumer and is set to become the largest oil importing country. India is projected to become the largest importer of coal within a decade. And the United States, once the largest energy consumer and dependent on Middle Eastern oil, could be on track for energy self-sufficiency with the revolution in unconventional oil and gas supplies. (2) In other words, the global energy sector is no longer dominated by a small band of Organisation for Economic Co-operation and Development (OECD) countries in Europe and North America. Rather, it is quickly being reconfigured by the growing demand for energy from non-OECD countries, especially in Asia and the Middle East.

However, these changes are also taking place in a carbon-constrained world. "As the source of two-thirds of global greenhouse gas emissions, the energy sector will be pivotal in determining whether or not climate change goals are achieved." (3) Put simply, the climate problem is an energy problem. Yet energy emissions continue to rise, and the likelihood of reducing global temperatures to 2[degrees]C, the so-called guardrail for preventing dangerous climate change, appears to be the hope of a previous decade, not this one. If the world does not take action to reduce global greenhouse gas emissions, it is projected that, by the end of the century, average global temperatures will rise by 5[degrees]C above preindustrial levels. (4)

The international energy architecture has not kept pace with these rapid transformations, and it is no surprise that there is an emerging consensus among global governance scholars that a "global energy governance gap" exists. As Ann Florini points out, "The current system of global energy governance is a mess, with many actors, many priorities, little coherence, and limited effectiveness." (5) Neil Hirst and Antony Froggatt argue that "all this points to the need for a genuinely global body for cooperation on energy policy including all major energy consuming countries and working with energy producers in areas where they have interests in common." (6) They claim that such a body could be created from the reform of existing institutions, "or it could be built from scratch."

The most prominent of the existing institutions is the IEA, which was established in 1974 by the world's largest oil consumers--the United States, Europe, and Japan--as a counterbalance to the world's largest oil producers--the Organization of Petroleum Exporting Countries (OPEC)-following the oil shocks of the 1970s. Although the IEA was initially dominated by oil issues, in recent decades it has broadened its focus to include everything from oil and gas markets to energy efficiency and climate change. It has also expanded its membership from the original seventeen to twenty-nine member countries, almost all of the OECD membership. (7) However, it was created at a time when China was a net oil exporter, human-induced climate change was not on the radar, and US energy independence seemed little more than a pipe dream. Today, four of the top ten energy-consuming nations with 40 percent of the world's population--China, India, Brazil, and Russia--are not members of the IEA.

The IEA is not the only global energy organization. Along with OPEC, which was created in 1960 and only began interacting with the IEA after the Gulf War in 1991, recent decades have seen a plethora of energy organizations. These include, among others, the International Energy Forum (IEF), which was created in 1991 as a dialogue between oil-consuming countries and OPEC members; the Energy Charter Treaty organization (ECT), established in the same year to promote energy sector investment in Eastern Europe following the end of the Cold War; and, most recently, the International Renewable Energy Agency (IRENA), which was established in 2011 largely due to German leadership to advance renewable energy. (8)

The announcement by G-20 leaders in Brisbane has put the G-20 at the forefront of global energy governance reform. Accordingly, in this article I consider the role of the G-20 in global energy governance, including the initiatives taken in 2014. Drawing on recent scholarship on global governance, environmental politics, and international negotiations, and on my observations as a past delegate to G-20 negotiations, I identify the principal conditions that will need to be met; namely, unilateral state leadership, or leadership from a coalition of states, which is mobilized by an exogenous variable to shift the behavior of these actors. Without the presence of these conditions, the G-20 is unlikely to drive more than piecemeal change, which will not address the shifting demands of an energy sector in a carbon-constrained world. In the next two sections, I provide the theoretical and historical context, which I then use to examine the state actors, coalitions, and exogenous variables that could promote global energy governance reform through the G-20. In the final section, I conclude by identifying the key conditions for G-20 action.

Who Governs the Globe?

It is now common for academics and policymakers engaged in discussions about politics above the state to refer to global governance as opposed to international relations. (9) The focus on governance begs the question, Who does all the governing? In other words, "Who governs the globe?" (10) To the extent that international relations theorists consider governance, their focus is largely on states. For example, governments can govern via international treaties, by creating international organizations, and by using summit processes, such as the G-20.

In this context, liberal scholarship has focused on international "regimes" to refer to the "principles, norms, rules, and decisionmaking procedures around which actor expectations converge in a given issue-area." (11) In this view, regimes, such as the world trade regime or the climate regime, matter in global governance because they affect the behavior of states. Accordingly, the conventional belief is that states create regimes when they expect that the regime will increase their welfare and that, once created, are easier to maintain than to construct again. As a result, states will typically seek to modify existing institutions in response to new problems rather than create new ones. (12)

While global governance scholarship has also shown that states do not govern alone, for the purposes of this article and the role of the G-20, my analysis is confined to state actors, given that nonstate actors, such as business groups and civil society groups, have limited formal representation within the G-20 meetings, more limited than in other forums such as the UN. In addition, a considerable body of empirical research continues to show that states remain the most important actors across a range of global governance sites, from trade and intellectual property to financial regulation and the environment. (13)

Further, a distinguishing feature of the global governance literature is the focus on coalitions and networks. In the context of multilateral negotiations, like the G-20, one of the defining characteristics is that parties form coalitions; that is, "a set of governments that defend a common position in a negotiation by explicit coordination." (14) As negotiation scholars have pointed out, in multilateral negotiations the larger the coalition, the less it will lose and the more it will gain, and coalitions that include developed and developing countries are likely to gain more than those that do not. In the G-20, the principal coalitions, as I discuss, are based around economic development and political power, yet empirical studies have shown that coalitions defined in terms of specific issues are likely to do better than ones encompassing several issue areas. (15) This could prove important in the case of energy if a G-20 coalition develops around global energy governance reform.

While coalitions of states can be considered endogenous to the G-20 negotiation process, state behavior can also be driven by exogenous factors that shift the behavior of actors by...

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