Andreas Goldthau

Energy and security

Executive Summary Uninterrupted provision of vital energy services (see Chapter 1, Section 1.2.2) – energy security – is a high priority of every nation. Energy security concerns are a key driving force of energy policy. These concerns relate to the robustness (sufficiency of resources, reliability of infrastructure, and stable and affordable prices); sovereignty (protection from potential threats from external agents); and resilience (the ability to withstand diverse disruptions) of energy systems. Our analysis of energy security issues in over 130 countries shows that the absolute majority of them are vulnerable from at least one of these three perspectives. For most industrial countries, energy insecurity means import dependency and aging infrastructure, while many emerging economies have additional vulnerabilities such as insufficient capacity, high energy intensity, and rapid demand growth. In many low-income countries, multiple vulnerabilities overlap, making them especially insecure. Oil and its products lack easily available substitutes in the transport sector, where they provide at least 90% of energy in almost all countries. Furthermore, the global demand for transport fuels is steadily rising, especially rapidly in Asian emerging economies. Disruptions of oil supplies may thus result in catastrophic effects on such vital functions of modern states as food production, medical care, and internal security. At the same time, the global production capacity of conventional oil is widely perceived as limited. These factors result in rising and volatile prices of oil affecting all economies, especially low-income countries, almost all of which import over 80% of their oil supplies.

A liberal actor in a realist world? The Commission and the external dimension of the single market for energy

ABSTRACT This article investigates the European Commissions external energy policy through the lens of the regulatory state. It argues that because of the nature of its institutions, policy tools and resources, the Commission remains a liberal actor even as the world leaves the benign pro-market environment of the 1990s and becomes more mercantilist – or ‘realist’. The article tests seven hypotheses related to two key challenges as perceived by the Commission: building energy markets, and making them work. It finds that the Commission seeks to project the single market beyond its jurisdiction to deal with transit infrastructure problems; extend international regimes to cover energy trade; deal with monopolists such as Gazprom through classical competition policy; and fix global energy market failures with clear regulatory state tools. Importantly, however, some actions by the Commission can be seen as an attempt to counterbalance external actors, or as second-best efforts to address energy market failures.

Dynamics of energy governance in Europe and Russia

Energy in Europe and Russia is in flux. The authors address key issues in this context and seek to analyze contemporary transition processes in the regions energy sector. They look at whether and how transnational policy mechanisms can generate sufficient steering capacity to address pressing energy policy issues, including environmental concerns, energy transit or rapidly changing natural gas markets. Moreover, they explore the impact climate change concerns have on policy making in the energy sector and to what extent market mechanisms provide for answers to these issues. Instead of taking a geopolitical or neoliberal approach, this energy policy debate acknowledges the strong interdependence of global, regional and domestic influences on the processes.

Soft power with a hard edge: EU policy tools and energy security

ABSTRACT International security debates surrounding the European Union (EU) energy supply challenge commonly invoke the need for more EU hard power – e.g. getting tough on Russia or engaging directly with other exporters. This article investigates whether what might be labelled ‘soft power with a hard edge’ instead amounts to a consistent policy strategy for the EU. The central argument is that the EU has turned a weakness into strength, and developed a set of tools that sharpen the way soft power is exercised in the energy sector. The article explores how soft power affects companies that ‘come and play’ on the EU market: the rules of the Single European Market (SEM) and how they affect external firms. It also assesses the long reach of the SEM: both the gravitational ‘pull’ the SEM exerts in the ‘near aboard’, and the EUs ‘push’ to facilitate the development of midstream infrastructure and upstream investment. The conclusion is that the EU regulatory state is emerging as an international energy actor in its own right. It limits the ways states like Russia can use state firms in the geopolitical game; and it exports its model into the near abroad, thus stabilizing energy supply and transit routes.

Introduction: Bringing Energy into International Political Economy

Dynamics of Energy Governance in Europe and Russia provides substantial explanations and analyses of transitions, change and uncertainty in energy issues in the broad region of Europe and Russia. The book focuses on questions of energy governance and approaches this topic from an international political economy (IPE) perspective. As such, this represents an attempt to bring energy back into the mainstream of IPE.

Energy technology, politics, and interpretative frames: shale gas fracking in Eastern Europe

This article explores competing interpretive frames regarding shale gas in Bulgaria, Poland, and Romania. These countries face the choice of embracing shale gas as a potential revolutionizing domestic source of energy, against the backdrop of Russia serving as the dominant gas supplier. This makes them interesting cases for studying how policy narratives and discourses coalesce around a novel technology. The findings, which are based on sixty-six semistructured research interviews, point to differing and indeed competing frames, ranging from national security, environmental boons to economic sellout and authoritarianism, with different sets of institutions sharing those frames. This suggests that enhancing energy security by way of deploying novel energy technologies such as shale gas fracking is not simply a function of resource endowments and technological progress. Instead, it is the result of complex dynamics unfolding among social stakeholders and the related discursive processes, which eventually will determine whether—or not—shale gas will go global.

The EU Regulatory State, Commission Leadership and External Energy Governance

In the 1990s the European Union extended its regulatory state model (Majone 1994; Lodge 2002; Moran 2002; Lodge 2008; Levi-Faur 2011) to the utilities sectors, and began to liberalize its gas market. As this process got underway, the EU began to pursue a parallel process: extending the reach of the single market beyond its borders. In fact, the EU sought to guarantee security of energy supplies primarily by extending its regulatory governance beyond its jurisdiction. These efforts included enlarging the EU (thereby expanding the direct reach of its regulatory apparatus), establishing the European Economic Area (EEA) (making key energy-supplier Norway comply with EU rules), and setting up policy agreements such as the Energy Charter Treaty with former Communist states — notably Russia (which currently supplies the EU with 30 per cent of its gas and 35 per cent of its oil) (Eurostat 2012).

Emerging Governance Challenges for Eurasian Gas Markets after the Shale Gas Revolution

Gas markets have seen major changes within the last few years. On the demand side, gas consumption has faltered, a consequence of the ongoing financial and economic crisis. On the supply side, soaring unconventional (shale) gas production, mainly in the US, has brought new gas supplies to international markets.1 The latter, as a consequence, now tend to be oversupplied. In fact, compared to a situation only five years ago, markets have literally been turned upside-down. A then-prevalent sellers market, giving considerable leverage to gas exporters during the first half of the last decade, has rapidly shifted towards a buyers market again. This fundamental change has major implications for, and the political economy of, Eurasian gas. Notably, prevalent take off arrangements and the common oil price peg are currently being reconsidered, if not entirely abandoned. Feeling the heat from its West European customers, key suppliers such as Gazprom or Statoil have started to partially use spot prices as reference points; fostered by increasing LNG imports, long-term contracts start giving way to short-term arrangements and spot market transactions; and Russia, the once dominant supplier in Eurasia, is consistently losing its market share on European consumer markets.

Regulatory or Market Power Europe? EU Leadership Models for International Energy Governance

With the second decade of the new millennium came a series of shocks to global politics that forced the EU to reconsider its liberal approach to international political economy. The increasingly assertive use of economic power by Russia and China, combined with the new US president’s challenge to international trading regimes and the British decision to leave the EU, means that the world confronting the EU in 2018 is quite different from the more benign international context of only half a decade earlier. This applies not least to the world of energy, where concerns about oil and gas supplies are increasingly linked to worries about Russia’s geopolitical agenda. This chapter explores the range of strategies available to the EU—from soft normative power to hard mercantilism—and concludes that, if the EU wishes to exercise any kind of international leadership in the energy sector, it must choose between assertive use of its regulatory power and more muscular use of its economic power.

Handbook of the International Political Economy of Energy and Natural Resources

This Handbook offers a comprehensive overview of the latest research from leading scholars on the international political economy of energy and resources. Highlighting the important conceptual and empirical themes, the chapters study all levels of governance, from global to local, and explore the wide range of issues emerging in a changing political and economic environment.