The authors would like to thank Marie Thorndahl for her support in the writing of this chapter.
1Modern economic development as we know it today, which is the product of the industrialisation process of the last two centuries, is fuelled primarily by non-renewable mineral resources extracted from the lithosphere (the outermost shell of Earth). It benefits from relatively abundant and low-cost energy obtained from fossil fuels, namely oil, natural gas and coal, and, to a much lesser degree, fissile fuels such as uranium. The other, traditional sources of energy such as biomass, wind and water power have been marginalised in the energy mix of the industrialised countries (Chevalier, 2004).
2Crude oil, with its exceptional qualities, has become the primary source of industrial and military power, replacing coal as reference energy. Liquid, easy to transport and store as well as a very intense form of energy, black gold has become the invisible engine of growth, particularly since the 1950s and 1960s. Equally, it has been a stake in many armed conflicts (Yergin, 1991; Youngquist, 1997; Laurent, 2006). Oil is extracted from rare oil fields located in sedimentary rocks of biogeochemical origin (Tissot and Welte, 1984). It is the main source of fuels for continental and maritime transport and the only source for aviation. This raw material lies at the very heart of the way of life of the majority of human beings, in terms not just of energy that it provides, of course, but also of objects, food production and even health.
3The area of social sciences that focuses on development has not yet taken full account of the importance of oil in the extraordinary phase of growth experienced by mankind – albeit in a very unequal way – in the twentieth century. This is an unprecedented phenomenon in the history of humanity and in the geological and biological history of Earth. The development model based on high levels of energy consumption and which facilitated the demographic and scientific-technological explosion of the twentieth century is encountering three constraints which, combined, are becoming increasingly problematic: peak oil and its implications (Campbell and Laherrère, 1998; Heinberg, 2003; Sachs, 2006), the rapid demographic and economic growth in the global South, and the degradation of the environment and disturbance of the biosphere’s climate system.
4Since the 1970s debate has been raging between the optimists who trust market forces and man’s capacity for innovation and technological ingenuity to overcome these obstacles, on the one hand, and the pessimists (who nonetheless would describe themselves as realists) who believe that there is an urgent need to take seriously the dual threat of post-peak oil and global warming, on the other. The pessimists appeal to us to rectify the excesses of the consumer society, which are threatening the planet’s ecological balance. On an academic level, they campaign for an epistemological paradigm shift in economics to take the relevant insights from natural sciences into consideration. This epistemological battle pits short-term political and economic visions and imperatives against the long-term ecological perspectives.
5In a relatively optimistic scenario, the International Energy Agency (IEA) predicts that global primary energy demand will increase by 36 per cent between 2008 and 2035, or 1.2 per cent per year, rising from 12,300 million tonnes of oil equivalent (Mtoe) to over 16,700 Mtoe (IEA, 2010). This scenario of ‘new policies’ presupposes that every country will implement the political undertakings and action plans which they announced for reducing their carbon dioxide (CO2) emissions. Regardless of which scenario is applied, the IEA predicts that fossil fuels will still be the predominant source of energy in 2035 and will account for more than half the increase in overall demand for primary energy. As a consequence of demographic and economic growth and urbanisation in emerging countries, 93 per cent of the additional demand will come from emerging economies and developing countries. But the IEA implicitly indicates that the peak of conventional oil production may have already been reached in 2006 at 70 million barrels per day. In 2035 today’s oil fields are expected to produce about a fifth of total conventional oil production. This means that 80 per cent of the 2035 projected production will have to come from new oil fields, which seems quite an optimistic projection.
6While the share of renewable energies could rise from 7 per cent to 14 per cent of total energy demand between 2008 and 2035, the IEA predicts that the share of nuclear energy will increase from 6 to 8 per cent. The share of non-conventional oils – tar sands and oil shales and extra heavy oil in particular – could rise from 3 per cent to more than 10 per cent of global oil supply in 2035, with a considerable impact on the environment because of the vast amount of greenhouse gas (GHG) emitted and the intensive use of water. According to various scenarios, the IEA estimates that global oil production (all categories) will reach a peak between 2020 and 2035. The IEA, which represents the Organisation for Economic Co-operation and Development (OECD) member countries, comes to the same conclusion as the Stern Review on the Economics of Climate Change released in 2006, namely that if governments fail to commit today to reducing energy consumption, the global environment will suffer considerable harm (Stern, 2006). Furthermore, we will become increasingly susceptible to supply shortages (IEA, 2010), with potentially disastrous consequences from a social and geopolitical point of view. The IEA’s vision is of course not unanimously shared either by peak oil experts or by academics working on energy climate and development issues and on global ecology of sustainable development. Many other reports, scientific or political (or both), are much more alarmist.
7Against this backdrop, inequalities of access to available energy remain glaring. More than 20 per cent of the world’s population still has no access to electricity, while 40 per cent have to use traditional biomass for cooking, mainly in rural areas of Africa and Asia. The fight against extreme poverty and malnutrition calls for resolute action to combat these inequalities. Even in the ten leading hydrocarbon-producing countries in Sub-Saharan Africa two-thirds of the population have no access to electricity; yet, a considerable amount of gas goes up in smoke as a result of gas flaring in this region (IEA, 2008).
8This chapter introduces the thematic dossier of International Development Policy which focuses on the interactions between energy and development. We briefly put the evolution of these interactions in a historical perspective and consider the gulf that separates social sciences from natural sciences in present-day academic communities. We also give a succinct overview of the contributions made by a small number of pioneers who have sought to build bridges by embarking upon a new interdisciplinary dialogue within ecological economics and industrial ecology. We then analyse the evolution of global governance in the energy sector and address its inadequacy to meet the above-mentioned challenges, the specific problems of resource-rich developing countries and the mounting pressure on access to energy resources.
9Some historians trace the genesis of the link between energy and human development right back to the domestication of fire some 500,000 years ago. Applying a much debated evolutionary paradigm, they frequently analyse the relationship between the gradual understanding of how to exploit the various sources of energy and the development of civilisation (Cottrell, 1955; Cipolla, 1962), eclipsing in the past the diversity of societies and civilisations. From a more recent socio-epistemological and anthropological point of view, it is the industrial revolution of the nineteenth century or, to be more precise, the ‘thermo-industrial revolution’ (Grinevald, 1990, 2007) which decisively seals the relationship between energy and modern economic development (Fouquet, 2008; Ayres, 2009). Political doctrines and economic theories of development have, by and large, taken this contingent Eurocentric model to be a universal historical or evolutionary standard. Criticism of it is relatively recent and still marginal (Mehmet, 1995; Rist, 1996; Grinevald, 2006).
10The very notion of energy in its modern sense is relatively recent. It stems from the transformation of physics in Europe in the first half of the nineteenth century, which was closely bound up with the new technology of heat and electrodynamic engines, and the invention of the notions of mechanical work, efficiency and power by the engineer-savants. With the establishment of the mechanical theory of heat around 1840–60 and the ‘Carnot principle’, a new science of energy emerged, namely thermodynamics, which is based on two fundamental principles: the principle of energy conservation and the principle of energy dissipation or degradation.1 According to this new science, energy is transformed and takes different forms, but its quantity remains constant in an isolated system. Its anthropomorphic definition implies drawing a distinction between two ways of categorising energy: usable energy, which either is concentrated or has low entropy and enables mechanical work, and dissipated2 energy, or high-entropy energy, which has no value for human use and is often overlooked in analyses (‘waste’).
11Identifying the changes in Western civilisation from the nineteenth century onwards as the start of the modern relationship between energy and development enables us to move away from the linear, evolutionary thesis of an ‘economic history of world population’ (Cipolla, 1962) or of development. We can then pinpoint a major discontinuity, namely the anthropological and ecological rupture that is the thermo-industrial revolution and which marks the beginning of the current anthropogenic geological epoch3 (Steffen et al., 2011).4
12The rapid development of the modern economy is based on the invention of the internal combustion engine, which enables cars and aeroplanes to be propelled, creating many new technical methods of moving goods and people and accelerating the speed of transportation in the contemporary world. This social invention of speed and acceleration commences with the steam engine mounted on wheels and metal rails, whose heyday really began between 1830 and 1850. The steam locomotive, powered by coal or wood, therefore became the symbol of modernity and progress propagated in the colonial empires towards the end of the nineteenth century.5 The railway revolutionised the space–time relationship in Western culture in the same way as air travel does today.
13Although the process of industrialisation implies breaking away from a certain ‘state-of-nature society’, it has its roots in a deeply ingrained, historical momentum. Europe was industrious long before it was industrial; so was China. The very long history of mediaeval and proto-industrial hydraulics is a reminder of this. However, the Vitruvian paradigm of hydraulic technology is well and truly blown out of the water by the revolution of ‘fire-engines’ (Carnot, 1824) and the increasingly rapid spread of the industrial use of fossil fuels, namely coal, oil and natural gas. The technically minded civilisation of Europe, with its quest to master natural forces to increase its mobility and its productivity, owes its rapid development to a constant stream of inventions and innovations in the energy sphere: wind power (first for sailing and then for windmills), animal power (with the invention of stirrups and harnesses), water mills (an ancient invention, but a technical and social revolution in mediaeval times, the hydropower harnessed by monasteries being a prime example), then the improvements to water wheels and turbines which for many years staved off competition from steam engines (Tunzelmann, 1978; Smil, 1994). However, these forms of power, which are biospheric and organic in origin, are subject to major geographical and meteorological constraints, not to mention the fact that animals and people suffer from fatigue. They only enable limited rates of growth and certainly not the exponential growth over a long period delivered by the golden age of oil (Campbell, 1997; Heinberg, 2003).
14It was artisans and technicians – many of whom had no involvement in scientific circles – who learned the art of exploiting mechanical energy. But we must not forget the vital importance of the rise of the engineering profession which for many years was dedicated to the military tradition and the formation of modern states. Specialising initially in the construction of fortifications and designing war machines, at the end of the revolutionary and Napoleonic wars the engineers turned to civil engineering.6 They became key players in the industrial revolution and colonial expansion. A highly qualified workforce, participating themselves in developments in physical–mathematical sciences, they were responsible for developing the old machines into increasingly complex technical systems by incorporating into them ever more powerful motors.
15However, the mass-scale use of fossil energies, which dates back to the nineteenth century, spread only gradually until the 1920s. The trend in annual global emissions of CO2, established over a long series starting in the pre-industrial period, perfectly illustrates the acceleration of the thermo-industrial revolution from 1850 onwards. Until then the use of energy which was biological or biospheric in origin did not affect the stability of the carbon cycle. Massive reliance on non-renewable fossil energies, and oil in particular, became the pillar of economic growth after the end of the Second World War, the result of a combination of factors and circumstances.
16First, let us consider the wars. These had a formidable, accelerating effect on technological progress and the growth of oil as the strategic stake par excellence and, later, the emergence of nuclear power. The First World War was the first major mechanised war, particularly in the last years. However, it was mainly during the Second World War that crude oil established itself as a strategic raw material and the geopolitics of oil assumed global dimensions, as demonstrated by the Japanese air and naval fleet attack on Pearl Harbour on 7 December 1941. Japan, which had no crude oil deposits, launched an audacious military operation to lift the American blockade. The mobilisation of scientists and engineers behind the making of the atomic bomb as part of the Manhattan Project from 1942 onwards, and the bombardments of Hiroshima and Nagasaki, marked the dawn of the ‘new nuclear age’. Peaceful uses of atomic energy, to eradicate what Oppenheimer called ‘the sin’, had yet to be developed.
Figure 1.1 – The golden age of oil throughout history, 0–2500
Source: Campbell (1991).
17Second, there was the exploration and discovery of oil deposits. Although the existence of oil has been known since very ancient times, crude oil was not utilised for industrial purposes until the 1850s, first in Baku and Romania, then from 1859 onwards in the United States (US) with the famous drilling of Colonel Drake in Titusville, Pennsylvania. The golden age of oil, characterised by a hitherto unprecedented abundance of energy supply, began in earnest in the 1950s, following the major oil discoveries made since the start of the twentieth century (Perrodon, 1985: Yergin, 1991; Campbell, 1997).
18Figure 1.2 – Global CO2 emissions from fossil-fuel burning, 1800-2007
Source: Tom Boden and Gregg Marland (Carbon Dioxide Information Analysis Center, Tennessee), ‘Global CO2 Emissions from Fossil-Fuel Burning, Cement Manufacture, and Gas Flaring: 1751–2007’, 8 June 2010, http://cdiac.ornl.gov/ftp/ndp030/global.1751_2007.ems.
19Third, there was the hope for a limitless economic development model. Despite the fears surrounding the nuclear arms race and the risks of proliferation after the start of the Cold War, nuclear power was seen as a new source of abundant, cheap energy, which would offer a solution to the increasing scarcity of fossil energies. In 1955 this hope spread to the countries of the southern hemisphere, mainly through the channel of the United Nations (UN), which were expanding their programmes of technical assistance for atomic energy under the banner of ‘Atoms for Peace’.7 This hope was shared by the physicists of the southern hemisphere, who wanted to use the command of this energy to help ease the poverty of underdeveloped countries by ‘leapfrogging the use of steam engines’ (Bhabha, 1955). However, it was global energy consumption associated with hydrocarbons that was to grow at an exponential rate from 1960 onwards (Meadows et al., 1972).
20These few decades of economic expansion must be set against the long geological times, which are out of step with the tempo of economic cycles. Hydrocarbons are the product of bygone organic waste and highly complex geological processes, which make them a rare resource and one that cannot be renewed on the scale of the history of mankind. The deposits that can be accessed and exploited have taken tens, if not hundreds of millions, of years to form. They are extraordinary reservoirs of energy for human endeavour. Drawn from the bowels of the earth, the fossil carbon consumed is pumped back almost instantaneously into the atmosphere of the present biosphere.
21The extreme brevity of political, economic and media time spans is undoubtedly one of the reasons why social sciences struggle to think of energy in its physical and geological dimensions. Analyses of political economics tend to show that governments and businesses base their decisions on a short-term view. In the economic sphere in particular the neo-classical school considers energy as a commodity in the same way as other raw materials and has not devised a specific category to accommodate primary energy (Ayres, 2009). Theoretically, it is certainly conceivable to take account of the costs created by the degradation of the environment by incorporating environmental externalities. What would the internalisation of these externalities mean in practice? A study commissioned by the Principles for Responsible Investment Initiative sets the environmental costs generated by human activity at USD 6,600 billion for 2008 alone, which is the equivalent of 11 per cent of the global gross internal product (GIP). The 3,000 largest global private companies by market capitalisation are responsible for a third of the costs generated. The report estimates that ‘in a hypothetical investor equity portfolio weighted according to the MSCI All Country World Index externalities could equate to over 50 per cent of the companies’ combined earnings’ (UNEP and PRI, 2010), simply meaning that over half of corporate earnings would evaporate if such externalities were duly internalised. The study recommends that investors engage in a dialogue with portfolio companies and seek policy and regulatory responses to address externalities.
22The neo-classical school bases its models for the allocation of energy resources on the concept of price formation on a more or less balanced market. The closed-circuit economics approach does not take account of primary energy and natural resources that enter the circuit to fuel the economic process and leave it in the form of waste which impacts on the global environment (Georgescu-Roegen, 1971, 1976, 1995). The arguments of ecological economics dispute the neo-classical hypothesis that the market is able to regulate the duration of access to hydrocarbons by means of fluctuating prices, to say nothing of the ecological and geopolitical aspects. Ecological economists state an obvious fact, namely that the truth of market prices cannot help renew exhausted stocks or mitigate the pernicious effects of GHG emissions into the atmosphere.
23Owing to its central role in the modern economy, energy lies at the heart of the gulf that, depending on different points of view, either separates or establishes a new interdisciplinary dialogue between the fields of social sciences and natural sciences. It is, in fact, impossible to discuss energy without addressing the relationship between man and nature (Smil, 2008).
24Until the 1970s energy was overlooked by economic theory and, indeed, historiography in general. Although deforestation, the exploitation of firewood and the exhaustion of coal mines figured in the analyses of some naturalists, geographers, geologists and economists from the nineteenth century onwards,8 the issue of the destruction of natural resources was largely ignored in economic and social thinking in the expanding industrial society.
25After the Second World War some American naturalists such as Fairfield Osborn and William Vogt and even heterodox thinkers like Lewis Mumford, Aldous Huxley and Jacques Ellul were the first to critically examine the scientific and technical progress of industrial society. A symposium organised in 1955 in Princeton on the theme ‘Man’s Role in Changing the Face of the Earth’ also seized upon these issues. However, the curiosity of economists – and development economists in particular – was not roused until the emergence of the ecology debate in the US in the 1960s and 1970s. From the 1960s onwards some dissident economists began questioning our ‘growthmania’.9 Critical, and sensitive to the arguments of the environmentalists, they were responsible for bringing the issues of natural resources, pollution and the relationship between social and natural sciences back into the spotlight. Among the most famous of these figures were Bertrand de Jouvenel, William Kapp, Kenneth Boulding, Nicholas Georgescu-Roegen and Herman Daly (Daly, 1997).
26New societies of scholars formed in the 1970s and 1980s, among them the Club of Rome, the Worldwatch Institute, the World Resources Institute, and, more especially, the International Society for Ecological Economics (ISEE).10 They all helped raise awareness of the planet’s ecological limitations and the problems caused to the world’s environment by modern development. However, these voices became less audible as in the 1980s and 1990s the price of a barrel began to plummet and the power of consumerism steadily grew.11
27Nonetheless, it was during this same period that international scientific cooperation rallied in the face of issues such as the atmosphere, GHG, climate change and biodiversity.12 The Intergovernmental Panel on Climate Change (IPCC), set up in 1988, did much to instil greater awareness of global environmental change. The result has been growing public- and private-sector commitment to sustainable development and, on a more radical level, increasing support for ‘de-growth’ movements. While these movements are marginal, they have quickly established a niche in the public sphere and with the media. Environmental diplomacy and international environmental law are growing in power, although the painfully slow process of intergovernmental negotiations since the Rio Earth Summit (1992) and, more particularly, the Kyoto Protocol (1997) illustrate the stakes and the formidable difficulties faced by the world’s governments in finding a solution to devastating ecological problems.
28The fields of ecological economics and industrial ecology are taking up the torch of the schools of thought which are seeking to unite the spheres of life sciences and economic sciences. These schools of thought argue for the need to lessen the physical and biological impact of human activity on the major biogeochemical cycles of the Earth system, in particular by reducing flows of materials and energy in absolute terms,13 that is by dematerialising and decarbonising the economy.
29The opposing viewpoints of geologists and orthodox economists regarding oil reserves and mineral resources in general is a clear illustration of the socio-epistemological crisis that lurks behind the current economic crisis, at a time when the debate is no longer so much about the reality of the theory of peak oil, but simply about its chronology and its consequences.
30Today there is a growing consensus about risks to the climate in particular because the theory of climate change is no longer disputed within the expert scientific community. There is also a growing consensus that the globalisation of the Western way of life, fuelled by high rates of demographic and economic growth in the southern hemisphere (UNDP, 2007), is unsustainable. The communicating vessels between countries and continents, the de-nationalisation of problems and the circular links between environment and development have become an inescapable reality. Despite this, the necessary changes in developmental and strategic policies for the business world are painfully slow in coming. The change of course on energy matters is being hampered by powerful lobbies and an institutional, behavioural and cultural inertia that is resistant to swift change. In private households the tyranny of those minor decisions about what to buy – which, almost imperceptibly, are a source of significant and serious environmental trends – is blurring the message that it is imperative to move swiftly towards low-carbon-intensity and low-energy-profile economies. At the inter-state level we are confronted with the familiar problems of collective action which put the brakes on attempts to conserve global public property.
31The difficulties involved in incorporating geological boundaries into appropriate public policies, especially in the global South, can also be explained by the significant financial benefits of extracting fossil fuels. As these resources become scarcer their extraction offers a growing number of low-income countries courted for their underground riches a unique opportunity to speed up their economic development.
32For instance, following the discovery of substantial oil deposits off the coast of Equatorial Guinea in 1996, this small country quickly became the third-largest exporter of oil in Sub-Saharan Africa, with an average output of 360,000 barrels per day in 2004. Three years later the average per capita income had already passed the USD 20,000 mark and the country ranked among high-income economies. Nevertheless, life expectancy is around 50 years, the infant mortality rate remains among the highest in Africa and most of the population lives below the poverty line of USD 2 a day.14
33The example of Equatorial Guinea is a good illustration of the paradox of plenty. Theoretically, oil exports offer such countries an opportunity to relax balance-of-payments constraint. The royalties and other payments underpin the budgetary capacity of the oil-producing countries. Oil thus serves to ease major structural constraints in developing economies. More intuitively, countries rich in mineral resources seem well placed to combat poverty. They have greater financial resources at their disposal than resource-poor countries to improve living conditions for their citizens, invest in infrastructure and foster economic diversification. However, the reality is quite different, as exemplified by new oil-exporting countries such as Chad, Sudan and Niger (which is also the third-largest exporter of uranium in the world after Canada and Australia).
34The International Monetary Fund (IMF) categorised over 50 countries as resource-rich economies in 2002–04 (IMF, 2007).15 This number increases as prices rise as a result of a greater demand for energy on the part of emerging economies, starting with China which became a net oil importer in 1993. Indeed, global oil consumption rose by 12 per cent between 2000 and 2008 and looks set to increase by a further 20 per cent by 2030. The resulting competition pushes extractive industries in ever more remote regions that have been relatively under-explored so far, notably in Sub-Saharan Africa and the Amazonian Basin as far as conventional oil and gas are concerned.
35Many resource-rich developing countries are experiencing slower growth than resource-scarce ones. Furthermore, their institutions are often more fragile and they suffer from a higher level of armed violence (Auty, 1993; Sachs and Warner, 1997). Various explanations have been put forward to explain this ‘resource curse’. On the economic front the challenge consists in adopting effective policies to address the so-called Dutch disease translating into domestic currency appreciation and a lack of economic diversification. The resource curse thus tends to vindicate the structuralist argument, which stresses the enclave nature of the extractive sector, the lack of backward and forward linkages with the rest of the domestic economy and the terms-of-trade deterioration over time. In its politico-institutional dimension the resource curse highlights the problems associated with ‘rentier states’ and widespread rent-seeking behaviour. Whereas many low-income countries are today showing resource-curse symptoms (for example, the Democratic Republic of Congo, Nigeria, Turkmenistan and Zambia), other developing countries have been able to take advantage of their mineral wealth to turn into upper-middle-income economies (for example, Botswana, Chile, Malaysia, Peru and South Africa). The curse is not inevitable.
36In several developing countries the limited extent of their hydrocarbon deposits makes it hard to envisage significant extraction lasting more than two to three decades. In order to avoid wasting this unique and relatively short-lived opportunity to fight poverty and boost development, they must first be able to negotiate good deals that will allow them to generate sufficient revenues in exchange for the depletion of their natural capital. The major challenge will then be to allocate the revenues generated from oil and mining operations in a manner that is both politically feasible and conducive to development. Extractive revenues can for instance be placed in sovereign wealth funds for the benefit of future generations along the lines of the Norwegian model, redistributed to citizens in the form of dividends or lower taxes (Alaska), invested in the country’s physical and human capital (Malaysia, or endowment of the King Abdullah University of Science and Technology in Saudi Arabia) or, as is the case in many weak states, diverted by the ruling elite for personal purposes or for political patronage. Yet, the governance system in the energy sector is ill-suited to address the specific concerns of resource-rich developing countries.
37Governance in the energy sector is patchy and lacks coherence. Even if efforts in environmental diplomacy have been stepped up, the global energy governance is ill-equipped to address the specific concerns of oil producer, consumer and transit countries. Its current structure is essentially the result of endeavour by net oil-importing industrialised countries over the past four decades to secure their energy supplies. Energy security concerns push them to support controversial deals between their national energy companies and producer states, even at the risk of upsetting partner countries and civil society groups, as illustrated by the recent deals negotiated by the German energy giant E.ON with Equatorial Guinea16 or by the Swiss firm EGL with the Islamic Republic of Iran.17
38Strengthening governance in the energy sector means different things for different countries. Most of the major exporters are members of the Organization of the Petroleum Exporting Countries (OPEC), which aims to keep prices at levels that it considers sufficiently high. The OECD member countries set up the IEA in 1974 to bolster the energy security of importing countries, in particular through the management of reserve stocks. Western European countries backed the Energy Charter Treaty (ECT), which laid down a series of binding provisions geared towards strengthening energy security and protecting investments in this sector, most notably in resource-rich former Soviet republics. By and large, emerging economies share the concerns of industrialised countries in terms of energy security. China and India have engaged in intensive ‘pipeline diplomacy’, be it with Myanmar, the Islamic Republic of Iran or the Gulf states. Beijing has also signed a series of bilateral agreements with producer and transit countries in Central Asia (Xu, 2011). Established in the 1990s, the International Energy Forum (IEF) is the only platform that brings together importing, exporting and transit countries. This informal forum suffers from a low level of institutionalisation. It is first and foremost a consultation platform and has no dispute settlement mechanism.
39The international trade in hydrocarbons is theoretically subject to the rules of the World Trade Organization (WTO). In practice, it lies largely outside the WTO’s remit, despite the fact that oil and mineral products represent a fifth of world trade in goods, amounting to USD 3.5 billion in 2008. In general, importing countries charge very low import customs duties on energy resources (Ruta, 2010). Producer countries, on the other hand, tend to impose high tariffs and restrictions on exports. At the same time they often subsidise domestic consumption for political reasons, thus providing incentives against greater energy efficiency. Insofar as these subsidies are non-discriminatory, they do not contravene the WTO Subsidies Agreement. It remains to be seen whether the pledge made by the delegates to the Group of 20 (G-20) Pittsburgh summit in 2009, namely to abolish in the medium term all subsidies which encourage energy waste, will be borne out in reality. In addition to their worries over energy security, industrialised countries have recently expressed concerns over their supply of rare-earth minerals for manufacturing high-tech products (for example, satellites, lightweight batteries, mobile telephones or wind turbines). For instance, German industrialists complained that Chinese officials threatened to stop supplying these rare-earth minerals, 93 per cent of which are produced in China (Dempsey, 2010).
40In the absence of an appropriate governance system able to meet the challenges of resource-rich developing countries, bilateral and multilateral development agencies have supported various multi-stakeholder initiatives in the extractive sector, often under pressure from coalitions of non-governmental organisations (NGOs). The aims of these initiatives include the promotion of extractive revenue transparency and respect for human rights in the security management of oil and mining operations. These initiatives rely on market and political incentives to change the behaviour of key stakeholders, starting with the producer states and extractive industries, while at the same time making civil society responsible for promoting and monitoring these initiatives at global and local levels.
41These multi-stakeholder initiatives suffer from the inherent weaknesses of soft governance, with a low level of institutionalisation, the voluntary nature of commitments made and the absence of sanction for non-compliance. Nevertheless, some of them have succeeded in increasing their effectiveness by progressively resorting to different behavioural pathways to effect change (Carbonnier, Brugger and Krause, 2011). The standards laid down by the stakeholders are sometimes made binding legislation within participating states. For instance, the Voluntary Principles on Security and Human Rights were appended to the concession contract awarded by the Indonesian government to British Petroleum for gas exploitation in West Papua, thus becoming the benchmark in terms of security management. In addition, after a decade of efforts the Publish What You Pay coalition of NGOs, together with supporters of the Extractive Industries Transparency Initiative (EITI), succeeded in bringing the US government to enact legislation requiring that oil and mining companies publish the payments that they make to host governments.18 Revenue transparency should allow the citizens in producer countries – that is the true owners of the extractive resources – to express their preferences with regard to revenue management and allocation.
42The thematic dossier of this issue of International Development Policy is divided into three parts. The first part looks at the geopolitical challenges with regard to energy resources and their impact on development, particularly in Sub-Saharan Africa. It also considers the strengths and weaknesses of global governance in the energy sector. The second part analyses the evolution of development aid projects in the energy sector. The third part addresses national energy strategies and policies formulated by developing countries in the post-Kyoto/Copenhagen context, focusing on India and Ecuador.
43In the first part Emily Meierding examines the strategies implemented by industrialised countries and emerging economies to secure their energy supplies and the impact that these have on developing countries. She analyses how increasing competition between the US, China and European countries is limiting the access enjoyed by exporting countries in Sub-Saharan Africa to their own energy resources and is weakening energy security on the African continent. Sijbren De Jong illustrates how the tension surrounding energy security has been exacerbated by a combination of rising energy demand from emerging economies, diminishing hydrocarbon reserves and constraints linked to climate change. The author regrets that the architecture of global energy governance has not been strengthened to address these challenges.
44The second part opens with a reminder that cutting CO2 emissions by 25 per cent requires around USD 200 billion to be invested every year in order to improve energy efficiency and reduce energy intensity in developing countries. Axel and Katharina Michaelowa present the results of original research into the evolution of bilateral development aid projects in the energy sector. Contrary to expectations, the proportion of projects dedicated to renewable energies or energy efficiency has barely increased since 1980. The percentage of projects focused on traditional renewable energies such as hydropower and geothermal energy has fallen, while the number of aid projects involving solar or wind energy peaked once in the 1980s and again during the 1990s. Even more surprising is the fact that the marked differences between individual donors do not mirror the divide between those countries that are climate policy pioneers or laggards. Guy Bonvin presents the conclusions of an independent evaluation of Swiss development cooperation projects in the energy sector implemented over the past 20 years in Eastern Europe and Central Asia. He underlines the fact that the success of such projects requires not only innovative technologies and approaches but also an appropriate institutional framework and more coherence in energy policy from an economic, social and environmental point of view.
45The third part begins by analysing energy policy in India, now the world’s sixth-largest energy consumer. On numerous occasions the Indian government has reiterated its desire to promote clean energies, something which would require major financial and technological support from Western countries. Megha Shenoy, Grishma Jain and Tara Parthasarathy argue that India should adopt a strategic development framework that is not associated with intensive carbon emissions. The challenge is to promote an inclusive growth capable of reducing inequality and improving the quality of life of the Indian people while at the same time taking account of local and global environmental constraints. Pamela L. Martin focuses on Ecuador within the context of the reduced emissions from deforestation and degradation (REDD) initiatives. The Ecuadorian government has invited the international community to provide financial compensation for refraining from extracting around 900 million barrels of oil from the Yasuní National Park, one of the most biologically diverse regions in the world. This example illustrates the increasing potential power of local networks linked to transnational movements, which are able to push for the institutionalisation of alternative approaches to environmental governance.
46The pursuit of a development path primarily driven by abundant, cheap fossil fuels is coming up against diminishing reserves, rising prices and global warming. Managing the growing tensions resulting from this situation requires increased cooperation on the part of industrialised countries, emerging economies and poor countries, with each country bearing differentiated responsibilities and having different financial and technological capacities.
47The surge of climate change on the international political agenda coincided with growing concerns surrounding peak oil. Nobody yet knows what the next chapter in the story of dwindling hydrocarbons will be, whether the slide down the other side of the peak will be slow or abrupt, voluntary and regulated or chaotic, serene or violent. One of the international community’s priorities should be to negotiate a reduction in the consumption of hydrocarbons in a manner that is politically, socially, culturally and technologically fair. The challenge is planning how the remaining reserves are to be used up19 and moving towards sustainable economic and consumption patterns while supporting development capacities in the most disadvantaged countries.
48In developing countries rural areas and the expanding urban centres are all facing different challenges. Intensified efforts should focus on providing electricity to the 1.4 billion people who still have no access to it, particularly in rural areas of Sub-Saharan Africa and South Asia. Research has shown that supplying electricity to villages by means of small local units in these regions can make a significant indirect contribution towards cutting infant malnutrition, most notably through its impact on female labour. In the major urban centres the challenge is to reduce the energy consumption intensity. On the one hand, governments must supply the regulatory framework as well as the incentives (taxes and subsidies) in support of less energy-intensive consumption patterns and of renewable energy sources. On the other hand, fashion trends play an undeniable role in the models of household consumption. All too often, depictions of social success go hand-in-hand with an image of the energy-guzzling Western lifestyle as conveyed by television series and by the examples provided on a daily basis by a growing number of billionaires who serve as people’s role models (Veblen, 1899; Kempf, 2007). In the sphere of architecture and urban planning there is an urgent need to reassess approaches and to provide solutions adapted to local conditions.
49Now, more so than ever, policy decisions must incorporate the insights and evidence-based knowledge produced by scientists. For several years experts have insisted on the urgent need to take corrective action to prevent serious crises in future that will require painful adjustments. The lack of resolute policy decision reflects the fact that politics and economics follow short-term cycles and are disconnected from the geological temporality and realities. In all probability, the energy crisis looks set to provoke shocks of much greater severity before key decision-makers eventually take appropriate action. It is to be hoped that, as the portents increase, international cooperation in the energy sector will become much more efficient so as to prevent the escalation of violent confrontations over the control of energy resources and to boost the development of renewable energy.