Global energy governance ‘needs urgent reform’

By Kieren Cooke on 25 January 2013

Existing bodies overseeing the global energy sector are inadequate and have failed to adapt to widespread changes in energy supply and demand, says a new report. A shake-up of global energy institutions is urgently needed – and nothing short of a technology revolution is called for in order to tackle the twin challenges of rising energy demand and climate change mitigation.The world badly needs secure energy supplies and a stable climate. But the international mechanisms it has developed to regulate the way energy is exploited and shared belong to another era, analysts say.

The report, The Reform of Global Energy Governance, by Neil Hirst at the Grantham Institute for Climate Change at Imperial College, London and Antony Froggatt of the London-based think tank, Chatham House, outlines how the energy market has changed in recent years.

The most developed OECD countries traditionally made up the bulk of world energy demand but now account for less than 45% – a share which is continuing to decline. The developing nations are the new big players on the block.

China is now the world’s largest energy consumer and also its largest CO2 emitter. World oil demand, largely driven by the so-called Bric countries, increased by 24% between 1990 and 2009 and is set to go up by a further 12% by 2025.

These profound and far-reaching changes in the global energy scene are having a big impact not only on the way economies develop but on the climate. Yet the institutions which oversee an energy trade that is worth about $2.3 trillion per year – or 16% of all international trade -  belong to another era.

Different priorities

The main player in global energy governance, the International Energy Agency (IEA), does not even have the Bric countries as members, with institutional rules and structures standing in the way of any change. This, says the report,  is  “a serious problem.”

Profound differences persist between the OPEC countries, who are committed to production quotas, and the IEA countries, who value open energy markets above all else.