Governance Framework for the Energy Commons
- Report: THE ENERGY COMMONS: A Governance Framework for Climate Stability and Energy Security. By Charles Elworthy, 2011.
From the Introduction:
'This paper has the ambitious objective of reconciling the economic and the environmental impacts of energy usage. It is an unpolished “work in progress,” and covers a wide range of themes from a variety of perspectives. Despite the generous assistance that I have been given I am very aware of its inadequacies, and suggestions and criticisms are most welcome. It is in this participative spirit that this paper is intended to contribute to discussion about appropriate global governance systems, and the provision of climate stability and energy security.These two worlds of energy and the environment tend, in both their academic and their practical manifestations, to speak different languages. The paper develops a simple interpretive framework connecting the two worlds using the concept of the commons, a communal form of governance without a central authority. It contends that the interrelationship between energy and the environment at a global level can be understood from the context of an energy commons, and shows that the failure of the Kyoto Protocol is comprehensible — and was predictable — from this perspective.The paper examines attempts to impose demand-side constraints over the emission of carbon dioxide. It concludes that control must instead be achieved by addressing the fundamental causes of carbon emissions—the extraction and combustion of fossil-fuels. This implies the control of current and future extraction through an international authority.The characteristics of energy security are examined as the critical requirement for economic growth and development. The paper then assesses the extent to which the apparently divergent needs of energy security and climate stability can be reconciled in an energy commons regime. It examines the characteristics of a possible institutional structure and assesses the most important governance objectives of such a system, concluding with a brief review of the financing, feasibility and fairness of the proposal." (http://www.scribd.com/doc/69237469/Elworthy-Energy-Commons-24jul2011ok)
"At first sight it may seem odd to consider addressing energy resources, especially those derived from fossil-fuels, from the perspective of the commons.
For the most part fossil-fuels are subject to clearly defined property rights. Yet closer investigation reveals that in the vast majority of jurisdictions there are no simple private property rights which provide for the ownership and sale of energy resources in a similar way to other resources such as land or buildings. Instead governments are generally the legal owners of energy resources,and control extraction either directly, through their own enterprises, or indirectly through the creation of licences to extract for certain periods under certain conditions. Those few countries which allocate direct ownership rights for energy resources, such as the United States, have very extensive systems of laws and regulations governing multiple dimensions of energy extraction, from financial payments through to technical and environmental provisions.
There are a myriad of reasons for this special role for the energy sector which include strategic, financial, technological and environmental factors, but which would go beyond the scope of this paper to explore further. This government control of energy property rights is especially apparent where energy resources lie outside conventional land property definitions.In the United States, for example, there is no private ownership of mineral rights in territorial waters. They belong to either State or Federal governments, who sell leases to energy companies.A second form of commons is at the “energy frontiers”. These are regions, such as the Arctic, where the territorial sovereignty is not clearly ascribed to particular states.
The value of energy resources is so high that where such rights do not exist solutions tend to berapidly found. Important developments in the demarcation of rights under the Law of the Seaand in areas such as the Arctic and the South China Sea can be ascribed to this pressure.
Similar processes have led to the resolution of extractive commons, as when several parties had rights to gas resources which were linked to create one common pool.A third form of commons relates to attempts to harvest “free” renewable resources such as wind, wave, tidal or solar energy. These are open access resources, and with increasing energy extraction we can expect increasingly negative spatial externalities among the producers. This is leading to calls for the establishment of legal frameworks which provide solutions to this aspect of the commons, such as by assigning appropriate propertyrights.
The fourth usage of the energy commons is somewhat more abstract and normative.We can speak of a village community’s governance of its fishery, forestry, or river commons,even when individuals have legal or customary rights of management and usage of particular resources in that system. Such commons regimes balance the rights and duties enjoyed by individuals with the economic, social, and environmental needs of the community.In a similar fashion we can speak of the governance of the global energy commons,especially those linked to fossil-fuels, and it is this sense that the expression is used in the rest of this paper. The international system has no clear authority, so that the logic of the fundamental collective action problem is very similar.
Good behaviour of one country alone, even if large and well-intentioned, is doomed to failure unless other countries are similarly cooperative. It is a similar logic to that of the “good villager” who restricts his fishing catch only to watch others exploit the resource.
This applies even when states have particular rights to specific resources, and these are allocated further to particular private companies and other commercial entities. It is the states that are in competition with each other in the international system, so that it is the states as actors that have the role of villagers as actors in a local commons. As with a village commons the international system has multiple possible equilibria, typically some associated with high-trust solutions which lead to maximisation of the general welfare and some with low-trust solutions.The current organisation of the global energy industry is strongly reminiscent of an uncoordinated commons. The “anarchic” character of the international system is particularly visible here, as states have ultimate control over the energy resources within their jurisdiction and generally use this control for their national and strategic purposes. The role that energy plays in international relations is critical but difficult to precisely specify, as it may be associated with relationships ranging from highly cooperative to commercially and militarily conflictual — depending upon the particular parties and situation involved.Coalitions and alliances have been created between energy supplying states, such as OPEC, but they are generally focused on coordinating production to maximise financial and strategic interests, rather than maximising general welfare. In general the current energy commons is dominated by a search for “energy security” by each country and low levels of trust and cooperation between states. The provision of energy security conventionally implies “securing adequate energy supplies at reasonable and stable prices in order to sustain economic performance and growth”, but the combustion of conventional fossil-fuels has dramatic implications for carbon emissions and the global environment. The next sections focus on this interaction and appropriate responses in preparation for a reconsideration of energy security in the context of the energy commons in section 7." (http://www.scribd.com/doc/69237469/Elworthy-Energy-Commons-24jul2011ok)