Two Paths to Energy Security

Abstract

The first G20 summit, held in Pittsburgh in the fall of 2009, highlighted the growing salience of energy security on the global agenda. The G20 leaders presented access diverse, reliable, affordable, and clean energy as critical for sustainable economic growth, and committed increasing the transparency and stability of energy markets, including strengthening the dialogue between producer and consumer countries. Reaffirming the objectives and principles of the United Nations framework convention on climate change, they also promised stimulate investment in clean and renewable energy as well as in energy efficiency, and to take strong action address the threat of dangerous climate change.1 The summit's communique underscores the interrelation of energy security, climate change, and open markets. The fact that the leaders ofthe G20 economies, which represent 85 percent of global GDP, 80 percent of world trade, and two thirds ofthe world's population· devoted a large segment of a tight agenda these issues indicates that energy security now more than ever belongs high politics.The US, Canada, four major European economies (the United Kingdom, France, Germany, and Italy), and the European Union backed the Pittsburgh statement. Energy security, however, is understood quite differently in North America and Europe. This article looks at differences in the framing of energy security in the world's two biggest regional free trade areas. On both continents, leaders promote the liberalization of markets, including energy markets, as a key component of energy security. They also address environmental concerns and have created institutions deal with environmental issues. But the EU has a more assertive liberalization agenda and is much more explicit in linking climate change energy security. This translates into a policy that addresses the supply side (diversification) as well as the demand side (energy efficiency). The North American free trade agreement (NAFTA), in contrast, hardly deals with climate change, which mirrors the reluctance of both Canada and the US take coordinated steps on reducing greenhouse gas emissions. The North American pact also lacks a coordinated energy security policy and relies implicitly on the US in the global arena.I argue that two factors explain transatlantic differences in the framing of energy security. First, the institutional structures ofthe EU and NAFTA diverge: whereas the former enjoys highly institutionalized, regulatory competencies, the latter is loosely institutionalized and market-driven. Second, the nature of dependence in these two free trade agreements differs: NAFTA is characterized by a hegemonic power approach that ensures security of supply for the US and security of demand for Canada.2 In contrast, energy security for the EU is both an external problem of dependence and an internal power game with regard authority distribution in the energy policy sector.Three key dimensions of energy security are examined in developing this argument: competition, climate change, and external relations. For each dimension, I argue that both institutional factors and the nature of energy dependence need be taken into account understand how energy security is framed. More specifically, I show that the EU's exclusive supranational competence in competition policy and shared (with the member-states) competence in environmental policy help explain why energy security has been framed as a liberalization and environmental issue. This has promoted some regulation at the EU level, with a strong role for the European Commission. NAFTA, by contrast, is characterized by a weak political organization and strong subnational entities like the Canadian provinces, which explains why energy security has been market-driven and narrowly framed as a deregulation issue. With regard external relations, however, NAFTA has been more successful than the EU in imposing its energy security agenda on the global stage. …