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Global Dialogue for Sustainable Energy Security

20 October 2006

Madrid, Spain

As we meet, energy security concern tops the political agenda worldwide. And let us face it up-front. We are all 'addicted to energy'. Not as an end in itself. But as a means. We need it to reach economic and social objectives in each and every country. Energy also affects commercial and political relations between countries. It fuels the world economy and impacts the environment. Energy influences international politics and international politics influence energy developments. Energy is a challenge for the industry set to harness it. And a challenge for the national and international political leadership that would govern it. 

The world will need more and cleaner energy, used in a more efficient way, accessible and affordable to a larger share of the world's population. The political challenge lies in operationalizing this energy imperative in a fair and sustainable way. 

Heightened energy consciousness

The heightened energy consciousness that we see around the world is set against a backdrop of some fundamental uncertainties. Are there resources enough? If so, will they be accessible and affordable? Will the investments needed to develop resources be made? What about environmental impact? The geographical mismatch between the centres of oil and gas reserves and centres of consumption? Will there be conflict, a scramble for resources adversely affecting sustainable and equitable global development? Will we see new patterns of energy co-operation shaping new geo-political realities? Or, will geo-political realities be a stumbling block for wise and sustainable patterns of energy co-operation?

Let me suggest some catchwords for our time of heightened energy consciousness:

- Fossil fuels remain paramount for quite some time with increasing attention to development of alternatives.
- Increasing energy demand, efficiency and trade.
- Increasing competition for energy resources and among energy resources. 
- Resource nationalism. Nations wanting to make the most of their endowment.
- Energy interdependence or energy independence for energy security? 
- Environmental concern. Catastrophe or environmentally benign technological breakthroughs to save us?
- Vulnerability of energy production and supply to politically motivated attack, technical mishap and forces of nature.
- Call for transparency and good governance. 
- Energy a 'Public Good'. People expect their Governments to provide sufficient, reliable and affordable energy.
- Demands for equitable access to energy for the quarter of the world's population who do not have it and who will want and need it for a better life tomorrow.
- The shift to Asia of global economic gravity with geopolitical and energy implications.
- Increasing awareness of long-term communality of interests among producers and consumers in a globalizing world.

This heightened energy consciousness, the uncertainties and increasing interdependencies among nations prompt re-think of fundamental policies and relationships. The policy tuning of one country to meet new challenges and to reduce its particular energy uncertainties can in itself exacerbate existing uncertainties or create new ones for others. Not least considering the interrelationship between energy, environment and economic development. As well as the links between energy and geopolitics. Global producer-consumer dialogue acquires increasing importance as nations revisit and modify established policies, and shape new ones, in their legitimate quest for energy security.

Shared responsibility

What are the Energy Ministers saying? At the 10th IEF Ministerial that took place in April this year in Doha, energy ministers of more than 50 countries discussed Energy Security as a 'shared responsibility'. Ministers not only of the industrialized energy consuming nations of the IEA/OECD and Ministers of the petroleum exporting countries of OPEC. But also Ministers of key countries that are not members of those organizations, such as China, India, Russia, South Africa and others that increasingly will influence not only the global energy scenario, but the global economic and political scenario as well. Ministers also met with heads of international organisations and CEOs of leading companies. 

Ministers noted that world economic growth had remained strong despite increasing oil prices and market volatility. They expressed concern over effects of sustained high price levels, which have since come down, on the world economy, and especially on developing countries. Ministers confirmed their shared interest in reduced market volatility and prices at reasonable levels for both consumers and producers. They noted increasing producer and consumer interdependencies.

Ministers underlined the importance of strengthening dialogue and co-operation not only between governments, but also between governments and industry to ensure reliable, secure and affordable energy. They called for a stepping up of investments across the energy chain to meet the substantial increase in demand required for global economic growth and social development in the years ahead.

The world will continue to rely strongly on fossil fuels - oil, natural gas and coal - supplies of which are ample. Ministers underlined the need to accelerate not only investments, but also the development of cleaner fossil fuel technologies and alternative sources of energy as well. And to increase energy efficiency.

Ministers emphasized how crucial it is for the long-term energy security to improve access to markets, resources, technology and financial services. Bolstered by fair and transparent economic, fiscal and legal regulatory frameworks, and by good governance. 

They underlined the importance of transparency and exchange of data for market predictability and the investments required to enhance energy security. They reaffirmed their support to the Joint Oil Data Initiative, JODI for short, which the IEF Secretariat is coordinating, with the support of the IEA and OPEC, APEC, Eurostat, OLADE and UN. The JODI World Database, released to the public last year, carries data on oil production, demand and stocks from more than 90 countries covering more than 90% of global production and demand.

G8 Summit support

Energy Security was at the top of the agenda also at the G8 Summit this summer. In the very first operative paragraph of their St. Petersburg Plan of Action for Global Energy Security, G8 Heads of Government invited the International Energy Forum to study ways of broadening the dialogue between energy producing and energy consuming countries on increasing transparency, predictability and stability of global energy markets including information exchange on their medium- and long-term respective policy plans and programmes. 

In the second operative paragraph of the G8 Plan of Action, Heads of Government welcomed the implementation of the Joint Oil Data Initiative and pledged to take further action to improve and enhance the collection and reporting of market data on oil and other energy sources by all countries including through development of a global standard for reporting reserves. They invited the IEF to work on the expansion of JODI membership and to continue to improve the quality and timeliness of data. 

Greater transparency and better governance is, indeed, increasingly being seen as a prerequisite for long-term and sustainable energy security of both petroleum producing and consuming countries, of industrialized and developing economies alike.

Energy Security

Energy security is a national imperative. A sovereignty issue. But it is also a global issue. And more than an issue of technical arrangements and infrastructure. It has also to do with economic development, geo-politics and the environment. It has domestic and foreign policy implications. It is timely that Energy Ministers are joined also by Prime Ministers, Foreign Ministers and others Ministers in a comprehensive dialogue that involves also industry and other stakeholders in addressing energy security in its wider and more holistic perspective. 

As national and global focus now is being put on issues of energy security, bilateral, regional and inter-regional energy co-operation is also being strengthened around the world. This gives additional impetus to the Global Energy Policy Interrelationship. Parallel processes of global and regional co-operation in a multi-polar energy world can be mutually supportive when heading in the same direction. The IEF provides a global meeting point for the evolving mosaic of regional and inter-regional energy ambition.

Recent international energy developments have, however, induced some countries to regard energy dependence on others with increased caution. Some would argue that dependency on others in so important and strategic an area as energy constitutes a political and economic risk that should be reduced to a minimum, if it cannot be avoided altogether. 

Others would argue that energy dependency ties countries closer together also economically and can serve as an impulse to improve political relations between countries as well and the overall geopolitical climate. Interdependence can be good. And interdependence can be bad. For it to be good and sustainable, it has to be mutually beneficial - win-win. 

There are two sides of the energy security coin. Energy importing countries want security of supply from energy exporting countries. Energy exporting countries in turn want security of energy demand in energy importing countries. They may in addition want and need investments and technology from abroad to develop infrastructure necessary to produce and export their energy resources.

Uniquely poised

The on-going dialogue among Ministers in the IEF transcends traditional political, economic and energy policy dividing lines and affiliations in a multi-polar energy world of increasing interdependencies. The IEF is not a decision-making organisation or a forum for negotiation of legally binding settlements and collective action. It is a forum for informal and frank dialogue, where Ministers, gathered under one global umbrella, voice their national interests and perspectives while seeking consensus-oriented approaches to global energy challenges ahead. 

I do not see in any immediate future the establishment of a global energy organization, where national decision-making would be relinquished for binding multilateral global energy governance. But I do see myriad new partnerships between governments and between governments and industry to seize win-win opportunity. And I do hope to see through deepened dialogue the development of a Global Code of Energy Conduct that is advantageous for all to follow. And from which to deviate in pursuit of short-term advantage at the expense of others, would be tantamount to shooting oneself in the foot, at the very least.