Sun, Jan 17, 2010 - Page 9 News List

Can energy be governed?

At the global level, a host of international organizations is tasked with governing energy policy. However, those groups are so beholden to interest politics that they often get nothing done

By Ann Florini

Energy lies at the heart of the world’s most pressing global challenges. Yet at both the global and national levels, energy is poorly governed. The fiasco of the Copenhagen climate summit is just one illustration of how far the world is from being able to bring about the desperately needed transition to a system of sustainable and secure provision of energy services.

The key role of energy in global problems is clear. Two-thirds of the greenhouse-gas emissions that are causing climate change trace back to fossil fuel use. A renewed scramble for oil is raising fears of a new generation of geopolitical conflicts. Global economic instability correlates strongly with energy-price volatility. Economic development is in significant part defined by the process of overcoming energy poverty, yet 1.6 billion people still lack access to even the most basic energy services.

Only recently has it become clear that these seemingly disparate issues are a collective manifestation of a dysfunctional energy system. Globally and at the national level, energy is still conceptualized and managed in terms of energy sources, not in terms of the energy services those sources provide. Yet consumers of energy services have no particular interest in what sources of energy fuel their production, transportation, lighting, heating, air conditioning or appliances. The existing paradigm serves to rigidify decision-making at a time when extraordinary flexibility and rapid change are essential.

At the global level, a host of inter-governmental organizations is tasked with addressing various pieces of the energy puzzle. Among these, the most conspicuous is the International Energy Agency (IEA). Created by oil consumers in the 1970s in response to the OPEC price shocks and the embargoes by Arab oil exporters, the IEA has succeeded in establishing and supervising a system of national oil stockpiles, which has helped to prevent a recurrence. With a small but highly competent professional staff, the IEA has also become the primary source for the world’s energy statistics and is playing a key role in the climate debate.

However, it is nowhere near the truly international organization that its name implies. The IEA was established by and for a small number of wealthy oil-importing countries under the aegis of the OECD. Its membership remains restricted to OECD countries, even though surging demand from non-member countries like China and India is rapidly undermining the IEA’s ability to speak for and coordinate responses among oil ­importers as a group. Although the IEA’s mandate has expanded beyond oil since the early 1990’s to include broader energy policy, several of its own member governments, led by Germany, found its record on renewable energy resources so unsatisfactory that they recently established the International Renewable Energy Agency (IRENA), whose membership is open to all.

Other key inter-governmental organizations face their own limits. The International Energy Forum, which grew out of a series of meetings of energy ministers, is intended to provide a common forum for fossil-fuel producers and consumers. It has taken some useful steps that may help to stabilize markets, such as the Joint Oil Data Initiative, but it plays a relatively minor role. The Energy Charter Treaty has failed to bring Russia into a rule-based framework for international transit via oil and gas pipelines. And, the World Bank’s energy financing remains overwhelmingly dedicated to fossil fuels, despite limited efforts to establish funding for low-carbon energy.

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