Global Energy Governance

Global Energy Governance: The New Rules of the Game

Copyright Date: 2010
Pages: 372
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  • Book Info
    Global Energy Governance
    Book Description:

    The global market for oil and gas resources is rapidly changing. Three major trends -the rise of new consumers, the increasing influence of state players, and concerns about climate change -are combining to challenge existing regulatory structures, many of which have been in place for a half-century.Global Energy Governanceanalyzes the energy market from an institutionalist perspective and offers practical policy recommendations to deal with these new challenges.

    Much of the existing discourse on energy governance deals with hard security issues but neglects the challenges to global governance.Global Energy Governancefills this gap with perspectives on how regulatory institutions can ensure reliable sources of energy, evaluate financial risk, and provide emergency response mechanisms to deal with interruptions in supply.

    The authors bring together decisionmakers from industry, government, and civil society in order to address two central questions:

    •What are the current practices of existing institutions governing global oil and gas on financial markets?

    •How do these institutions need to adapt in order to meet the challenges of the twenty-first century?

    The resulting governance-oriented analysis of the three interlocking trends also provides the basis for policy recommendations to improve global regulation.

    Contributors include Thorsten Benner, Global Public Policy Institute, Berlin; William Blyth, Chatham House, Royal Institute for International Affairs, London; Albert Bressand, School of International and Public Affairs, Columbia University; Dick de Jong, Clingendael International Energy Programme; Ralf Dickel, Energy Charter Secretariat; Andreas Goldthau, Central European University, Budapest, and Global Public Policy Institute, Berlin; Enno Harks, Global Public Policy Institute, Berlin; Wade Hoxtell, Global Public Policy Institute, Berlin; Hillard Huntington, Energy Modeling Forum, Stanford University; Christine Jojarth, Center on Democracy, Development, and the Rule of Law, Stanford University; Frederic Kalinke, Department of Politics and International Relations, Oxford University; Wilfrid L. Kohl, School of Advanced International Studies, Johns Hopkins University; Jamie Manzer, Global Public Policy Institute, Berlin; Amy Myers Jaffe, James A. Baker Institute for Public Policy, Rice University; Yulia Selivanova, Energy Charter Secretariat; Tom Smeenk, Clingendael International Energy Programme; Ricardo Soares de Oliveira, Department of Politics and International Relations, Oxford University; Ronald Soligo, Rice University; Joseph A. Stanislaw, Deloitte LLP and The JAStanislaw Group, LLC; Coby van der Linde, Clingendael International Energy Programme; Jan Martin Witte, Global Public Policy Institute, Berlin; Simonetta Zarrilli, Division on International Trade and Commodities, United Nations Conference on Trade and Development

    eISBN: 978-0-8157-0464-5
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Foreword
    (pp. ix-xii)
    Wolfgang Reinicke

    In his contribution to this volume, Joe Stanislaw writes about the “monumental, multigenerational global challenge” that we are confronted with in the energy domain today. He is not exaggerating. Dwindling low-cost hydrocarbon reserves, the rise of new consumers such as China and India, and of course the specter of climate change dictate a fundamental reordering of existing energy systems. That reordering will be neither easy nor cheap. Whether we will succeed in tackling the resulting challenges depends on our ingenuity and particularly on the availability of sufficient political will to make change happen.

    Traditionally, discussions on energy security have focused...

  4. 1 The Role of Rules and Institutions in Global Energy: An Introduction
    (pp. 1-22)
    Andreas Goldthau and Jan Martin Witte

    Current public policy debates on energy security are characterized by a sharp focus on questions regarding access to resources and associated geopolitical and geoeconomic challenges. China’s new “scramble for Africa” has already become the stuff of legend; access to the gas resources of the Caspian Sea region is the subject of extensive geopolitical scheming; and the race for the presumed resource wealth of the Arctic has begun in earnest.

    This focus on the geopolitics of energy is rooted in the deep fears of consumers about security of supply, leading them to put strong pressure on policymakers to come up with...

  5. 2 Energy Diplomacy in Trade and Investment of Oil and Gas
    (pp. 25-48)
    Andreas Goldthau

    To secure enough oil and gas for their rising energy needs, emerging consumer countries such as China increasingly enter into energy contracts using state diplomacy. Even producer countries like Russia have adopted a state-backed strategy to supplement their domestic energy sources. Both modalities have been labeledenergy diplomacy.The term commonly connotes the way countries give their energy companies a competitive edge in bidding for resources by using the state’s power: consumer countries strengthen their supply situation by diplomatically flanking energy contracts, whereas producer countries use diplomacy to enhance access to markets or reserves.

    To be sure, the phenomenon of...

  6. 3 Managing the Patchwork of Agreements in Trade and Investment
    (pp. 49-72)
    Yulia Selivanova

    Energy markets are constantly evolving, making it difficult to adopt international rules for each new circumstance. However, current trends toward tighter supply and increased demand require a reliable framework for trade and investment in oil and gas. The energy sector accounts for the biggest share of trade flows (20 percent in 2007) and is set to grow further in the future.¹ At the same time, bilateral disputes, related mainly to the gas trade, have prompted the question whether any international rules could reduce tensions and provide speedier resolution to disputes.

    Energy is different from any other commodity for a number...

  7. 4 Development of the Emerging Biofuels Market
    (pp. 73-98)
    Simonetta Zarrilli

    Growing concerns about oil price volatility, independence on foreign oil supplies, and the climate change ramifications of fossil fuel use have drawn substantial attention to renewable energies—including biofuels—as alternatives to meeting the world’s energy demand.

    Both supply and demand of biofuels are expected to rise dramatically in the coming years, and according to many, the unfolding of this energy revolution may have far-reaching consequences for agricultural production, world trade, and development. Biofuels present many opportunities, especially for those developing countries with land to devote to feedstock production, a favorable climate to grow them, and abundant farm labor. Positive...

  8. 5 Trade and Investment in Global Energy: A Policy Perspective
    (pp. 99-104)
    Ralf Dickel

    The previous chapters, part 1 of this volume, deal with the regimes for energy trade and investment flows across borders and the development and transfer of new technologies, that is, instruments to overcome restrictions created by the existence of national states and borders. This chapter addresses two questions: whether these regimes are sufficient to govern supply and demand of energy and its price formation on a global basis; and what role international organizations and national governments play or should play in defining and monitoring the balance of supply and demand and price formation.

    The year 2008 saw unprecedented price movement...

  9. 6 State-Backed Financing in Oil and Gas Projects
    (pp. 107-132)
    Amy Myers Jaffe and Ronald Soligo

    A long process of structural change has been experienced in the international oil industry over the last several decades. Increasingly, control of oil resources has been returning to national governments through the stewardship of their national oil companies. National oil companies (NOCs) now command over 80 percent of the remaining global oil reserves and will overwhelmingly dominate world oil production and pricing in the coming decades. By comparison, Western international oil companies (IOCs), which dominated the world oil scene in the nineteenth and twentieth centuries, now control less than 10 percent of the world oil resources.

    According to the respected...

  10. 7 How Do Emerging Carbon Markets Influence Energy Sector Investments?
    (pp. 133-160)
    William Blyth

    This book is concerned with the energy security and governance challenges associated with meeting an increasing demand for energy from an expanding global population. While there is no lack of hydrocarbons on the planet, the extent to which these can be used is constrained by, among other things, the capacity of the atmosphere to absorb carbon emissions without dangerously altering the world’s climate. Globally, the energy sector contributes almost 60 percent of the world’s annual greenhouse gas emissions, making it impossible to disentangle questions of energy policy from questions of climate policy.

    The total value of the world’s energy consumption...

  11. 8 Financing the Future: Investments in Alternative Sources of Energy
    (pp. 161-182)
    Hillard Huntington and Christine Jojarth

    The confluence of technological breakthroughs, exploding oil prices, and political concerns about energy dependence and climate change has made alternative energy an attractive investment choice. New investments in this sector recorded more than a sevenfold increase between 2004 and 2008, and the market capitalization of clean technology companies more than doubled during this same period. However, this trio of technological, economic, and political investment drivers has been severely hit by the financial crisis into which the world plunged in the fall of 2008.

    The credit crunch is drying up the financial flows into research and development, threatening to slow the...

  12. 9 A New Green Deal and the Future of Global Energy: A Policy Perspective
    (pp. 183-192)
    Joseph A. Stanislaw

    It took just over a year to scramble the already complex calculus of local and global energy governance beyond recognition.

    That was then: in October 2007 Al Gore shares the Nobel Peace Prize; shortly thereafter, concern over climate change reaches fever pitch as the Intergovernmental Panel on Climate Change (which shared the Nobel with Gore) issues a damning report on global warming. By summer 2008, oil hits US$147 a barrel, and gasoline in the United States hurtles to more than US$4 a gallon. Energy producers are kings of the game. Venture capital and private equity flow into green technology start-ups...

  13. 10 Consumer Country Energy Cooperation: The International Energy Agency and the Global Energy Order
    (pp. 195-220)
    Wilfrid L. Kohl

    New consumers such as China and India change the global energy landscape in a number of ways. Most prominently, these newcomers are treated as mere competitors over global resources, challenging the dominant position of the well-established Western consumer bloc. Yet the rise of China and India, along with other emerging economies, also has important implications for the architecture of global energy regarding consumer-consumer cooperation. Cooperation among consuming nations is key to buffering the risks stemming from the volatile oil market and to combat climate change. Hence it is appropriate to assess the impact the newcomers have on existing forms of...

  14. 11 The Evolving Role of LNG in the Gas Market
    (pp. 221-246)
    Dick de Jong, Coby van der Linde and Tom Smeenk

    The global energy scene is changing rapidly. Producing countries are tightening their grip on the development of their resources, emerging (and other) economies are taking a direct political interest in securing supplies, politics and business are increasingly integrated in international energy deals, and energy is on the political agenda of every government. Compounding this, prices of energy skyrocketed over the four years leading up to August 2008. As a result more gas resources became economical to develop, creating more supply potential than before.

    However, the severe crisis in international financial markets and national banking systems is now changing this outlook....

  15. 12 The International Energy Forum and the Mitigation of Oil Market Risks
    (pp. 247-268)
    Enno Harks

    Oil and gas markets are once again at the forefront of international attention and home politics. The years of oil prices racing to hitherto unknown levels—close to US$150 a barrel, which would have been called a crisis in former times—signaled to some the end of cheap oil and to others the end of oil itself. Since then the implosion of oil prices in the wake of financial turmoil has brought consumers some relief but has also raised some fundamental questions: What exactly happened to the oil market? More important, where were the tools to remedy signs of irrational...

  16. 13 The Future of Producer-Consumer Cooperation: A Policy Perspective
    (pp. 269-284)
    Albert Bressand

    The picture of the relations between energy-consuming and energy-producing countries that emerges from chapters 10, 11, and 12 is a contrasted one. On the one hand, a policy agenda of global cooperation on energy matters has begun to take shape, albeit still timidly. As documented by Dick de Jong, Coby van der Linde, and Tom Smeenk (chapter 11), consumers and producers have overcome their bipolar view of the past and now recognize a number of common challenges, at least as far as oil markets are concerned. The institutional structure supporting this emerging policy dialogue is strengthening, in a low-key yet...

  17. 14 The Good/Bad Nexus in Global Energy Governance
    (pp. 287-314)
    Thorsten Benner, Ricardo Soares de Oliveira and Frederic Kalinke

    Traditionally, global energy governance has been a value-blind enterprise dominated by crude realpolitik concerns. For energy-importing governments in the industrialized world only two variables mattered: the price and the security of supply of the lifelines of industrial civilization, especially oil. Likewise, oil-exporting countries (which are mainly in the developing world) put a premium on price as well as continuous and long-term rent generation through exports. International energy companies were powerful intermediaries; they cared about maximizing access to hydrocarbons and about their own profits. International financial institutions, both private banks and public institutions such as the World Bank, cared solely about...

  18. 15 Building Global Rules for Sovereign Wealth Funds
    (pp. 315-340)
    Jamie Manzer and Jan Martin Witte

    Institutions matter in the world of energy security. Institutions not only help make markets tick, they also act as standard setters, determinants of the rules of the game. Up until now, sovereign wealth funds (SWFs) have not been subject to international or multilateral rules, but rather their investment practices and data have been largely unscrutinized and regulated only at the national level.

    On September 8, 2008, representatives of sovereign wealth funds, finance ministries, central banks, and the International Monetary Fund (IMF) convened in Santiago, Chile, after a six-month negotiation process to launch the so-called Santiago Principles, a set of twenty-four...

  19. 16 Global Energy Governance: The Way Forward
    (pp. 341-356)
    Andreas Goldthau, Wade Hoxtell and Jan Martin Witte

    This book presents a new analytical perspective for examining contemporary public policy challenges in global energy. As emphasized in the introduction to this volume, much of the recent debate in the field is characterized by a fairly narrow focus on resource nationalism, access to energy, and corresponding geopolitical implications. This perspective, it is argued, is based on the myopic assumption that global energy politics is necessarily a zero-sum game, in which one country’s energy security is another’s lack thereof. We posit that this traditional focus on energy security is incomplete at best and quite frequently results in misleading policy conclusions....

  20. Contributors
    (pp. 357-358)
  21. Index
    (pp. 359-372)
  22. Back Matter
    (pp. 373-373)