Why the world needs a more inclusive global energy agency

Hydroelectric dam
Hydroelectric dam, Qinghai, China

Neil Hirst, Senior Policy Fellow at the Grantham Institute, argues that China and other developing countries need their voices heard as members of the International Energy Agency (IEA).

The G20 Summit in Hangzhou earlier this week provided a unique opportunity for China to assert its place in the world. So it’s hugely significant that Chinese president Xi Jinping, in his opening announcement, focused on the ratification of the Paris climate treaty, alongside the United States.

China is proving that it can be a world leader on climate change. But to make its full contribution , the world’s second largest emitter of greenhouse gases now needs to become a member of the International Energy Agency (IEA). The IEA is where governments analyse their energy policies and learn from each others’ experiences.  It’s the engine room where governments work out practical options to reduce carbon emissions while also meeting national needs for secure and affordable energy. Until developing countries are allowed to join its ranks we lack a genuinely global centre for this vital work.

Setting a green example

China’s economic miracle has delivered the greatest reduction of poverty in world history. On the flipside, a boom in manufactured exports and coal power has left the country accounting for more than a quarter of the world’s carbon dioxide emissions, as well as a legacy of pollution and urban smog.

The Chinese government is now cleaning up its act, steering towards a cleaner, less energy intensive, lower carbon economy. Other developing countries are watching closely.

China’s new Five Year plan majors on energy efficiency and clean technology. China is already the world’s largest market for renewables and is pioneering carbon trading in cities and provinces. It is investing in nuclear power and carbon storage. Less efficient coal mines and coal power stations are being closed.  There is a massive programme to improve industrial efficiency, the “top one thousand enterprises” scheme.

The future of the planet depends on the energy policies chosen by rapidly growing countries across Asia and Africa, and the blueprint set by China will be hugely influential.

Beyond Paris

Whilst China’s ratification of the Paris climate treaty has grabbed headlines, without membership of the IEA, China is not fully engaged in the underlying energy policy debate. Conversely, the IEA cannot fulfil its mission as a global energy body without the participation of China and other major developing countries.

The reductions in emissions that governments have committed to under the Paris treaty are not nearly enough to limit global warming to two degrees. In order to make this ambition a reality, they will need realistic energy policies to facilitate the move towards a low-carbon existence. That is where the IEA comes in.

Joining the club

In the wake of the 1973-74 oil crisis, the IEA was established to protect the security of oil supply to  industrialised nations. It has proved remarkably adaptable, evolving to become the world’s main international energy body. Last year, the IEA, China, Indonesia and Thailand agreed to form an “Association”, and this is intended as a first step towards building a truly global energy organisation. Association countries are allowed to participate in IEA meetings and benefit from enhanced collaboration with member states. The next step will be granting full membership to  China, along with other major developing nations including India, Indonesia, Nigeria and Malaysia.

The process will not be easy. Today the IEA’s rules specifically exclude developing nations. The existing 29 member countries will, understandably, be cautious about changing a system which, in many ways, has worked well. China will be cautious about joining an organisation with its roots firmly in the West. But today there is positive momentum on both sides. The creation of the Association shows what can be done. The creation of a genuinely fit-for-purpose global energy organisation is a glittering prize and will form a vital component of global climate mitigation efforts.

Over the past 4 years, the Grantham Institute has collaborated with China’s Energy Research Institute (ERI) on a project focused on global energy governance reform and enhancing China’s role. Our latest report provides recommendations for creating a more inclusive global energy architecture in which leadership by the highest levels of the G20 would be supported by a genuinely inclusive IEA working in cooperation with other, more specialised, international energy organisations.





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