But, the G20 is not all about geo-politics. It is credited with pulling the world out of recession post-2008 through collaborative action. On energy issues, it offers the only global platform for governments to talk to each other, without the aim of striking a 'deal'. In fact, energy perhaps holds the maximum potential for the G20 to achieve success, by helping enhance overall availability, stability in prices, and transition towards clean energy. The report card of the Australian presidency in the energy sector for 2014, however, as discussed here, does not have much to show.
The previous G20 presidencies had left two major agenda items for follow-up: firstly, monitoring transparency in oil markets; and secondly, eliminating inefficient fossil fuel subsidies. While both are important global concerns, there isn't much original work left in them. The volatility in oil markets, which saw oil prices swing between $60/barrel and $140/barrel (2007-08) had hurt both producers and consumers, and precipitated global recession. The G20 in 2011 (the Cannes Summit) tasked the Independent Organisations of Security Commissions to suggest principles for oil Price Reporting Agencies, which might increase transparency in oil markets. In 2014, progress in implementation of the above was reviewed. Similarly, there has been a call for voluntary rationalisation of inefficient fossil fuel subsidies. This was also reviewed, with no notable development to report. The transparency principles have not been fully implemented, and G20 can take no credit for the recent softening of oil prices. Similarly, the fossil fuel subsidy issue is still quite country-specific, with little global consensus.
Now, we come to the original action areas.
At the St Petersburg summit (2013), the leaders had asked G20 to consider reform of the Global Energy Architecture so as to make it more inclusive. There is a subtle recognition that a clear North-South divide exists on energy, with different objectives in these two worlds. The North has near-flat overall energy demand growth, while the South is still catching up on the former's per-capita energy consumption. Issues such as energy poverty, access, availability, affordability are rather unfashionable, or have not been reckoned significant enough for global consideration. It is mere lip service when the grouping's reports mention that we need to help the 1.3 billion people who do not have access to electricity, or the 2.6 billion who still use unclean cooking fuels (solid and polluting ones).
In compliance with the 2013 mandate, the Energy Sustainability Working Group of the G20 debated this issue. Its first major failure has been limiting the dialogue to examination of the agendas of the international organisations (OPEC, World Bank, IEA, IEF, IRENA and so on). Can the energy concerns of the emerging world be addressed just by discussing energy poverty in Paris, Vienna and Washington, without addressing the core issues of pricing and international action? High energy prices are a taboo topic at G20. Unless the affordability issue is addressed, and excessive reliance on "markets" is reviewed, there is little in it for the developing world.
For the present, the leaders are likely to conclude the topic of GEA by adopting a set of nine energy principles, in which 'affordability' would be a part of one principle. The energy-poor of the world have again been left to their own devices.
The next original work taken up was towards strengthening natural gas markets. Gas, being a younger fuel, lacks the institutional framework which crude oil has - mechanisms to address sudden supply disruption, demand spurts, price markers and so on. The share of gas in the global primary energy mix is likely to go up from 21 per cent to 27 per cent by 2035.
Here, again, the G20 avoided taking up price distortion in gas markets, wherein the Asia-Pacific (India lies in this) faces much higher LNG prices than the other two geo-markets (North America and Europe). The G20 achievement has been a decision to organise a gas dialogue at the inter-governmental level. The first one has been scheduled for November 11 at Acapulco, on the sidelines of the IEF Ministerial.
The third new issue relates to energy efficiency. Again, none can doubt the choice of this topic. Energy efficiency alone can produce 49 per cent of the desired greenhouse gas reduction that's needed before 2020 if we have to stay on course for a two-degree target for global warming. Moreover, this action area is a sensitive one, as it entails financial commitments in aligning with global standards, higher costs to consumers and elaborate enforcement mechanisms.
On this issue, the leaders are being asked to adopt a voluntary energy efficiency action plan at the summit. This will contain six work streams on vehicles, networked products, finance, buildings, industrial energy management and electricity generation, with priority for the first three. The OECD interest in the prioritised items is obvious, as they export this stuff, and standardisation would only help in expansion of their markets at the cost of the other small unorganised producers. But there is no intent to transfer technology or funds to help increase energy efficiency in the developing world.
In summary, what we have in the energy sector from the G20 this year is a set of energy principles, a gas dialogue and an action plan! True, this is a non-negotiating forum, and vital, too, as it is the only one where heads of governments of leading developing and developed economies huddle together. But, how can governments take commercial positions, and not address development concerns?
Energy requires collaborations and partnerships, which companies cannot be expected to provide. Ninety per cent of the new energy demand up to 2030 is to come from the developing world (IEA). Let not the OECD use the G20 to expand its market, while the developing world is engaged in implementing principles and attending dialogues.
The writer, an IAS officer, is Adviser (Energy) to the Planning Commission