ElBaradei: we need a World Energy Agency

by Alex Evans | Jul 24, 2008 | Climate and resource scarcity, Conflict and security, Cooperation and coherence

As a general rule of thumb, my starting assumption is that we need new multilateral agencies like we need a hole in the head.  But if there’s an exception to that rule, then energy has a pretty good claim to be it.  As I argue in Multilateralism for an Age of Scarcity, there is no multilateral agency with a mandate to look at all aspects of the issue:

The International Energy Agency is supposed to represent major consumer countries, but its 27 members are all OECD countries – hence leaving out key emerging economies including China and India.  Although the Organisation of the Petroleum Exporting Countries (OPEC) is generally thought of as the major body representing producer states, in fact well over half of the world’s oil is produced by non-OPEC countries. Yet the most fundamental incoherence on energy is the obvious one: that with consumer and producer states represented by two different institutions in two different cities, it is wholly unclear where any discussions about a comprehensive approach encompassing both producer and consumer interests would take place.

Now, IAEA head Mohamed ElBaradei has written a piece in the FT which starts from the same analysis, and goes on to argue that a new global energy organisation is indeed needed.  What would it do?

“complement, not replace, bodies already active in the energy field … bring a vital inter-governmental perspective to bear on issues that cannot be left to market forces alone, such as the development of new energy technology, the role of nuclear power and renewables, and innovative solutions for reducing pollution and greenhouse gas emissions”;

“provide authoritative assessments of global energy demand and supply and bring under one roof energy data that are now dispersed and incomplete … speed the transfer of appropriate energy technology to poor countries and give them objective advice on an optimal energy mix that is safe, secure and environmentally sound”;

“develop a global mechanism to ensure energy supplies in crises and emergencies, and help countries run their energy services and even do it for them temporarily after a war or natural disaster … co-ordinate and fund research and development, especially for energy-poor countries whose needs are often overlooked by commercial R&D.”

He concludes, “the need for joint action to develop long-term solutions to the looming energy crisis is now undeniable. It is difficult to see how this can be done without an expert multinational body, underpinned perhaps by a global energy convention, with the authority to develop policies and practices to benefit rich and poor countries alike, equitably and fairly”.

So what to make of this call?  A few thoughts.

First, I can’t see much in the first two paragraphs that isn’t already done by the IEA – with the possible exception of advising poor countries on their energy mix, which agencies including UNDP and the Bank already cover.  True, most publicly available data on oil reserves is pretty suspect; but this new agency wouldn’t obviate that problem (which stems from internal machinations within OPEC). 

The interesting element here is the idea of a global mechanism to ensure energy supplies in crises and emergencies (what could the head of the IAEA be thinking of?).  When I was drafting Multilateralism for an Age of Scarcity, this seemed to me one of the real gaps in current multilateral capacities – both for dealing with short term spikes (attack on Iran leads to $200 oil) and long term stresses (peak oil).  In those conditions, a regime for sharing access to what supplies there are will be essential for reducing the risk of competition and friction, and for providing (at least a degree of) predictability, to reduce wild market swings as much as can be.

What I think is missing from ElBaradei’s proposal is a proper account of where food fits in.  There are plenty of major reasons why food prices and energy prices are ever more closely in synch: biofuels, input costs (especially fertiliser), and the fuel used to cultivate land, harvest crops, process, refrigerate, ship and distribute them.  If energy costs keep going up over the long term (as looks likely, recent sharp falls notwithstanding), then food prices will do the same – making it more important than ever to effect a far more integrated international approach.