IEEJ：June 2018○ｃIEEJ 2018
Special Bulletin
A Japanese Perspective on the International Energy Landscape (378)June 4, 2018

Revisiting Global Energy Governance
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn June 1, the Institute of Energy Economics, Japan (IEEJ), and Asia Pacific Energy
Research Center (APERC) cosponsored the third IEEJ/APERC international energy symposium at
Tokyo Prince Hotel. Under the theme “Revisiting Global Energy Governance,” which is also the titleof this bulletin, intellectuals and experts in the world discussed key issues involving global energy
governance in three sessions. A total of 300 people participated in the symposium on a registrationbasis for significant discussions through panelists’ presentations, moderator-led panel sessions andquestions from the audience.
Global energy governance can be defined as a mechanism or system to keep global energy
market stability, order and sustainability. It can also be interpreted as a mechanism to conserve
energy-related international public goods such as energy security and global warming prevention.
The symposium aimed to analyze the fates and challenges of present great changes and grave events
involving the important global energy governance and clarify how to respond to them. In thefollowing, I would like to summarize my comments based on the most impressive points of thediscussions for me.
I moderated Session 1 under the theme “Perspectives on Energy Geopolitics; Who will be
the leader?” that matches the entire symposium’s theme. Panelists for the session were Amy Jaffe
from the U.S. Council on Foreign Relations, Paul Stevens from the British Chatham House and IEEJ
Board Member Koichiro Tanaka who serves as a professor at a Keio University Graduate School.
The history of the international energy market clearly shows that the United States hasremained the center or leader in global governance and global energy governance since the middle ofthe 20th century. The past international energy market order has been an order led by the UnitedStates. However, the global situation has seen great changes such as the rise of China that is shaking
the position of the United States. Under the present U.S. Trump administration, the internationalsituation has seen destabilization rather than order or stability. A symbolic development is theconfusion or fluidization of the Middle Eastern situation that has heightened geopolitical risks andshaken the international energy market.
The panelists discussed the impact of the United States’ withdrawal from the Iran nuclear
deal on crude oil prices and growing geopolitical risks in the Middle East as great matters of concern.
Given that the Middle East plagued with numerous complex and difficult problems has been an
energy supply center for the world, adequate governance must be established to maintain andenhance regional stability. However, recent developments indicate destabilization, leading toquestions including what would be required for regional stabilization and what roles each actor
should play. While increasing tensions in the Middle East by US withdrawal from the nuclear deal,
the United States is pursuing “energy dominance” by accelerating shale development to substantially
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IEEJ：June 2018○ｃIEEJ 2018
expand energy exports. China is further increasing its presence with global strategies such as the Beltand Road Initiative, while Russia is enhancing diplomatic presence in the Middle East by playing itsown role in Iranian and Syrian affairs. How these powers outside the Middle East as well as regional
powers would change the regional governance and how such change would influence the energy
market are key issues for the future international energy market. Japan for its part should
strategically consider what position it should keep and what roles it should play.
Session 2 was titled “What is the outlook for paths toward a 50% reduction in GHG
emissions by 2050?” and moderated by Wall Street Journal reporter Mayumi Negishi. Panelists wereUniversity of Colorado Prof. Roger Pielke, Whim Thomas from Shell International and Dadi Zhoufrom the Energy Research Institute of China’s National Development and Reform Commission.
Under the Paris Agreement, most countries in the world are launching initiatives to reducegreenhouse gas emissions under their respective voluntary targets. They are expected to deepen theirsubmitted GHG emission reduction targets and enhance the reduction under the agreement. As
indicated by various analyses, however, these voluntary GHG reduction initiatives have a great gap
with the target of halving GHG emissions by 2050. The panel discussions focused on whether the50% reduction by 2050 would be feasible technologically, economically and politically throughclimate change policy realities, implications of future scenario analyses and initiatives by the world’s
largest GHG emitter China. It is difficult to conclude that the panel discussions led to any consensus.
However, the discussions implied that there are great hurdles to halving GHG emissions by 2050
from technological, economical and political viewpoints and that the realization of the target would
not be easy. Technological advancement or innovative technology development is expected to play agreat role in filling the great gap. In a sense, however, those who depend only on technologicaladvancement or innovative technologies may be taken as refusing to face the problem. Thediscussions led me to feel that society and its members must be prepared to shoulder costs to resolve
difficult challenges.
Session 3 was titled “Can the electricity market liberalization be compatible with energy
security and climate change concerns?” and moderated by Robin Harding from the Financial Times,
with U.S. Rice University Prof. Peter Hartley, former U.S. Assistant Secretary of Energy Peter Lyons
and International Energy Agency Chief Economist Laszlo Varro as panelists.
The main objective of electricity or energy market liberalization is to introduce
competition to improve market efficiency, reduce costs and increase consumer benefits. Pursuing theobjective, numerous countries including developed ones have promoted the liberalization. However,market liberalization’s conflict with externalities such as energy security and environmental
conservation would be a permanent challenge. Liberalization also represents social experiments andmay have to be revised or reformed in response to specific problems. In such process, new strong
government involvement or intervention may be required and implemented, as indicated by somespecific cases. The panelists discussed mainly what a system for introducing low-carbon electricity
sources into the market should be like in pursuit of the liberalization effects and how specificimplemented systems would be assessed. Given that energy and electricity environments differ fromcountry to country, it is difficult to simply generalize answers to these questions. For countries in the
midst of liberalization and those planning future liberalization, however, it is significant to takeadvantage of lessons learned from past social experiments for managing a tradeoff between theso-called 3E’s – economic efficiency, energy security and environmental conservation – in abalanced manner. This is a key point emerging anew from the discussions.
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