The Architecture of International Energy Governance

Abstract

Despite the centrality of energy to global and national politics, international energy governance remains one of the most fragmented areas of international cooperation. In this paper I address three question: Why is international energy governance so fragmented? Why is that fragmentation a problem? And what should we do about it? In brief, energy governance is fragmented between economic energy institutions — such as the International Energy Agency, the Organization of Petroleum Exporting States, and the Energy Charter Treaty — and environmental energy institutions such as the United Nations Framework Convention on Climate Change (UNFCCC). This fragmentation, due in part to path dependence, is problematic because it creates a situation in which the policies adopted in one institution can undermine the effectiveness of policies adopted in another institution. The UNFCCC, for example, aims to create incentives for an economy-wide shift to low-carbon fuels by making low-carbon fuels cheaper relative to high-carbon fuels. Yet economic energy institutions often have the opposite objective and/or effect. The IEA and OPEC both adopt measures aimed at keeping oil competitive with low-carbon substitute fuels, thereby deterring the fuel-switching encouraged by the UNFCCC. Moreover, because economic energy institutions often set policy for only a single type of fuel (such as oil or natural gas), they greatly increase the transaction costs to bargaining over a comprehensive energy production or consumption policy. To reduce the costs of this fragmentation, I make two suggestions. First, the role of the International Energy Forum in coordinating the policies of other intergovernmental energy institutions should be amplified. Second, energy governance should in some cases be further fragmented to de-emphasize linkages that prompt political backlash during negotiations.

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