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The International Energy Agency finally begins a process of modernisation

The International Energy Agency finally begins a process of modernisation
Published 1 Apr 2016   Follow @hannahjwurf

In August last year, I questioned whether China's new interest in international governance institutions would extend to global energy governance and joining the International Energy Agency (IEA). I had some doubts that energy was an area in which China would prioritise cooperation over its national interest, given that IEA members share data and coordinate their oil stocks in times of crisis.

IEA Executive Director Fatih Birol at COP21 (Flickr/IEA

I pointed out that the IEA was in trouble as an energy consumer forum if China and India were not intending to join the organisation. The IEA treaty is tied to OECD membership, yet the IEA predicted as early as 2011 that 90% of the growth in energy demand will come from non-OECD countries over the following 25 years.

While the COP21 climate change agreement has dominated recent energy governance discussions, another important meeting also took place in Paris last year at the IEA headquarters. In November, the IEA commenced a 'modernisation' process by concluding association agreements with the some of the most important Asian energy consumers, namely China, Indonesia and Thailand. Indonesia is particularly indicative of changing energy patterns as it is also an OPEC producer (although this is another complicated relationship).

The association agreements are non-binding and allow the participation of countries in IEA meetings and training and capacity building. Association countries can also send secondees to the IEA secretariat to build up human capital. 

Presumably, these agreements are a stepping-stone towards full membership, as the IEA will help association countries to develop and test emergency response systems. However, the official language is a lot softer and only states that the agreements will 'serve as a bridge and platform for wider-ranging and deeper co-operation and collaboration between IEA member and association countries'. [fold]

The political impetus behind the association agreements is clear – the IEA no longer represents the world's largest current and future energy consumers. The IEA is responding to this by affirming its 'strong desire to welcome more major emerging countries to join association in the future'. But whether India has any aspirations to join is unknown. There are surely those within the IEA who hope that China signing an association agreement might have a positive snowballing effect and influence India. 

The association agreements will form part of the legacy of new Executive Director Fatih Birol, who gave a speech in Beijing just eight days after his appointment to the role. In the speech, he made it explicit that 'this visit to Beijing is a tangible demonstration of my personal vision to modernise the IEA. . . a key part of that vision is to develop a truly International Energy Agency during my tenure'.

In return for China's cooperation, the IEA will set up an IEA China Centre in Beijing which should help improve the quality of China's energy data. As the IEA's main comparative advantage continues to be compiling sophisticated sets of global energy data, data gaps are a big problem. These gaps are a result of poor capabilities as well as political sensitivity. 

Interestingly, Australia has committed a token amount of $260,000 to help establish the new Centre. It is well known that Australia has not been a favourite at the IEA table because it does not hold the stipulated 90 days of energy reserves, but it's to Australia's credit that it is supporting the IEA's modernisation process and encouraging China to strengthen its partnership with the organisation. 

In the short-term, the next steps for the IEA will be to implement and deepen the association agreements, and expand the number of association countries to include other key energy consumers that may not be ready for full membership. In the medium-term, the IEA will need existing members like Australia and many of the founding European members to agree to more radical reforms if the organisation is to stay an important player in global energy governance.

At the end of the day, association agreements are only a workaround solution. The IEA is a consensus body and it needs members to meet around the table on equal footing. It will need to convince many new countries to join as full members to secure its future.

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