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Testing the Water for Global Energy Governance Reform: Can the Energy Charter Provide a New Benchmark?

by Dr. Marat Terterov - 10 July 2013

Global energy governance is a topic which has come under increasing levels of scrutiny at the moment. Debates about energy security have become more acute in recent years, giving rise to complex global energy challenges. Concerns which consumer nations once had over access to cheap oil flows have transformed into alarming politicisation of present-day gas supplies. Peaking demand for hydrocarbons has caused oil and gas prices to spiral inexorably upwards. Consumer country watchdog organisations continue to warn us of the finite nature of fossil fuels. Access to reserves of hydrocarbons is increasingly becoming the domain of national oil champions from non-OECD countries, amidst power shifts from west to east. In large Asian countries – India, China and others – energy demand is accelerating at alarming rates. On the climate side, global management and regulation of harmful CO2 emissions remains a highly complex task. Further, non-OECD nations now seek a stronger voice in debates on energy security and the commensurate energy challenges within the framework of existing international fora.

Lively debate over energy security and the newfound salience of associated energy challenges has created the space for an academic discussion on global energy governance. The term global energy governance may implicitly point towards a form of global energy order in the international system. However, the actual governance landscape is dominated by energy governors, often with divergent agendas, rather than promoting any form of collective order or rules of the game which could be widely accepted. While there appears to be a dearth of consensus in the academic literature on any form of collective energy security, in the prevailing global governance landscape the main form of common ground emerging is that reform of institutions is desirable.

This paper asks the question whether the Energy Charter, an east-west energy cooperation project which emerged in the 1990s, can provide a new benchmark for reform. While strong US influence over the International Energy Agency limits the scope of reforming the IEA, the Energy Charter constituency (which includes more than 50 member countries) has mandated modernisation of the Charter. The case of the Energy Charter is pointed out as an audacious opportunity of a global energy governance reform: the most obvious test case available today. That said, it is also suggested that much work remains to be done if successful reform of the Energy Charter is to be forced through. In particular, the need is pointed out for stronger political ownership to drive the Charter Process and the necessity to change the perception held by some oil producing countries that the Energy Charter Treaty is inimical to their national interests.


The contents of this work are the author's sole responsibility. They do not necessarily represent the views of the Energy Charter Secretariat or any members of the Energy Charter Treaty.