approach to EMR could be adopted, such that the
benefits of incremental reform are tangible to
each partner country.
Cooperation on internationally coordinated
grid cybersecurity requires a high degree of trust
between states, as well as between states and
corporations, and has proven elusive so far,
though this is not a precondition for cooperation
on grid interconnection.
Conclusions
This paper has explored in detail four cooperation options that China could pursue to help
facilitate the shift to a low-carbon, secure energy
system—a system based on quality, both on the
supply and the demand side, rather than quantity.
From this follows several observations:
1. International Cooperation is Critical to
Achieving Chinese and Global Energy
Objectives
The global challenge of enhancing energy security over the course of the next half century while
decarbonising the energy sector will not be
achieved through governments acting unilaterally
in isolation to one another. Energy security—
whether of oil and gas supply or the reliability of
(increasingly interconnected) electricity grids—
will be greatest when governments have shared
rules for how markets are governed during normal operation and, critically, disruption. Such
frameworks build trust, reduce system costs and
mitigate the risk of market failures should disruptions occur. Similarly, the costs of decarbonisation can be minimised through cooperative
actions and arrangements to align standards,
avoid carbon leakage and extend carbon pricing,
and maximise aggregate demand for low-carbon
technologies. Nor can the two objectives—energy
security and decarbonisation—be considered in
isolation: each has implications for the other.
2. There Is No Silver Bullet Governance
Reform or Cooperation Strategy
This paper has expanded on four opportunities
for international cooperation. There are several
others that could be explored. It is clear that
intergovernmental cooperation and governance
reforms will be needed in many different areas.
A country can pursue international cooperation
along a spectrum of interventions, ranging from
simple pragmatic bilateral approaches to bolstering regional mechanisms and ambitious
multilateral reform agendas with higher risks of
failure but potentially larger returns. Different
approaches will often be mutually reinforcing
and form distinct parts of an overall strategy: the
opportunities for cooperation considered in this
paper include different mixes of bilateral, regional and multilateral elements.
3. The Prize for All Countries Is Substantial
A country’s dominance in specific areas of
low-carbon manufacturing, and its ambition to
extend this to new green technologies, means it
can benefit from emissions reduction efforts in
other countries, which will increase demand for its
exports. Establishing strong governance of critical
metals for low-carbon manufacturing, on which
China’s export base will increasingly depend, is
important for China’s long-term economic security. As the world’s largest energy consumer and
importer, China has a strong interest in establishing effective governance for fuel security and
grid interconnection. China’s energy security will
depend on successful global efforts to limit climate change, so supporting other countries’
transition is likely to be a priority.
4. Win-Wins Are Available, but Will Require
Compromise
The international community has a shared interest in collective energy security and low-cost
decarbonisation, creating opportunities for
win-win cooperation. However, political compromises will often be needed to move forward.
For example, expanding IEA membership will
require concessions from existing member
countries, but also from China and other
emerging economies, to improve data transparency and agree to emergency sharing rules.
Special Report 5: International Energy Cooperation and Governance
659
benefits of incremental reform are tangible to
each partner country.
Cooperation on internationally coordinated
grid cybersecurity requires a high degree of trust
between states, as well as between states and
corporations, and has proven elusive so far,
though this is not a precondition for cooperation
on grid interconnection.
Conclusions
This paper has explored in detail four cooperation options that China could pursue to help
facilitate the shift to a low-carbon, secure energy
system—a system based on quality, both on the
supply and the demand side, rather than quantity.
From this follows several observations:
1. International Cooperation is Critical to
Achieving Chinese and Global Energy
Objectives
The global challenge of enhancing energy security over the course of the next half century while
decarbonising the energy sector will not be
achieved through governments acting unilaterally
in isolation to one another. Energy security—
whether of oil and gas supply or the reliability of
(increasingly interconnected) electricity grids—
will be greatest when governments have shared
rules for how markets are governed during normal operation and, critically, disruption. Such
frameworks build trust, reduce system costs and
mitigate the risk of market failures should disruptions occur. Similarly, the costs of decarbonisation can be minimised through cooperative
actions and arrangements to align standards,
avoid carbon leakage and extend carbon pricing,
and maximise aggregate demand for low-carbon
technologies. Nor can the two objectives—energy
security and decarbonisation—be considered in
isolation: each has implications for the other.
2. There Is No Silver Bullet Governance
Reform or Cooperation Strategy
This paper has expanded on four opportunities
for international cooperation. There are several
others that could be explored. It is clear that
intergovernmental cooperation and governance
reforms will be needed in many different areas.
A country can pursue international cooperation
along a spectrum of interventions, ranging from
simple pragmatic bilateral approaches to bolstering regional mechanisms and ambitious
multilateral reform agendas with higher risks of
failure but potentially larger returns. Different
approaches will often be mutually reinforcing
and form distinct parts of an overall strategy: the
opportunities for cooperation considered in this
paper include different mixes of bilateral, regional and multilateral elements.
3. The Prize for All Countries Is Substantial
A country’s dominance in specific areas of
low-carbon manufacturing, and its ambition to
extend this to new green technologies, means it
can benefit from emissions reduction efforts in
other countries, which will increase demand for its
exports. Establishing strong governance of critical
metals for low-carbon manufacturing, on which
China’s export base will increasingly depend, is
important for China’s long-term economic security. As the world’s largest energy consumer and
importer, China has a strong interest in establishing effective governance for fuel security and
grid interconnection. China’s energy security will
depend on successful global efforts to limit climate change, so supporting other countries’
transition is likely to be a priority.
4. Win-Wins Are Available, but Will Require
Compromise
The international community has a shared interest in collective energy security and low-cost
decarbonisation, creating opportunities for
win-win cooperation. However, political compromises will often be needed to move forward.
For example, expanding IEA membership will
require concessions from existing member
countries, but also from China and other
emerging economies, to improve data transparency and agree to emergency sharing rules.
Special Report 5: International Energy Cooperation and Governance
659