Energy Dragons Rising

Event context    

Fueled by the demands of their rapidly growing economies, China and India have become net importers of energy resources. The dimensions of their rise are enormous: For example, within just ten years China has evolved from being a net exporter of crude oil to becoming its third largest global importer. Between 2001 and 2004, China’s oil needs alone accounted for 35% of the growth in global oil demand, and the share of oil imports to total consumption rose from 37% to 45% in last year alone. The quest for oil is an even greater strategic priority for India, which relies on imports for 70% of its oil needs. In trying to secure their own supply, both countries have been increasingly outflanking the established global markets for resources such as oil and natural gas, turning to illiberal regimes in Africa, Latin America, Central Asia and the Caucasus for access to upstream energy sources. The resulting suspicion in the West, in turn, has given rise to mercantilist strategies as well.

With a view to the upcoming 2007 German presidency of both the Group of Eight (G8) and the European Union, there is an urgent need to bring the full range of relevant perspectives into the German discussion. In addition, it is important to integrate European and American debates more closely. Until now, these discussions have been running in parallel without coming together to weave a genuine transatlantic strategic dialogue on energy security. For two reasons, such an exchange would be beneficial for both sides: First, we stand to learn from comparing the energy policy experiences and strategies on both sides of the Atlantic. And second, dialogue and cooperation between Europe and the US is essential to devising joint strategies for effectively dealing with the increasingly global challenges of energy security.

Event objectives

Our conference brought together young professionals from all relevant sectors (government, NGOs, business, the media, think tanks and universities) in order to promote a strategic community. It aimed to build bridges between the US and Europe; among various sub-communities dealing with sustainability, security of supply and economic efficiency; and among policymakers from different parts of the government, civil society, business and the media.

In focusing on the role of governance institutions in achieving energy security, the conference filled a critical gap in the current public debate. With the recent tightening of energy markets, the emergence of new players and the growing assertiveness of some older ones, each actor’s own security considerations have come to dominate the agenda. Such a narrow focus obscures the danger in pursuing unilateral policies to the detriment of all.

Key questions the conference addressed included: Why is it that the two biggest emerging economies, one of them a democracy, find it necessary to circumvent this established framework of world energy markets? How should the rest of the world deal with the consequences of their defection for good governance and economic development in Africa, the global regulation of climate change, and the need for rapid and substantial investment in energy production? How can the system of global energy governance be changed to better integrate China and India, and satisfy everybody’s needs in a reliable way? What would a constructive transatlantic strategy to this end look like, and what roles would the G8 and the European Union play?

Starting with an opening speech outlining the challenges put forward by the rapid growth of emerging economies like China and India, the conference explored these themes by addressing (i) the rationale behind China’s and India’s current strategies, (ii) their consequences for issues of global governance, and (iii) common transatlantic policy options for adjusting the global framework for energy governance to meet the needs of all market participants. Small working groups were formed to tackle specific aspects of each question. In each working group, a participant with particular expertise in the topic was asked to give a short introductory presentation while another led the discussion. In preparation for the final session of workshops, a keynote speech and panel discussion were scheduled to solicit additional input on policy options.