Published daily by the Lowy Institute

Will China join the IEA?

Will China join the IEA?
Published 3 Aug 2015   Follow @hannahjwurf

Lately, there has been renewed interest in energy governance, as large emerging economies seek to grow their influence in international organisations in order to better reflect their economic weight.

International governance of energy has changed little since the oil crises of the 1970s. As the oil producers banded together to form OPEC, the International Energy Agency (IEA) was formed as the collective response of energy consuming countries that were starved of oil. The IEA remains the most influential multilateral energy organisation and provides a significant body of technical expertise.

There is pressure for the IEA to reform its membership to include the world's largest energy consumers – neither China nor India are members despite their significant energy needs. The G20 established principles on energy cooperation in 2014 where leaders agreed to work together to make international energy institutions more representative and inclusive of developing economies. The appointment of a new executive director of the IEA is an opportunity to make this pledge and relations with emerging economies a top priority. 

Broadening IEA membership is no easy task and would depend on treaty reform and decoupling OECD membership from IEA membership. The advanced economies of the IEA want emerging economies in the organisation to improve capacity to respond to energy crises and increase data sharing. [fold]

However, it is not clear if China and other emerging economies are ready to join the IEA. The Chinese Government has not made IEA membership a top priority, although it has strong ties with the organisation. There are some who believe the future of energy governance is in Asian-focused organisations rather than the IEA, with its fixed principles and institutional history. The IEA risks going through a series of complicated reforms only for disgruntled members to be told that big players like China and India are not yet interested in membership.

A challenge for any new IEA members is the requirement to hold 90 days of oil stocks (a rule that Australia has flouted). Also, the IEA's emphasis on coordinated emergency response encroaches on sovereignty over energy resources, a sticking point for China.

What could the IEA do to convince China to join its ranks?

A regional IEA headquarters in Beijing is an idea that has been floated. Also, engagement with high-level Chinese officials will be necessary to create supporters of the IEA within the Chinese Government. This will require additional effort and resources from the IEA. China sees itself as having a special place in the world, and has no qualms about asking for special conditions. 

China's embrace of multilateralism is still at an early stage and its commitment to global public goods is provisional. For example, in climate financing, China sees itself as a developing country that needs to be helped by advanced economies. For many emerging economies, energy access will continue to trump climate change action.

Energy remains a sensitive area of national interest and will test China's commitment to multilateralism.

Photo courtesy of Flickr user Adam Cohn.

You may also be interested in