Editing IPCC:AR6/WGIII/Chapter-14 (section)

==== 14.5.2.2 Energy Sector ====

<div id="h3-29-siblings" class="h3-siblings"></div>

International cooperation on issues of energy supply and security has a long and complicated history. There exists a plethora of institutions, organisations, and agreements concerned with managing the sector. There have been efforts to map the relevant actors, with authors in one case identifying six primary organisations ( [[#Kérébel--2009|Kérébel and Keppler 2009]] ), in another 16 ( [[#Lesage--2010|Lesage et al. 2010]] ), and in a third 50 ( [[#Sovacool--2012|Sovacool and Florini 2012]] ). At the same time, very little of that history has had climate mitigation as its core focus. Global energy governance has encompassed five broad goals – security of energy supply and demand, economic development, international security, environmental sustainability, and domestic good governance – and as only one of these provides an entry point for climate mitigation, effort in this direction has often been lost ( [[#van%20de%20Graaf--2016|van de Graaf and Colgan 2016]] ). To take one example, during the 1980s and 1990s a combination of bilateral development support and lending practices from multilateral development banks pushed developing countries to adopt power market reforms consistent with the Washington Consensus: towards liberalised power markets and away from state-owned monopolies. The goals of these reforms did not include an environmental component, and among the results was new investment in fossil-fired thermal power generation ( [[#Foster--2020|Foster and Rana 2020]] ).

As [[#Goldthau--2010|Goldthau and Witte (2010)]] document, the majority of governance efforts, outside of oil and gas producing states, was oriented towards ensuring reliable and affordable access for oil and gas imports. For example, the original rationale for the creation of the International Energy Agency (IEA), during the oil crisis of 1973–74, was to manage a mechanism to ensure importing countries’ access to oil (van de Graaf and Lesage 2009). On the other side of the aisle, oil exporting countries created the international institution OPEC to enable them to influence oil output, thereby stabilising prices and revenues for exporting countries ( [[#Fattouh--2013|Fattouh and Mahadeva 2013]] ). For years, energy governance was seen as a zero-sum game between these poles ( [[#Goldthau--2010|Goldthau and Witte 2010]] ). The only international governance agency focusing on low-carbon energy sources was the International Atomic Energy Agency, with a dual mission of promoting nuclear energy and nuclear weapons non-proliferation ( [[#Scheinman--1987|Scheinman 1987]] ).

More recently, however, new institutions have emerged, and existing institutions have realigned their missions, in order to promote capacity building and global investment in low-carbon energy technologies. Collectively, these developments may support the emergence of a nascent field of global sustainable energy governance, in which a broad range of global, regional, national, sub-national and non-state actors, in aggregate, shape, direct and implement the low carbon transition through climate change mitigation activities, which produce concomitant societal benefits ( [[#Bruce--2018|Bruce 2018]] ). Beginning in the 1990s, for example, the IEA began to broaden its mission from one concerned primarily with security of oil supplies, which encompassed conservation of energy resources, to one also concerned with the sustainability of energy use, including work programmes on energy efficiency and clean energy technologies and scenarios (van de Graaf and Lesage 2009). Scholars have suggested that it was the widespread perception that the IEA was primarily interested in promoting the continued use of fossil fuels, and underplaying the potential role of renewable technologies, that led a number of IEA member states to successfully push for the creation of a parallel organisation, the International Renewable Energy Agency (IRENA), which was then established in 2009 ( [[#van%20de%20Graaf--2013|van de Graaf 2013]] ). An assessment of IRENA’s activities in 2015 suggested that the agency has a positive effect related to three core activities: offering advisory services to member states regarding renewable energy technologies and systems; serving as a focal point for data and analysis for renewable energy; and, mobilising other international institutions, such as multilateral development banks, promoting renewable energy ( [[#Urpelainen--2015|Urpelainen and Van de Graaf 2015]] ). The United Nations, including its various agencies such as the Committee on Sustainable Energy within the United Nations Economic Commission for Europe, has also played a role in the realignment of global energy governance towards mitigation efforts. As a precursor to SDG 7, the United Nations initiated in 2011 the Sustainable Energy for All initiative, which in addition to aiming for universal access to modern energy services, included the goals of doubling the rate of improvement in energy efficiency, and doubling by 2030 the share of renewable energy in the global energy mix ( [[#Bruce--2018|Bruce 2018]] ).

Sub-global agreements have also started to emerge, examples of issue-specific climate clubs. In 2015, 70 solar-rich countries signed a framework agreement dedicated towards promoting solar energy development ( [[#ISA--2015|ISA 2015]] ). In 2017 the Powering Past Coal Alliance was formed, uniting a set of states, businesses, and non-governmental organisations around the goal of eliminating coal-fired power generation by 2050 ( [[#Jewell--2019|Jewell et al. 2019]] ; [[#Blondeel--2020|Blondeel et al. 2020]] ). Scholars have argued that greater attention to supply-side agreements such as this – focusing on reducing and ultimately eliminating the supply of carbon-intensive energy sources – would strengthen the UNFCCC and Paris Agreement (Collier and Venables 2014; [[#Piggot--2018|Piggot et al. 2018]] ; [[#Asheim--2019|Asheim et al. 2019]] ; [[#Newell--2020|Newell and Simms 2020]] ). [[IPCC:Wg3:Chapter:Chapter-6|Chapter 6]] of this report, on energy systems, notes the importance of regional cooperation on electric grid development, seen as necessary to enable higher shares of solar and wind power penetration ( [[#RGI--2011|RGI 2011]] ). Finally, a number of transnational organisations and activities have emerged, such as REN21, a global community of renewable energy experts ( [[#REN21--2019|REN21 2019]] ), and RE100, an NGO-led initiative to enlist multilateral companies to shift towards 100% renewable energy in their value chains ( [[#RE100--2019|RE100 2019]] ).

Whether a result of the above activities or not, multilateral development banks’ lending practices have shifted in the direction of renewable energy ( [[#Delina--2017|Delina 2017]] ), a point also raised in [[IPCC:Wg3:Chapter:Chapter-15|Chapter 15]] of this report. Activities include new sources of project finance, concessional loans, as well as loan guarantees, the latter through the Multilateral Investment Guarantee Agency ( [[#Multilateral%20Investment%20Guarantee%20Agency--2019|Multilateral Investment Guarantee Agency 2019]] ). This appears to matter. For example, [[#Frisari--2015|Frisari and Stadelmann (2015)]] find concessional lending by multilateral development banks to solar energy projects in Morocco and India to have reduced overall project costs, due to more attractive financing conditions from additional lenders, as well as reducing the costs to local governments. [[#Labordena--2017|Labordena et al. (2017)]] projected these results into the future, and found that with the drop in financing costs, renewable energy projects serving all major demand centres in sub-Saharan Africa could reach cost parity with fossil fuels by 2025, whereas without the drop in financing costs associated with concessional lending, this would not be the case. Similarly, [[#Creutzig--2017|Creutzig et al. (2017)]] suggest that greater international attention to finance could be instrumental in the full development of solar energy.

Despite improvements in the international governance of energy, it still appears that a great deal of this is still concerned with promoting further development of fossil fuels. One aspect of this is the development of international legal norms. A large number of bilateral and multilateral agreements, including the 1994 Energy Charter Treaty, include provisions for using a system of investor–state dispute settlement (ISDS) designed to protect the interests of investors in energy projects from national policies that could lead their assets to be stranded. Numerous scholars have pointed to ISDS being able to be used by fossil-fuel companies to block national legislation aimed at phasing out the use of their assets ( [[#Tienhaara--2018|Tienhaara 2018]] ; [[#Bos--2019|Bos and Gupta 2019]] ). Another aspect is finance; [[#Gallagher--2018|Gallagher et al. (2018)]] examine the role of national development finance systems. While there has been a great deal of finance devoted to renewable energy, they find the majority of finance devoted to projects associated either with fossil fuel extraction or with fossil fuel-fired power generation.

Given the complexity of global energy governance, it is impossible to make a definitive statement about its overall contribution to mitigation efforts. Three statements, do however, appear to be robust. First, prior to the emergence of climate change on the global political agenda, international cooperation in the area of energy was primarily aimed at expanding and protecting the use of fossil energy, and these goals were entrenched in a number of multilateral organisations. Second, since the 1990s, international cooperation has gradually taken climate mitigation on board as one of its goals, seeing a realignment of many pre-existing organisations priorities, and the formation of a number of new international arrangements oriented towards the development of renewable energy resources. Third, the realignment is far from complete, and there are still examples of international cooperation having a chilling effect on climate mitigation, particularly through financing and investment practices, including legal norms designed to protect the interests of owners of fossil assets.

<div id="14.5.2.3" class="h3-container"></div>

<span id="transportation"></span>