Global Energy Governance: International Institutions Perspective

Energy resources have played a significant role in shaping the world order for several decades. They have affected various fields, such as the economy, internal affairs, international relations, terrorism, and so on.

Especially, the significance of energy resources and the emergence of energy economics arose from the nationalization process of energy resources in the oil-rich Middle Eastern countries around the 1970s. The Organization of Petroleum Exporting Countries (OPEC) barred American oil-producing firms and restricted oil supply in 1973 (Schwarz, 2018). Also, the first (in 1973) and the second (in 1979) oil crisis affected the world economy significantly and negatively, and oil prices soared after these crises sharply. High oil prices damaged most of the countries’ economies which are dependent on energy imports, especially the developed ones.

After the works of Stiglitz (1974) and Solow (1974) in the 1970s, the significance of energy resources was highlighted in the production process. According to the classical production function, capital (K) and labor (L) are the main factors of production. After these seminal works, energy resources are accepted as a third fundamental factor of production in the science of economics, and it can be named as the production function extended with energy. Therefore, many countries seek to cooperate with other countries both regionally and internationally to mitigate the negative consequences of the energy issues across the world.

Van de Graaf and Sovacool (2020) argued that the conventional energy problems (conflicts among firms, consumers, countries, etc.) are not at the center of the main attention of energy governance anymore. Its focus is extended by the following concerns: a) climate change, b) emerging markets (especially, China), c) the transition to renewable energy, and d) energy poverty. It is hard to handle energy issues through the efforts of individual governments alone; there should be international cooperation to manage them in both global and regional settings.

Global energy governance is to design and implement rules (regulations) to avoid issues with collective action related to energy, involving multiple countries or actors all around the world It is a complex and ever-changing field of research that examines the rules, norms, markets, and institutions that regulate energy interactions in an international setting.

Global energy governance has five main objectives - supply and demand security, economic development, international security, environmental sustainability, and domestic good governance.

There are four activities: Combating climate change, Promoting renewable energy, Controlling pollution, Developing carbon pricing.

Climate change, emerging markets, the transition to renewable energy, and energy poverty affect worldwide energy trends and shape global energy governance throughout the World.

China, India, and the Middle Eastern countries

According to Energy Institute data, the share of fossil fuels was around 81.79% of the energy consumption in the world in 2022. The remaining part consisted of nuclear energy (3.99%), hydroelectric (6.73%), and renewables (7.47%). In addition, the share of fossil fuels was 77.44% in OECD countries, while it was 84.54% in non-OECD countries (Energy Institute, 2023). It can be said that advanced economies prefer to use more clean energy (nuclear energy and renewable energy) compared to emerging countries.

It is the lack of access to affordable and high-quality energy services.” According to the recent IEA data, around 775 million people do not have access to electricity. Especially, the sub-Saharan African countries face energy poverty problems.

It can be stated that these people’s quality of life is very low; the cooking, cooling, and lighting activities are handled by traditional (or primitive) methods. Besides, if people are not able to access electricity (or modern energy), their states of health get worse because of the lack of clean water, sanitation, and healthcare.

Patt (2010) argued that global energy governance may not work properly because it is hard to make cooperation among countries all around the world. There might be negotiation problems between counterparts, distrust between countries, or fear of loss of national sovereignty. Therefore, he suggested conducting regional energy governance rather than global energy governance, especially for combating climate change.

a) treaty-based cooperation and governance, and b) special purpose entities.

International energy institutions can be classified as global energy institutions and regional energy institutions.

the International Energy Agency (IEA), International Renewable Energy Agency (IRENA), the World Energy Council (WEC), the International Energy Forum (IEF), the Organization of the Petroleum Exporting Countries (OPEC)

The Agency for the Cooperation of Energy Regulators (ACER), the Organization of Arab Petroleum Exporting Countries (OAPEC), West African Power Pool (WAPP), Southern African Power Pool (SAPP), and the Energy Community

They are essential in tackling environmental issues and advancing sustainable development. In addition to addressing various contaminants, species preservation, and habitat conservation, these accords seek to lessen human impacts on the environment.

The 1972 Stockholm Conference, The 1992 Rio Conference, The Kyoto Protocol, The Paris Agreement, United Nations Sustainable Development Goals (SDGs).

European Green Deal, OECD countries, Development Banks, Arab Gas Pipeline Treaty, Central American Electrical Interconnection System Treaty, North Sea Offshore Grid Agreement, Andean Electrical Interconnection System Treaty, West African Gas Pipeline Agreement, and African Petroleum Producers’ Organization Treaty.