Global energy cooperation needs urgent reform, say researchers

China and other developing nations must play a larger role in global energy governance, according to senior UK, Chinese and US energy experts.

A committee, led by Lord Browne of Madingley in the UK, along with senior Chinese and US experts is calling for world leaders at the G20 summit in Brisbane next weekend to commit to energy governance reform that is more inclusive of developing nations.

Their statement, issued today and published below, is underpinned by research carried out at the Grantham Institute at Imperial College London, together with China's Energy Research Institute (ERI) of the National Development and Reform Commission (NDRC).

Energy policy experts at these two institutions have published a study, "Global Energy Governance Reform and China's Participation", alongside the committee's statement, which focuses on the need for reform and sets out recommendations for improving cooperation on international energy policy.

'Significant development'

Neil Hirst, Senior Policy Fellow at the Grantham Institute, Imperial College London and head of the project in the UK, says: "It is vital to get the main players round the table to tackle the critical issues of climate change and energy supply that we are facing. Energy governance reform is key to this and the G20 now has a critical opportunity to give top level direction. The participation of senior Chinese figures in today's statement is a significant development, which shows that the door is open."

Neil Hirst, Grantham Institute Senior Policy Fellow

The committee highlights the challenges of global energy policy set out in the Grantham Institute/ERI report.  In particular, it focuses on the need to increase the supply of energy services to support rising living standards and poverty eradication, the need to address critical issues of climate change and pollution, and the need to maintain energy security.

It calls for the world's most influential body for energy cooperation, the International Energy Agency (IEA), to open its doors to developing countries to enable them to play their part in global energy issues, and not restrict membership to countries that are members of the Organisation for Economic Co-operation and Development (OECD).

"The IEA is already taking important steps to engage with developing nations, which the committee supports, but we believe restricting membership to the OECD presents a huge barrier to progress," adds Mr Hirst. "We need reforms that can help stabilise energy markets, mitigate climate change and support poverty eradication. In order to achieve these, we need more inclusive structures that will enable China and other major developing nations to be involved in world leadership on these tough questions - as befits their role in energy markets."

The G20 group, a forum for international economic cooperation and decision-making, will hold its annual Leaders' Summit from 15-16 November, in Brisbane, Australia.   More inclusive global energy governance is expected to be on their agenda. 

STEERING COMMITTEE STATEMENT

(1) Some of the most critical issues facing world leaders today are in the field of energy policy.  Maintaining the rise of living standards and poverty eradication around the world requires a rapid continuing increase in the provision of energy. However a transformation is needed in the way that energy is supplied and used to address the equally critical problems of climate change and urban pollution. Meanwhile, concerns about energy security are resurfacing at a time of instability in some oil producing regions.

(2) These are problems requiring global cooperation at the highest level.  There is a high level of common interest and potential for cooperation.  Unfortunately, today's institutions for global energy governance are fragmented and rooted in the 1970s before the rise of major developing nations, before the recognition of the threat posed by climate change, and when producer/consumer relations were more adversarial than they are today.  There is a clear need for more inclusive structures that will enable China and other major developing nations to assume a position which befits their role in energy markets. There is also a need for closer cooperation between producing and consuming nations.

(3) These reforms could make a vital contribution to the security of energy markets, mitigating climate change, promoting technology collaboration and innovation, and supporting poverty eradication. 

(4) The G20, on which major developing and developed nations are represented on a basis of equality, has an essential part to play.   We call upon the G20, at their meeting in Brisbane on 15 and 16 November, to deliver a strong message on the need for these changes and to adopt a continuing leadership role in bringing them about.

(5) The Energy Research Institute of China's NDRC, and the Grantham Institute, Imperial College London, are working together on this topic. We have agreed to serve as a Steering Committee. Today we are releasing their discussion document, for the first time in both Chinese and English.  This contains detailed proposals for reform.

(6) China is already increasing its participation in existing organisations of energy cooperation, and working to enhance its role and to accept its share of responsibility for leadership on global energy issues.  China is also advancing its own revolution in energy production, consumption, technology, and management systems.  

(7) A process of consultation and confidence building should now begin between the IEA and major developing nations, towards the creation of an inclusive body for international energy cooperation, committed to free and open international energy markets. This can be achieved through evolution and expansion of the IEA.  The IEA should open its doors, in principle, to major developing countries.  The consultations should also consider the development of constructive relations with OPEC producing countries, working with the International Energy Forum.

(8) The IEA's current Association proposals are a welcome step in the right direction, which we support.  But the restriction of IEA membership to OECD countries is a formidable barrier which limits what can be achieved.  There is a strong argument for building on existing institutions wherever possible, but if this problem cannot be solved it may become necessary to create a wholly new body for global energy cooperation.

(9) We recognise the important contributions of the IEF, the Energy Charter Treaty Organisation, the Clean Energy Ministerial, and the many bodies specialising in particular areas of energy policy and technology.  A genuinely global body for energy policy cooperation could provide a centre to help focus and coordinate their work.  

See the press release of this article