World Energy Policy Summit
ITC-Maurya Sheraton Hotel, New Delhi, India
6-7 September 2011
“Energy, Diplomacy and the Fukushima Crisis”
by
Ambassador Arne Walther
Our contemporary world has passed from a bi-polar one via a uni-polar to a multi-polar one that is perhaps becoming a zero-polar world. But there definitely still is something that we can call “the Geopolitics of Energy”. The “G-word” has to do with how the location of, and demand for, energy resources influence the policies of nations. Energy developments will continue to impact geopolitics and geopolitics will continue to impact energy developments. While energy security remains a national imperative in an energy-hungry world. We know that economic slowdown in the industrialized economies, what comes out of the Arab Spring and the optimism for the future in an ascendant Asia will mean a lot for energy developments and geopolitics. We will have to wait and see, perhaps even fastening our safety-belts, what exactly that “a lot” will be.
Among the many uncertainties, two things are certain. One is that 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 other certainty is my pleasure being back in Delhi, where I served as Norway’s Ambassador in the late 1990s. Let me congratulate Narendra Taneja on convening this impressive first annual World Energy Policy Summit.
My remarks will focus on some current cases of energy diplomacy, discuss “energy nationalism” and conclude on the prospects for better global energy governance. As a foreign diplomat serving in Japan, I will mention the nuclear problems at Fukushima that have prompted a rethink of Japanese energy policy. Being a Norwegian, I will take you to the Arctic, a new region of play for the geopolitics of energy, as its ice continues to melt due to climate change. And highlight a summit in Oslo next month on the imperative of “Energy for All”. Being back in India, let me also mention what I see emerging as a new “Asian Energy Identity” sparked by the process of Roundtables of Asian Energy Ministers that started here in Delhi, in this very room, five years ago.
A Means - not an End
To be clear - energy is not a goal in itself, but a means to fuel economic and social development. Energy diplomacy is a means for nations to promote their energy security – be it security of energy supply, security of energy demand or security of energy transit through third countries. Energy diplomacy is conducted bilaterally by importing countries to gain or maintain access to energy sources hosted by others. It is conducted exporting countries to gain or maintain access to markets for their energy endowment. And it is conducted by both energy-importing and energy-exporting countries in international institutions to promote shared multilateral ambition, while also taking best possible care of national interests. Energy diplomacy deals with challenges that call not only for deeper global dialogue, but also call difficult trade-offs within and among nations in a world of increasing and complex interdependencies.
An Environment Conscious Producer of Energy
My own country, Norway, is an environment-conscious energy-exporting country producing ten times as much energy as we use ourselves. Almost 100% of our electricity, that is 60% of our total energy demand, is generated by emissions-free and renewable hydro-power. Our substantial and reliable exports of offshore oil and natural gas contribute to the security of energy supply of our trading partners. Norway is the world’s second largest exporter of natural gas, only Russia exports more, and the seventh largest exporter of oil. Considering the global abundance and accessibility of environment-friendly natural gas, highlighted also at this Conference, we regard natural gas not only as a bridge to a new energy era, but as a very important part of that new energy era. We have vast offshore areas yet to be explored and resources yet to be tapped, not least in the Arctic.
As an energy resource-rich country, with a foreign policy bridge-building mind-set, we Norwegians harbour in our DNA an energy policy consciousness in our foreign policy and a foreign policy consciousness in our energy policy, without the one dictating the other. Our energy diplomacy is active, bilaterally and multilaterally.
An Evolving Energy Scenario
Global energy demand is expected to grow, mostly in non-OECD, with oil and other fossil fuels remaining paramount for quite some time. This calls for large scale commercialization of cleaner fossil fuel technologies, such as carbon capture and storage, to reduce the global carbon footprint. In ten days’ time, ministers will meet in Beijing for the Carbon Sequestration Leadership Forum, of which both Norway and India are members.
Environmental and climate change concern will also grow, not least in the public domain, and impact energy decision-making. Increasing attention will be paid to renewable alternatives, such as solar, wind, tide and bio-fuels, as well as to nuclear. Today, Fukushima is in focus. What governments can and are willing to do about climate change concern, when economic and financial times are tough, we will see in Durban later this year. Measures to meet the climate change challenge should not jeopardize energy security. Policies and measures for energy security should not exacerbate climate change.
Promoting energy security also means that we must also consider vulnerability of energy production and supply to politically motivated disruption, terrorist attack, technical mishap as at Macondo and forces of nature as at Fukushima.
Environmental concern as well as economic downturn and financial crisis are prompting countries and groups of countries to re-think fundamental energy security policies. In this evolving picture, we will see new patterns of energy co-operation shaping new geopolitical realities. But we might also see established geopolitical realities raising stumbling blocks for wise and sustainable new patterns of energy co-operation.
“Not a Lucky Island?
In Japanese, “Fukushima” means the “Island of Good Fortune”. When disaster struck on 11 March this year, Fukushima did not lived up to its name. The amount of radioactive cesium ejected by the meltdowns at Fukushima was 168 times that of the atomic bomb in Hiroshima. But still far less than Chernobyl. The nuclear problems at Fukushima and population scare have prompted a rethink of energy policy in Japan, where non-CO2 emitting nuclear has been a pillar of the country’s energy security policy, not least to reduce dependence on imported oil and natural gas.
Before the Fukushima accident, the Japanese government was opting for a dramatic increase in nuclear power from 31% to 53% of the country’s electricity supply. After Fukushima and before leaving his Prime Minister’s office last week, Naoto Kan reaffirmed his aim to reduce Japan’s level of reliance on nuclear power so as to create a society that is not addicted to it. Parliament passed his Government’s Bill to promote renewable energy, indeed, one of his conditions for stepping down. Recent opinion polls show that 70% of the Japanese want to scale down their nuclear reliance substantially, if not totally. The “NIMBY” – “not-in-my-back-yard” – response of the public is echoed by local and national politicians.
The new Prime Minister Yoshihiko Noda confirmed upon taking office last Friday that he will try to reduce Japan’s reliance on nuclear power, but pledged to restart reactors undergoing regular checks after they pass safety requirements. Currently only 12 of Japan’s 54 nuclear reactors are on line. We shall see to what degree Japanese sentiment and action will impact nuclear policies elsewhere? The German response was as clear as it was quick. There are now 440 nuclear reactors world-wide, a figure that before Fukushima was expected could double by 2025. After Fukushima? Your guess is as good as mine.
“Energy for All”
It is unfair and a geopolitical time bomb that a fifth of the world’s population continue to lack access to electricity and that two fifths lack clean cooking facilities. Access to the modern commercial energy that could lift multitudes out of poverty.
A priority task for Norwegian energy diplomacy is the major international energy conference that Prime Minister Jens Stoltenberg will host in Oslo next month. “Energy for All – financing access for the poor”. It will be attended by Prime Ministers of several developing countries and other ministers and experts. UN Secretary General Ban Ki-Moon, who will also come, has launched a new initiative called “Sustainable Energy for All”. We are honoured that India’s Union Minister for New and Renewable Energy, Farouk Abdullah, will attend. We hope to see the Oslo conference give a major boost to forceful national and multilateral action. We are heading into the “International Year of Sustainable Energy for All” and the Rio+20 summit in June next year. Equitable access to environmentally benign energy for all is crucial to accelerate economic development and mitigate climate change. Let me add that here in India, Norway has been testing solar technology to bring off-grid power to villages previously without access to electricity.
Indigenous energy resources have been a “blessing” for Norway. We would like to see energy, not least oil, be a “blessing”, not a “curse”, for developing countries as well. Another example of Norwegian energy diplomacy is our sharing experience and expertise in a special programme “Oil for Development” in dialogue with resource-rich developing countries, mainly in Africa. We support them in their efforts to maximize income and manage their petroleum resources in an environmentally sustainable way that generates economic growth and promotes the welfare of the population. This means good governance, transparency and anti-corruption. We are also stepping up support to clean energy and low carbon solutions in our co-operation with developing countries.
Arctic and High North
The ice sheet in the Arctic is melting at an alarming rate, being reduced by an area the size of Rajasthan and Uttar Pradesh combined per decade. As the ice sheet is getting smaller and smaller due to climate change, international interest in the Arctic is getting bigger and bigger, envisaging new and shorter shipping routes and access to mineral resources, but also wary of the region’s environmental vulnerability.
More than a fifth of the yet-to-be-discovered reserves of oil and natural gas in the world could be found in the Arctic. While conflict and political unrest may characterize many of the other petroleum provinces of the world, the Arctic stands out as a stable and peaceful region. This above-ground factor increases interest in the below-ground petroleum promise with both onshore and offshore petroleum developments expanding into new areas. The biggest concentration is in the Russian part of the Barents Sea. The USD 2 billion exploration partnership announced by Exxon-Mobil and Rosneft for the Kara Sea announced last week can open another interesting chapter in the Arctic energy saga set to come.
Centre-stage in the Arctic offshore are the five coastal states - Norway, Russia, the USA, Canada and Denmark because of Greenland. They enjoy the same rights and responsibilities in the Arctic on land and offshore as nation states enjoy also elsewhere in accordance with international law. This includes sovereign rights on their continental shelves, including the exclusive right to explore for and exploit natural resources.
For Norway, the High North and Arctic is the most important area of our strategic focus in the years ahead. Our policy is one of dialogue with the states that have interests in the region. It is a policy of strengthening institutionalized multilateral co-operation, such as that we have in the Arctic Council. Our policy underscores the importance of intensified co-operation with Russia. After some forty years of bilateral negotiations, an agreement between Norway and Russia on the delimitation of our continental shelves in the Barents Sea and the Arctic entered into force in July this year. Dividing fifty-fifty, and allowing for petroleum activity in, a formerly disputed offshore area two-thirds the size of Uttar Pradesh or the United Kingdom. To those who would believe that difficult disputes inevitably lead to conflict and use of force, this bilateral agreement shows that difficult disputes can be solved with patience and good diplomacy for mutual benefit.
New Asian Energy Identity
Reflecting the increasing importance of Asia, and the geopolitical importance also of regional dialogues, “Roundtables of Asian Energy Ministers” under the global umbrella of the International Energy Forum are taking place. As then Secretary General of the International Energy Forum, I had the pleasure of initiating this process together with then Petroleum Minister Mani Shanker Ayer, who hosted the first Roundtable here at the Maurya in 2006. The fourth Ministerial took place in Kuwait in April this year and more are scheduled to follow. An interesting forum for regional energy diplomacy with geopolitical impact, where Ministers of the principal petroleum-exporting countries of West Asia – better known as the Gulf - and Ministers of the principal petroleum-importing countries of East and South Asia meet to discuss energy security, stability and sustainability. A new Asian Energy Identity has emerged as an integral part of the wider global energy economy.
Energy Nationalism
The variety and importance of core national interests will continue to define what is possible in broader international efforts to meet the global challenge of energy security. A word then about “energy nationalism”, one of the themes of this summit.
Especially when oil prices are high, we hear complaints from oil-importing countries about the “energy nationalism” of oil-exporting countries, a label used by some for what they see as wicked and unjust policies of greedy resource owners out to harm economically or pressure politically countries dependent on energy imports.
“Energy nationalism” has been around for quite some time. As long as there are nation states to call the energy shots, we should expect it to remain so. It should not surprise us that governments see a political imperative in making the most out of their particular national and natural endowment for the social and economic development of their countries and welfare of their people.
But I would not limit the concept of “energy nationalism” to resource host countries. Even countries that lack sufficient indigenous energy resources pursue, in my view, policies of “energy nationalism”. In the sense that they seek the energy resources of others, as cheaply and as reliably as possible, for their own domestic social and economic development.
And just as those countries that are blessed with energy resources would use their position of resource advantage to pursue wider economic and political objectives, so would also countries that lack such resources use their position of advantage in other areas to pursue their wider economic and political objectives. And the latter would include policy measures to secure their energy supply as cheaply as possible and in a way that necessarily will affect the vital interests of energy-exporting countries.
Let me for the sake of good order also include national policies of energy independence as a policy of “energy nationalism”.
The “energy nationalism” of both energy-exporting and energy-importing countries can be either good or bad. It is good when it is win-win and benefitting the social and economic development of the host country concerned, while also benefitting the interests of co-operating countries and companies. It is bad when it is win-lose – benefitting one, but detrimental to vital interests of the others. Global dialogue can identify short and long-term win-win opportunity. It can preempt misunderstandings that could otherwise lead to conflict.
Global Energy Governance
Globalization, economic downturn and the ascent of Asia in an evolving world order are redefining geopolitics and challenge the institutional architecture for international co-operation in energy as in other areas. There is today no global, intergovernmental institution with supranational decision-making power to deal comprehensively with all forms of energy. Given the strategic importance of energy to the national interests of each and every country, it hardly seems realistic to expect one in any near future, in which national decision-making would be relinquished and replaced by legally binding global energy governance.
What we do have is a “global energy policy interrelationship”. A comprehensive network of inter-governmental energy institutions and co-operative contacts among countries at political and technical level, on bilateral, regional and global basis. An interrelationship, where international organizations and financial institutions along with other stakeholders have their role to play in addition to governments. And not to forget that core to all this is the energy industry itself doing the actual work of finding, producing and bringing much-needed energy to industry and household consumers.
Our best efforts for a sustainable common energy future demand that institutions and co-operative processes must take into account the evolving world order and its geopolitics, in which the emerging economies assume their increasing and rightful say. It is quite appropriate that our conference is taking place in India. The energy diplomacy of India in the “Great Energy Game” of nations has, indeed, become increasingly interesting to watch and will have increasing impact.