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Mapping Global Energy Governance

2011; Wiley; Volume: 2; Issue: s1 Linguagem: Inglês

10.1111/j.1758-5899.2011.00119.x

1758-5899

Navroz K. Dubash, Ann Florini,

Natural Resources and Economic Development

Global PolicyVolume 2, Issue s1 p. 6-18 Research ArticleFree Access Mapping Global Energy Governance Navroz K. Dubash, Navroz K. DubashSearch for more papers by this authorAnn Florini, Ann FloriniSearch for more papers by this author Navroz K. Dubash, Navroz K. DubashSearch for more papers by this authorAnn Florini, Ann FloriniSearch for more papers by this author First published: 07 September 2011 https://doi.org/10.1111/j.1758-5899.2011.00119.xCitations: 63AboutSectionsPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Abstract Abstract The challenges inherent in energy policy form an increasingly large proportion of the great issues of global governance. These energy challenges reflect numerous transnational market or governance failures, and their solutions are likely to require a number of global components that can support or constrain national energy policy. Governing energy globally requires approaches that can simultaneously cope with three realities: the highly fragmented and conflictual nature of the current inter-state system's efforts to govern energy; the diversity of institutions and actors relevant to energy; and the dominance of national processes of energy decision making that are not effectively integrated into global institutions. Policy Implications • The lack of clarity on and priorities for the objectives of global energy governance impedes coordination and communication. • The energy landscape is littered with governors and institutions. But because they have emerged in a path-dependent fashion, often in response to serial crisis, the result is an uncoordinated and inchoate landscape. There is now a compelling need to harness this diversity productively. • An emergent array of partnerships and networks are coming together, particularly with regard to clean energy finance, which provide possible sources of governance innovation but also have the potential for low levels of legitimacy and transparency. • National decision making continues to drive energy policy, in ways that are poorly coordinated both internally and with regard to global processes of governance. National energy policy processes need enormous improvement and need to be consciously coordinated with global processes. The Asian giants will be crucial actors in this regard. Why energy is a global governance challenge Although energy-related policy issues frequently dominate headlines, energy remains a surprising outlier in global governance debates. In the vast literatures on the shifting tides of globalization, the complexities of managing an increasingly multipolar world with a pronounced shift of power to Asia, and the rise of a dizzying array of nonstate actors, energy policy issues at best figure in occasional cameo appearances. We argue that energy policy deserves a leading role. The challenges inherent in energy policy form an increasingly large proportion of the great issues of global governance. These energy challenges have direct or indirect global components that support or constrain national policy options and private sector behaviors. We frame the range of energy-related global governance issues and briefly assess the current configuration of global energy governors and institutions. We aim to contribute to an emergent global conversation on how the rapid changes in world order shape, and are shaped by, energy-related developments. In this article, we use public goods theory to help identify key energy-related market and governance failures, highlight key obstacles to coherent global energy governance and suggest directions for a broader research agenda. Framing global energy governance Only in the past few years have international relations and global governance scholars and policy analysts begun to develop a significant literature on broad frameworks for understanding energy governance beyond the national level (Cherp et al., 2011; Colgan, 2010; Florini, 2008; Florini and Sovacool, 2009, 2011; Goldthau and Witte, 2009, 2010; Keohane and Victor, 2011; Lesage et al., 2010; Pascual and Elkind, 2010). Global energy governance has been relatively unexplored in the literature, in part because it is hard to conceptualize as a coherent field. Historically, energy governance at both national and global scales has been fragmented by energy source – nuclear, oil and gas, coal, renewable and so on. In addition, energy is closely intertwined with the historical evolution of industrialization, and is a critical input to productive activity and social outcomes such as health, education and habitats. Finally, the consumption of energy comes with pervasive and persistent local and global externalities, notably climate change. All these aspects of energy use are studied, but it is daunting to consider the various interconnections within a single rubric. A few intrepid scholars have put forward interesting conceptual frameworks that directly or indirectly are applied to the energy arena. Cherp, Jewell and Goldthau (2011), for example, make intriguing use of complexity theory to explore global energy governance. Raustiala and Victor (2004) suggest a 'regime complex' framework for understanding issue areas characterized by multiple overlapping regimes – an approach that may fit well with the variegated and fragmented nature of current global energy governance. Goldthau and Witte (2009, 2010) have engaged in a deep exploration of market mechanisms for oil and gas. The regime complex idea has been applied to climate change by Keohane and Victor (2011) and further extended by Abbot (2011). Such theoretical framing is clearly crucial to research that aims to focus on how energy should be governed at the global level. Our approach in this special issue and in this article complements the early literature in at least three ways. First, much of the literature cited above takes as its starting point the existence of considerable challenges that require global energy governance, but (with the partial exception of Cherp, Jewell and Goldthau (2011) and Florini and Sovacool, 2011) do not systematically identify what the full range of objectives are, how these objectives emerge or the level of legitimacy and support they enjoy at the global level. The article begins with this exercise which, we suggest, is a necessary first step to understanding the landscape of global energy governance. Second, based on our reading of the empirical landscape of energy, we go well beyond attention to the international inter-state arena to include the role of nonstate actors in global energy governance, and to understand decision making within national jurisdictions. Since we do not have the luxury of starting with a blank slate, an accurate mapping of the existing landscape is integral to our understanding of global energy governance challenges. Third, we complement the various efforts at constructing theoretical frameworks with a focus on policy-oriented frames and empirical questions of what needs governing and who are the governors. In other words, we aim to identify likely areas of market and governance failures, and to investigate the range of relevant actors. In the second part of the article, we map the landscape of global energy governance, with the intent of providing an empirically informed framework for future research. Objectives of global energy governance Discussions on global energy governance are challenged by a lack of systematic understanding on why governance at that level is needed and what its objectives should be. Perhaps because so much of energy policy has been shaped around barrels of oil and other private-good energy sources, market solutions are often suggested as ways of providing energy services (Goldthau and Witte, 2010). But markets themselves require governance mechanisms that can enforce contracts, define and enforce property rights, overcome excessive information asymmetries or simple absence of information, regulate natural monopolies and ensure fair competition for resources. In the energy arena, these mechanisms are often lacking, particularly at the cross-border level. Moreover, numerous specific features of energy make efficient and effective energy markets particularly difficult to construct and maintain. Energy exhibits a host of public goods problems, externalities, market failures, coordination problems and competing interests that collectively add up to an enormous governance challenge (Florini and Sovacool, 2009), as will be explored throughout this special issue. And overwhelmingly, these are transnational or global, not purely national, in scope. For Lesage, van de Graaf and Westphal (2010) the emphasis is on how the contemporary context of multipolarity increases the challenges of coordination to reduce conflict over energy and foster an energy transition. For many other writers, the challenge is dominated by the global collective action problem of climate change, a problem caused in large part by energy-related emissions of greenhouse gasses. Cherp, Jewell and Goldthau (2011) are the broadest in their framing, examining energy security, energy access and climate change as three distinct arenas within global energy governance. Drawing on a public goods framework allows us to identify cross-border market and governance failures that require governance intervention and to lay out the full range of global energy governance objectives. Consistent with our empirical approach, we identify these objectives through close scrutiny of global political pronouncements such as those emanating from G8 and G20 meetings, mandates and policy statements of international institutions, and initiatives of nonstate actors and multistakeholder networks that have played an agenda-setting role in energy governance. We group these objectives under four headings, each of which is further discussed below: energy supply security and geopolitics; energy poverty; environmental externalities; and domestic governance. Energy supply security Security of access to energy supply is a high priority for all governments, one that they pursue through both cooperative and competitive means. The centrality of oil and natural gas to modern military operations and modern industry leads governments to interfere in open market operations in the name of national security. Nonetheless, reasonably efficient global markets have developed for various energy sources, and further development of such markets could provide positive-sum approaches to global energy governance. Yet what had seemed to be a growing consensus on market-based systems of energy security is now under threat. Many governments, particularly in Asia, are increasingly pursuing mercantilist approaches and territorial claims to ensure energy supply security (Dubash, this issue; Kong, this issue). In addition, oil price volatility renders markets unstable. Because the nature of the oil industry (and energy in general) requires very long-term planning and investment, this is a particularly serious market failure. Some of the global discourse about energy security is quite broad. The G8 St Petersburg Statement on Global Energy Security of 2006 conceived of energy security as the challenge of 'ensuring sufficient, reliable and environmentally responsible supplies of energy at prices reflecting market fundamentals' (G8 Summit, 2006). That declaration asserted that the 'development of transparent, efficient and competitive global energy markets' is the best way of achieving overall energy security (G8 Summit, 2006), a notion echoed by the wider G20 Summit statement at Pittsburgh in 2009 (G20 Summit, 2009). This broadening is also echoed in the academic literature, which increasingly constructs energy security as multifaceted, including concerns such as environment, affordability and efficiency (Sovacool and Brown, 2010). But overwhelmingly, the debate over energy security remains a debate about access to oil (and increasingly natural gas). Oil remains the single largest source of global primary energy supply, accounting for roughly a third, and drives the majority of transportation in virtually all parts of the world. As oil rose in importance starting in the mid-20th century, oil producers and consumers organized separately and increasingly in reaction to each other. The 1961 founding statute creating the Organization of Petroleum Exporting Countries (OPEC) explicitly states that the aim of coordinated action among members was the interests of oil producers, providing them a steady income and a fair return on capital (OPEC, 2008; see also Goldthau and Witte, this issue). The International Energy Agency (IEA), established by the OECD as a club of oil consumers, had the explicit aims of securing oil 'on reasonable and equitable terms' and creating a system to manage oil supply emergencies. The instrument for achieving these goals was sustaining 'stable international trade in oil and … promoting secure oil supplies on reasonable and equitable terms' (IEA, 2008; see also Florini, this issue). Over time, this oppositional construction has softened, and dialogue between consumers and producers has been institutionalized in the form of the International Energy Forum (IEF). Significantly, in addition to creating structures for dialogue, the IEF supports ongoing sharing and collation of data in the form of the Joint Oil Data Initiative. However, the improved dialogue has not yet led to effective mechanisms that can reliably stabilize oil prices, as became evident in the wild price swings of 2006–09. Moreover, energy supply security is increasingly reflected in regional agreements, notably in the ASEAN Agreement on ASEAN Energy Cooperation (ASEAN, 1986) and the Energy Charter Treaty (ECT, 1994). Taken collectively, these statements suggest considerable international consensus on the importance of energy supply security, and at least some investment in large-scale coordination to enable countries to achieve energy security, particularly through the smooth functioning of energy markets. But the geopolitics of energy security are not so easily addressed. As readily available supplies fall short of rapidly increasing demand, we see growing competition for energy resources, with energy at the heart of many of the world's most pressing geopolitical challenges. Proven oil and gas reserves are heavily concentrated in a small number of countries whose political stability is not assured and where production is controlled by state-owned firms whose fidelity to market principles cannot be assumed. Although figures on oil and gas reserves are notoriously unreliable, the available data indicate that well over half, and probably more in the order of 75 per cent, of oil and gas reserves are held by these state-owned firms (PetroStrategies Inc, 2010; US EIA, 2010). The existing cooperative response by oil-consuming countries, via the IEA's coordination of national oil stockpiles, does not include such enormous and rapidly growing sources of demand as India and China (Florini, this issue). And the rising consumers have demonstrated a lack of faith in international oil markets, with their much-discussed efforts to develop overseas energy assets (Dubash, this issue; Kong, this issue). The disputes in the oil-rich South China Sea offer one clear indication of the potential for conflict. Riven by conflicting territorial claims involving China, Vietnam, Brunei, Malaysia, Taiwan, Indonesia and the Philippines, competition over the South China Sea led to bloodshed between China and Vietnam in 1974, and intense posturing between China and the United States in 2010. Energy poverty Energy poverty is widespread and persistent. About 1.4 billion people lack access to electricity and 2.7 billion use biomass for cooking (IEA, 2010), depriving them of any opportunity to participate in energy-dependent processes of economic modernization. Instead, these billions eke out a grueling existence, suffering the consequences in health (indoor pollution from biomass burning), opportunity costs (hours spent gathering fuels, which cannot be spent more productively) and environmental degradation (deforestation and soil depletion). While energy poverty is largely a domestic issue, its wide-scale global prevalence, the potential for technological and institutional learning across borders and its importance to the success of a broader anti-poverty agenda make this an important issue for global governance. Although the eradication of poverty is a high-profile international cause, the poverty agenda is seldom directly linked to energy. Yet, there is considerable evidence that access to energy and the quantum of its use is closely correlated with both economic growth (Feinstein, 2002) and advances in human development (Martinez and Ebenhack, 1997). To the degree that international pronouncements on development and poverty do mention energy, they tend to fall into three broad categories: big picture calls linking energy and development; more explicit, if back door, linkages between energy and poverty in the context of the Millennium Development Goals (MDGs); and a few direct efforts to address energy poverty. First, on occasion global political declarations from the G8 and G20 allude to the role of energy in alleviating poverty. But these passing mentions stand in contrast to the explicit focus and attention given to concerns such as energy security at St Petersburg in 2006, and climate change at Gleneagles in 2005. When energy poverty is mentioned, it tends to be couched within larger objectives. Thus, the St Petersburg Declaration links energy to 'quality of life and opportunities', the Pittsburgh G20 Declaration links access to energy with 'sustainable growth' and the Gleneagles Declaration calls for increasing access to modern energy services as part of a larger package aimed at addressing climate change and achieving sustainable development. Second, energy has a complex relationship to UN-led initiatives on global poverty and sustainable development. This complexity is, arguably, due to an unresolved question at the root of sustainable development – are increasing growth and consumption really compatible with environmental sustainability? (Lele, 1991) This question has the potential to pit energy haves against have nots; the latter fear that environmental concerns will perpetuate their low energy consumption levels. By one interpretation, the lack of an MDG on energy is an artifact of these tensions (Hodas, 2010). These environment versus development tensions are also apparent in the UN Framework Convention on Climate Change (UNFCCC), which pointedly notes that, climate change concerns notwithstanding, developing countries in particular will need to increase their energy consumption in order to achieve 'sustainable social and economic development' (UNFCCC, 1992). Given the absence of an MDG on energy, energy for development and poverty alleviation has been worked on to the international agenda in less direct ways. For example, UN-Energy, the coordinating mechanism for energy across the UN, devoted its first report to energy poverty in 'recognition of the centrality of providing energy services in the pursuit of the MDGs' (UN-Energy, 2005, p. 1). Despite the lack of explicit attention to energy in Agenda 21, the Commission on Sustainable Development charged with its implementation has focused on energy for its ninth, 14th and 15th meetings (Hodas, 2010). However, as the CSD-15 chairperson's report notes, considerable divisions remained around energy and climate change (CSD, 2007). Third, multilateral donor agencies such as the World Bank have placed some emphasis on energy access for the poor, but this is often subordinate to a larger objective of neoliberal reform. For example, the World Bank's influential energy strategy of 1993 which guided its work for nearly a decade focused on structural reform, increasing private sector participation, improved regulation and promotion of commercial practices (World Bank, 1993). Such reforms, which do not specifically incentivize service to the poor, have not necessarily reduced energy poverty. By the late 1990s, the World Bank's attention had shifted to developing an energy and environment strategy, although many of the earlier objectives around sector reform found a place in this strategy under a new guise (World Bank, 2000). The only explicit mention of energy poverty as one of four objectives comes in an 'informal' 2001 strategy to supplement the environment strategy (Feinstein, 2002).11 A 2009 approach paper towards a new World Bank strategy identifies the 2001 document as an 'informal strategy'. More recently, the World Bank is considering a new strategy that is organized directly around two pillars: improving access and reliability of energy supply; and facilitating a transition to clean energy (Nakhooda, this issue; World Bank, 2009). This twin objective reflects, perhaps, a growing clarity that both these aims have to be pursued simultaneously, even if tensions over whether the two are in conflict or not have as yet been incompletely addressed. Environmental sustainability The rise of environmental sustainability as an important objective of global energy governance is arguably the single most dramatic shift in the global energy landscape over the last two decades. This attention has been propelled by the threat of global climate change but also includes concerns of local pollutants, the environmental costs of mining, and other, non-energy-related environmental concerns. The sustainability thread runs from the 1972 Stockholm Conference on the environment, through the 1988 Brundtland Report which provided a single (if not particularly satisfying) definition of sustainable development, to the 1992 Earth Summit at Rio, which sought to operationalize the concept. While Stockholm set the stage for recognition of environmental challenges, Rio focused attention on the global character of these problems.22 UN General Assembly Resolution 44/228 setting in place a negotiation process for a framework convention on climate change explicitly recognizes the 'global character' of many environmental problems. As discussed above, while the Rio Declaration and Agenda 21 did not have explicit sections on energy, the linkages to energy through protection of the atmosphere, agriculture and other sectoral concerns are clear.33 See, for example, the Agenda 21 chapter on 'Sustainable Agriculture and Rural Development' which calls for a mix of 'cost effective fossil and renewable energy sources that is itself sustainable'. The most consequential outcome of Rio from an energy perspective, however, is undoubtedly the UNFCCC and its subsequent process. Given that energy accounts for some two-thirds of greenhouse gas emissions, climate policy necessarily carries potentially significant consequences for the future of energy globally. Moving beyond global declarations and conventions, notable among efforts to internalize the environmental sustainability objective is the World Bank's articulation of an environment strategy for energy in its 2000 Fuel for Thought document. This document broke new ground for an institution that hitherto had focused on financing and promoting new sources of energy supply by acknowledging and seeking to internalize the existence of environmental trade-offs (see Nakhooda, this issue). Although the extent of changes in lending practices and even in the underlying approach are debated (Mainhardt-Gibbs, 2009), the objectives are clearly reoriented to favor environmental outcomes. More recently, and as the climate change negotiations have become increasingly bogged down, energy-related environmental concerns have increasingly found their way into high-level political statements. The G8 Gleneagles Communiqué of 2005 squarely sought to reinvigorate global action on climate change. The Pittsburgh G20 summit in 2009 focused on promoting energy efficiency in particular by phasing out subsidies for fossil fuel, in part because they impeded a transition to clean energy sources, a concern echoed by the Leaders Declaration from the Asia Pacific Economic Cooperation (APEC). Perhaps even more instructive, it is rare to see a global political declaration, whether of the G8/20 or the Major Economies Forum, that fails to make an explicit reference to the need for attention to the global environment in general and climate change in particular. And climate is increasingly seen as more than an environmental externality. Its sweeping implications make it a question of national and international security. The UN General Assembly in a 2009 resolution expressed its deep concern 'that the adverse impacts of climate change, including sea-level rise, could have possible security implications', and asked for a report from the Secretary General (United Nations, 2009). A number of retired senior American generals and admirals released a report in 2007 expressing deep concerns over the potential for climate change to serve as a threat multiplier and thus directly endanger national security (CNAC, 2007). By 2010, climate change had become an explicit item in the US National Security Strategy, which noted that 'The change wrought by a warming planet will lead to new conflicts over refugees and resources; new suffering from drought and famine; catastrophic natural disasters; and the degradation of land across the globe' (White House, 2010). Domestic good governance and corruption Energy has been susceptible to a high degree of corruption and rent seeking because of the ease of bypassing normal channels of accountability, the concentration of fossil fuel deposits in countries that have not yet developed effective domestic institutions, and the tendency to deliver energy services through highly centralized large infrastructure projects. Consequently, energy-related concerns have been critical to pushing domestic good governance concerns up the global governance agenda. The landmark Organisation for Economic Cooperation and Development (OECD) Anti-Bribery convention of 1997, which was the first instance of an anti-corruption instrument on the 'supply side' of a bribery transaction, is a notable example of this emergent attention (OECD, 2010). Others include the UN Convention against Corruption of 2003 and Principle 10 of the UN Global Compact which enjoins business against corruption (United Nations, 2003, 2004). It is important to recognize the importance of energy to global financial flows. In the mid-1990s, for example, oil and gas and power sector investments together accounted for about 40 per cent of export credit agency financing, which is the main mechanism through which governments support overseas investment and trade by their companies (Maurer and Bhandari, 2000). In many cases these transactions involve dealing with governments that have direct ownership over energy resources, leaving enormous scope for rent seeking (Clifford, 2006; Global Witness, 2004; Human Rights Watch, 2003; Kolas and Tonnesson, 2006). Growing attention to energy and domestic governance owes a great deal to the activities of civil society groups that have played an important role in bringing instances of corruption to light, and institutionalizing mechanisms such as disclosure-based regulatory tools (Florini and Saleem, this issue). Although this new impulse is yet to command the sort of global consensus at the multilateral level that marks many of the other objectives discussed here, it is included as an important new and growing area of concern for global energy governance. Toward a framework for global energy governance To understand global energy governance requires blurring several boundaries – between different fuel sources and markets, between state and nonstate actors and between global and national scales. We now turn to a more detailed exploration of all three, as crucial components of a conceptual framework. Understanding fragmented global energy governance: the trade-offs and the actors Global energy governance is a challenge in part because, as the discussion above suggests, the objectives around which governance is organized are themselves fragmented, inconsistent and unprioritized. To the degree that states and other actors have established rules and organizations to try to deal with the four sets of market/governance failures, it has generally been as a result of a particular crisis (as in the case of oil in the 1970s), or as a sideline of efforts to achieve other objectives (such as the energy poverty role of the multilateral development banks as a component of their larger development mission). Each issue has moved up the policy agenda of late for a host of idiosyncratic reasons. As they do so, the tensions among them, and the lack of capacity to resolve those tensions, are becoming more and more apparent. Thus, concern about energy supply security grew out of the oil crises of the 1970s, and has since been rediscovered in many other guises, most recently in reaction to growing demand from Asia. Energy as an issue of environmental sustainability came of age in the late 1980s and 1990s with the spread of the modern environmental movement and acquir