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International Governance of Green Energy: Challenges & Opportunities

Updated: Jun 9, 2021











Fig. 1 Ovo Energy


In 2018, leading climate change experts from the Intergovernmental Panel on Climate Change calculated in an alarming report that we must achieve net-zero CO2 emissions by 2050 if we want to avert disastrous environmental and social consequences and limit global warming to 1.5 degrees celsius. A substantial problem obstructing this goal is our continued dependence on fossil fuels for energy and industry.


With alarmingly grim outlooks for the future, why are we still reliant on energy sources that cannot be sustained - what stands in the way of transitioning to 'green' renewable energy sources instead? A significant problem is that governments support fossil fuel energy much more than renewable energy. Globally governments spend around $500 billion to subsidise fossil fuels, and 90% of global oil reserves are actually in state hands. Our modern society is a production of fossil fuel dominance where oil is used for transport and petrochemicals and coal for electricity and industry. The world-wide commercialisation of petroleum facilitated the economic boom of the 20th century and yielded a more indulgent understanding of a 'good life' with access to cheap products and increased consumption. In the words of Dieter Helm: "The fossil fuels are what made the twentieth century possible".


But now, the fossil fuels are endangering future societies, without even mentioning the disastrous costs of the 'good life' and the resource curse on minority communities and the environment. Phasing out fossil fuels by transitioning into more sustainable economies and energy resources is, therefore, crucial - the scientists have given us a deadline. International organisations and institutions play a central role in mobilising global action. But a global systematic change, especially from a resource that our existing economies rely upon, is difficult to implement across different industries and actors with varying degrees of commitment. The main institutional challenge lies in framing the problem to convey the urgency that we must work with, as well as certain participatory gaps based on states' interest-based explanations. However, the problems are somewhat contradictory - institutional complexity makes it difficult to accurately frame the problem and motivate action, but it also presents opportunities for non-state actors to influence outcomes and drive societal change.



PROBLEM IN FRAMING THE PROBLEM


To address the concerns for a green economy and energy transition, several partnerships between international organisations have emerged in the past decade to foster global action. The Partnership for Action on Green Economy (PAGE) emerged in 2013 as a response to a call at Rio+20, Green Growth Knowledge Platform (GGKP) emerged in 2012, and the Green Fiscal Policy Network (GFPN) in 2014. However, there are many actors outside the institutional sphere that are also involved in the energy problem, particularly national politics and oil corporations, which also shape the framing of the energy problem.


What is 'green' energy? What should the transition look like?


Fig. 2 PAGE

PAGE: Global outcomes need to ensure that "countries reframe economic policy around sustainability and put in place enabling policy conditions, reforms, incentives, business models, and partnerships to catalyse greater action and investment in green technologies and natural, human, and social capital".


GGKP: The global transition needs to "address these challenges by substantially increasing investment in renewable energy technologies and implementation, doubling the rate of improvement to energy efficiency, and changing user behaviours, with the aim to achieve absolute decoupling between energy consumption and economic growth".


GFPN: Fiscal and budgetary tools should be used to support low carbon development: "Incentives to shift behaviour towards more sustainable patterns, align government expenditures with environmental goals & enhance effectiveness of public spending".


All three of the institutional partnerships outlined above share the view that the solution to the energy problem must be economic and incentive-based. However, they use varying terminology to convey similar goals: green / renewable / low carbon / clean. An significant problem in the problem framing is the use of ambiguous terms, which can be used and interpreted very differently. For example, to be green, an energy resource cannot produce pollution, such as fossil fuels, but not all renewable energy industries are necessarily green.


Canadian Association of Petroleum Producers: "Canada’s oil and natural gas industry is a leading investor in environmental innovation. These innovations are being used to reduce GHGs and lessen impacts on land, air and water across the industry. This kind of forward-looking investment ensures Canada’s oil and natural gas industry can be a sustainable supplier of energy to the world even as it creates economic opportunities here at home.”

As demonstrated by the Canadian oil association, terms like 'sustainable' or 'environmental innovation' can be also used to support the fossil fuel industry. There is no centralised definition of sustainability. For oil companies, sustainability could also imply economic growth and job security. For them, the framing of the sustainable energy problem is incentive-based like for the three international organisations, but instead they produce a greenwashing narrative. By using the same 'environmentally friendly' terminology, the oil corporations can skew their public image to fit the environmental trends that are gaining traction among consumers and policymakers.


Friends of the Earth (FoE): "Nuclear and coal are polluting, dangerous, and economically inefficient energy sources. Despite this common knowledge, the Trump Administration and Energy Secretary Rick Perry continue to prop up these dying industries. Friends of the Earth is committed to fighting against the Trump Administration’s dangerous, misguided policies on coal and nuclear power".


As an activist organisation, FoE instead frames the problem of energy using a political perspective. As Ronald contends, the political perspective of problem framing encapsulates the idea that "environmental problems arise because those with power lack incentives to protect the environment and those with incentives lack the power to do so". FoE demands change by appealing to political parties, namely Trump's administration during his presidency, as they have the power to determine the national course of action for green energy. Since government subsidies for fossil fuels constitute a significant portion of the problem, appealing to national politics is important. For the international organisations involved in the issue, political incentives may be difficult to address, as their funding often comes directly from the powerful nation states. Therefore, activist organisations play an important role in politically framing the problem.


Burning of fossil fuels affects us all globally, whether we contribute to it or not.

Moreover, the problem of fossil fuel energy is local-cumulative; a problem that occurs within national borders but with cumulative impacts that reach far beyond national processes by significantly affecting the climate (O'Neill). National governments can steer their own support for fossil fuel industries and utilise them in national operations based on subjective incentives, but the burning of fossil fuels affects us all globally, whether we contribute to it or not. It is, therefore, difficult to solve the complex problem internationally. The main problem that international institutions face in governing this issue is accurately framing the problem across the various industrial sectors. Terminology like 'green' or 'sustainable' that institutions use to frame the problem can be taken out of context and used for greenwashing by corporations that contribute to the problem.



PARTICIPATORY GAP IN PAGE


Another key problem that international governance faces in a green energy transition is a participatory gap that can be observed particularly in the Partnership for Action on Green Economy (PAGE). Their main objective is to support countries to embark on green growth trajectories, which includes phasing out fossil fuels. A major participatory gap can be identified in the lack of initiative to join or fund the partnership from the US, Russia or some MENA countries, specifically, Saudi Arabia. These three countries are the world's main fossil fuel suppliers, all producing over 10 millions barrels of oil per day. Their contribution to the partnership would be pivotal to make PAGE's achievements more significant on a global scale. At the moment, PAGE only has resources to support 20 countries, although they also have applications from 31 other countries. Below you can see a map of the partner countries:

Fig. 3 PAGE


There are strong regional factors that can be attributed to the US, Russia, and Saudi Arabia's lack of incentive to join the PAGE. The regions depend heavily on fossil fuels for energy supply, domestic consumption and economic revenues. Their political economy of energy is determined by characteristics that promote the use of fossil fuels: they encompass large supplies of oil and gas resources, and hydrocarbon wealth has enabled the economic development of many oil and gas producers in the countries. And especially in the MENA region, energy has for decades been considered a ‘public good’ provided by many governments for free or for a low price.


$20 billion per year to meet 10% of electricity demand with wind energy

We can also offer an interest-based explanation for why these regional factors are resulting in the participatory gap. As Sprinz and Vaahtoranta suggest, "states are more inclined to participate in environmental protection when the costs of compliance are relatively minor". The high abatement costs (or the costs of compliance) needed to transition into green energy may prevent countries from joining the partnership. For example, governments in the MENA region would need to allocate $20 billion per year to meet 10% of electricity demand in the region with wind energy. Even though PAGE offers monetary support to its partner countries, the countries themselves would still need to significantly invest in the greening of energy themselves.


PAGE also incorporates enforcements that may discourage participation. They have a strict criterion and an application process for country selection where only those countries are selected that demonstrate a strong willingness to commit to greening the economy. PAGE also has high monitoring and enforcement mechanisms for the countries after they join, which add to the depth of the partnership. However, as Bernauer et al. argue, the depth of the partnership could also encourage participation and PAGE does also provide positive enforcements of technical and financial support to participants. Therefore, there are strong opportunities to promote participation in the future if PAGE can secure more funding from international organisations and high-income countries and lower their criterion for country selection. See below a presentation video that delves more specifically into the participatory lack stemming from the MENA region:




BENEFITS OF COMPLEXITY & GOING FORWARD?


While the complexity of actors and institutions shaping the international governance of energy resources makes it more difficult to frame the problem, I contend that institutional complexity is also the strongest feature to mobilise action across the varied industrial sectors and politics involved in the production and supply of energy going forward. The answer to a complex problem will have to address it in the same complex manner.


As Alter and Meunier argue, "complexity creates openings for non-state actors to influence outcomes" and that complexity "contributes to making states and IOs more permeable, creating a heightened role for experts". As I demonstrated in the very beginning of this blog, climate change experts from the IPCC produced a report in 2018 that set clear warnings of CO2 emissions resulting from the burning of fossil fuels. Experts have a decisive role in the governance of the energy problem. By listening to expert findings, international institutions can mould their reaction and policies in accordance with the severity of the problem. The scientific findings of the consequences of CO2 emissions have set clear deadlines that now define the international governance of green energy in the form of the Sustainable Development Goals (SDGs).


The decentralised approach distributes work across various institutions, which means that risks and shortcomings are also spread out.

PAGE as a partnership already encompasses a rich complexity as they work toward achieving the SDGs. The partnership draws upon the knowledge and resources of several international organisations, as well as government ministries and international coalitions that also work with various research centres. See below a mapped out diagram of PAGE's connections and some of the most pertinent international actors governing the issue of green economy and energy:











As we can see from the diagram, most actors are in some way linked to one another with a lot of overlaps. Alter and Meunier suggest that sometimes overlap may introduce 'positive feedback effects' that enhance cooperation through cross institutional political strategies. The decentralised approach to govern the problem distributes the work across various institutions, which means that risks and shortcomings are also spread out. For example, even though PAGE suffers from a participation gap, the GFPN has been able to mobilise contact with the US, Russia and Saudi Arabia, which ensures that they are still involved in governing the issue even though not through PAGE.


Moreover, as Ronald suggests, “resolving most environmental problems requires decentralization, local autonomy, and respecting the knowledge and sensitivity of local people to local conditions and the fact that environmental damage often arises because decision makers are distant from, unaware of, and unconcerned about environmental impacts of the policies they approve”. PAGE works closely with the 20 countries that have been accepted to join the partnership. PAGE claims that these countries receive "services for policy development and implementation, capacity building and financing for inclusive green growth transitions, tailored to their individual needs and circumstances". This allows each country to develop their own pathway to respect their individual customs. I believe that the close cooperation culminates in the strength of the partnership; to provide knowledge and resources to those who seek them, but to let local decision-makers shape and implement their own policies without orders from a distanced hall of authority. Of course, the process also has its challenges, as not all local governments necessarily represent the diversity of opinions and knowledge in a given country.


However, institutional complexity that enhances cooperation between different organisations, research centres and experts, governments, and non-state actors allows for a cross-sectoral understanding and solution-oriented approach to solve the complex problem of fossil fuel energy dependence and pave the path for a green energy transition. While there are challenges in framing the problem and participatory gaps resulting from the lack of initiative from the largest fossil fuel producers, complexity allows for a versatile approach to cope with difficulties and initiate future solutions.


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