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Research Report


David Goldwyn
Phillip Cornell
Copyright Date: Apr. 1, 2017
Published by: Atlantic Council
Pages: 22
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Table of Contents

  1. (pp. 1-1)

    Energy security—defined as affordable, reliable access to the energy resources required for national prosperity—has been a cornerstone of US national security for decades with strong bipartisan consensus. In both periods of scarcity and times of abundance, the United States has protected its interests by fostering open trade, resisting attempts by countries to withhold the supply of critical resources (from oil and gas to rare earth minerals), and sustaining American energy production by assuring access to export markets. Experience has shown that domestic security is enhanced by promoting the diversification of supply worldwide to avoid the coercion of friends...

  2. (pp. 1-1)

    At this time of dramatic change in energy markets, from the shift in demand from West to East, to the democratization of the energy supply, to the accelerating development of renewable technologies and digital innovation, to unprecedented international agreement on pursuing pathways to reduce the rate of the planet’s warming to two degrees centigrade, the Atlantic Council Task Force set about to examine whether these arrangements are still necessary, if their structures are adequate to their tasks, and how they might be improved to be fit for modern purpose.

    The Task Force also investigated whether current institutions adequately address twenty-first-century...

  3. (pp. 2-2)

    With energy (and particularly oil and gas) remaining a strategic commodity, and given the control of foreign governments over much of those reserves, collective action is still needed to protect markets. The world learned this lesson through adversity. Pre-war Europe hoarded industrial supplies of coal and steel, driven by militaristic national competition. In the immediate aftermath of the 1973 embargo by Arab members of the Organization of the Petroleum Exporting Countries (OPEC), countries that had previously contracted bilaterally for supply were required to share supply by reallocating their holdings. Pricing and contracts of oil and gas were not transparent. Global...

  4. (pp. 3-3)

    The IEA is arguably the most wide-reaching and influential body that covers much of the fuel array and represents the developed countries. It conducts one “hard” function in recommending and coordinating the release of strategic oil stocks in the event of short-term supply disruptions, but it also serves as a clearing house for energy statistics, provides outlooks of the various fuel markets, and conducts analyses that aim to inform national policies. The IEA is the established forum for discussing energy issues among developed countries, and has recently made significant efforts to increase the involvement of major non-member countries like China...

  5. (pp. 4-5)

    Over the past decade, fundamental changes in the global energy economy have taken place with considerable speed. At the same time, the natures of both industry and political institutional structures have also changed.

    Since the 1980s, international energy companies (like much of the rest of the economy) have seen steady deregulation away from strict post-war industrial policies. Particularly in Europe, privatization and the erosion of national monopolies have generally introduced greater efficiency and competition, but also complicated the maintenance of public goods. In the United States, successive waves of deregulation of the natural gas and power markets have positively impacted...

  6. (pp. 6-7)

    What then are the energy challenges and policy priorities of the twenty-first century, and how prepared are twentieth-century institutions to address them? How best can broad objectives of domestic energy policy (reliability of service, affordability of service, safety/security/health, interregional commerce, environmental concerns, and energy industry prosperity and jobs) be served by international institutions?

    Markets. From a US perspective, the new landscape provides major opportunities to supply energy technology and digital energy management tools, as well as hydrocarbon commodities, to global markets. Fostering open trading systems to assure fair access to overseas markets, free trade in energy, and utility of strategic...

  7. (pp. 8-9)

    International engagement remains fundamental to US interests, including in the energy sphere. The world, and particularly the energy market, is deeply connected, and responsible global leadership has brought enormous benefits to the welfare of the American people.

    The post-war era of American preeminence was rooted in a security and economic architecture that fostered stability and prosperity abroad as well as at home, and one that provided opportunities for American industry to spread around the globe. Building on that success means recognizing the role of functional international governance. Ultimately, the combination of a stable international system rooted in market principles, the...

  8. (pp. 10-10)

    Based on these broad findings, the Task Force established basic principles for change when it comes to providing policy recommendations.

    Avoid institutional proliferation. While it is true that multiplicity can be a strength, existing overlaps in the regime complex are the result of institutional creation to address specific issues and crises, and subsequent inertia that locked them in absent a sunset clause. The Task Force therefore seeks to focus on reforming existing structures and, where possible, rationalize redundancies.

    Seek to address fragmentation gaps. Representation, coordination, and implementation continue to be the areas where gaps exist—sometimes because they can be...

  9. (pp. 11-15)

    The United States benefits directly from oil security, gas security, the opening of markets for renewables and nuclear investments, and energy poverty reduction. It is not in the national interest to withdraw—doing so would cede leadership, forfeit lucrative markets, and could allow less market-based and less transparent competing models to prevail.

    The United States should reiterate and sustain its commitment to international energy governance. Practically that means maintaining and reinforcing domestic structures in the State Department (Bureau of Energy Resources), Department of Energy (Office of International Affairs), and the White House (Senior Advisor at the National Security Council), and...