Francis McGowan

The recent revival of interest in energy policy is driven by a combination of concerns about the security of future sources of energy supply and also about the consequences of using those resources, particularly their contribution to climate change. Yet the ability of energy policy makers to address these problems faces major challenges. This is partly because the energy economy is the aggregate outcome of the choices of millions of energy consumers, whether individual citizens or firms, and also because many aspects of that energy economy are outside national control. If anything, it is national energy policies that have been subject, in different ways and to differing extents, to international constraints and pressures.

Although the international aspect has always been important for countries that have depended upon external sources for their energy needs, it has arguably become more important in the last two decades for several reasons. Firstly, trade in energy (and for most countries the level of imports) has become a more important component of the energy balance for most developed and developing countries, prompting concerns about supply security. Secondly, the global environmental consequences of energy production and consumption have become more apparent as concerns over climate change have intensified in tandem with increasing evidence of its impact. Thirdly, liberalisation and privatisation have made energy markets more globalised as firms which were traditionally owned by the state or by local investors are subject to international consolidation (though this is truer for some countries than for others).

If the global challenges of securing future energy needs and addressing the environmental consequences of energy use are beyond the control of individual governments, can joint action be taken? Are governments able to work together instead? Global problems require global solutions and everyone, it can be argued, has an interest in identifying and putting into practice those solutions. Yet governments find it difficult to act collectively to address these issues. A paradox of this and other areas of globalisation is that at the very time that governments are increasingly constrained, they often appear to be defensive about their formal sovereignty, and many seem reluctant to commit themselves to binding international rules.

There are international rules which impact upon national energy policies, and in a variety of ways (discussed below) international commitments affect the scope and direction of such policies. However, even where international rules have an impact on energy policy, that impact may not always be positive as the rules tend to be designed to facilitate economic globalisation, rather than sustainability. In the process, such rules risk working against attempts to develop sustainable energy policies and to tackle the most fundamental energy policy issue - climate change.

Significant progress has been made in mapping out international rules on climate change (at both the multilateral and, in the case of the EU, the regional levels). However, there are serious shortcomings in their design and implementation of these rules, on the one hand, and in the commitment of states to engage with them on the other. While these shortcomings have many causes, an important one is the tension with other energy policy objectives such as securing energy supplies at affordable prices.

Although there is scope to resolve these tensions, in practice those solutions have proved elusive, not least because they require action at a variety of levels: global, regional, national and local. This chapter examines how national energy policies have become more subject to international factors. There is a paradox of sovereignty, whereby states have less control over policy but remain unwilling to act jointly.

This chapter explains the way in which global and regional rules and agreements affect national policy. The global aspect is important, both as the space in which energy markets and firms are located and, to some extent, as the realm in which rules are made which impinge directly or indirectly upon national policy makers. The regional also matters and in cases such as that of the EU, it is potentially very important, providing a bridge between national and global action. In both cases, however, the potential for international action is far from fully realised.

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