6.4 Strategic Pathways
China could work through the G20 to reform the
IEA and formalise a long-term agenda under the
auspices of an enhanced G20 to harmonise global
energy and climate governance.
(1) IEA reform
China could work with emerging economies
(including other association countries—India and
Indonesia) within the G20 to initiate a process for
IEA reform at a summit chaired by an emerging
economy (to ensure its priority on the agenda).
This could include a five-year roadmap to partnership for the emerging economies based on the
precedent of Norway, which is a partner country
rather than a full member having never signed
the International Energy Programme treaty.
The push for IEA reform could be strengthened by China first cooperating to enhance
regional energy security, which has certain
structural weaknesses—for example, through
ASEAN Plus Three (see Box 11), the International Energy Charter (see Box) and regional
cooperation on gas (see Box 13). This would still
allow China to improve its energy security and
hedge against the possible failure of IEA reform,
for example were it to be blocked by member
countries. It would also signal to IEA member
countries that China is serious about strengthening energy security governance.
Box 13: Regional gas security
Asia is the world’s largest consumer of
liquefied natural gas (LNG), and the most
vital incremental demand market. As such,
the region has known extremely high spot
prices in periods of limited supply. While
new supplies seem set to outstrip demand
in the coming years, buyers should not
become complacent. China should view
the backdrop of well-supplied LNG markets as an opportune time to promote
regional frameworks to enhance natural
gas security and promote greater flexibility
of supplies.
These could include a concerted push
for less rigid contracts with volumes
delivered through open destinations or
more flexible redelivery clauses. A regional pricing hub, that would be indexed
to gas rather than oil prices, would also
provide more accurate pricing signals to
shift volumes from one destination to
another. Finally, storage capacity will
support a more robust and flexible gas
market. China has already issued targets to
increase its gas storage capacity and could
work with other countries to develop similar infrastructure, which could then be
coordinated more effectively in times of
shortage. North-east Asia would be the
most natural starting point given the concentration of large buyers there, but
ASEAN Plus Three would also offer a
convenient framework, bringing together
regional consumers and producers
(Fig. 33).
Box 14: Mission statements of key
international organisations
The Energy Charter Treaty provides a
multilateral framework for energy cooperation that is unique under international law.
It is designed to promote energy security
through the operation of more open and
competitive energy markets, while
respecting the principles of sustainable
development and sovereignty over energy
resources.
The International Energy Agency works
to ensure reliable, affordable and clean
energy for its 29 member countries and
beyond. Its mission is guided by four main
areas of focus: energy security, economic
development, environmental awareness
and engagement worldwide.
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W. Jigang and P. Webb
China could work through the G20 to reform the
IEA and formalise a long-term agenda under the
auspices of an enhanced G20 to harmonise global
energy and climate governance.
(1) IEA reform
China could work with emerging economies
(including other association countries—India and
Indonesia) within the G20 to initiate a process for
IEA reform at a summit chaired by an emerging
economy (to ensure its priority on the agenda).
This could include a five-year roadmap to partnership for the emerging economies based on the
precedent of Norway, which is a partner country
rather than a full member having never signed
the International Energy Programme treaty.
The push for IEA reform could be strengthened by China first cooperating to enhance
regional energy security, which has certain
structural weaknesses—for example, through
ASEAN Plus Three (see Box 11), the International Energy Charter (see Box) and regional
cooperation on gas (see Box 13). This would still
allow China to improve its energy security and
hedge against the possible failure of IEA reform,
for example were it to be blocked by member
countries. It would also signal to IEA member
countries that China is serious about strengthening energy security governance.
Box 13: Regional gas security
Asia is the world’s largest consumer of
liquefied natural gas (LNG), and the most
vital incremental demand market. As such,
the region has known extremely high spot
prices in periods of limited supply. While
new supplies seem set to outstrip demand
in the coming years, buyers should not
become complacent. China should view
the backdrop of well-supplied LNG markets as an opportune time to promote
regional frameworks to enhance natural
gas security and promote greater flexibility
of supplies.
These could include a concerted push
for less rigid contracts with volumes
delivered through open destinations or
more flexible redelivery clauses. A regional pricing hub, that would be indexed
to gas rather than oil prices, would also
provide more accurate pricing signals to
shift volumes from one destination to
another. Finally, storage capacity will
support a more robust and flexible gas
market. China has already issued targets to
increase its gas storage capacity and could
work with other countries to develop similar infrastructure, which could then be
coordinated more effectively in times of
shortage. North-east Asia would be the
most natural starting point given the concentration of large buyers there, but
ASEAN Plus Three would also offer a
convenient framework, bringing together
regional consumers and producers
(Fig. 33).
Box 14: Mission statements of key
international organisations
The Energy Charter Treaty provides a
multilateral framework for energy cooperation that is unique under international law.
It is designed to promote energy security
through the operation of more open and
competitive energy markets, while
respecting the principles of sustainable
development and sovereignty over energy
resources.
The International Energy Agency works
to ensure reliable, affordable and clean
energy for its 29 member countries and
beyond. Its mission is guided by four main
areas of focus: energy security, economic
development, environmental awareness
and engagement worldwide.
636
W. Jigang and P. Webb