Energy & Power

ANALYSIS

Energy Security & International Relation- Global Perspective

EP Analysis

USDOE estimated that over 80% of Asia’s energy needs by 2025 will be met through imports. International Energy Agency forecasted global demand to grow by more than 50% between now and 2030.The phenomenal rise of energy demand in India and China, high oil prices, climate change, terrorism and renewed interest in nuclear energy, world focus on green energy all these are the dynamics of global energy scenario. Australia has substantial reserve of oil & gas, huge coal reserve and very active energy export industry. Energy exports in 2006-07 reached about $43 billion, one third more than the combined agriculture, fisheries and forestry export. In recent past some new deals have been concluded for exporting LNG and coal to China. Traditional fossil fuels also account for growth in carbon emission. Australia has also signed Kyoto Protocol. The changed circumstance will require making fresh strategy for the fossil fuel exploitation and trade. The immediate past Minister of Foreign Affairs Alexander Dana felt that Australia did not require Mr. Al Gore to remind them that the growth in carbon emissions from fossil fuels is a major global challenge that requires to be confronted.

Australia as a nation has a reasonable degree of energy security. It has abundant sources of fossil fuels as well as green energy. It also has substantial infrastructure to move electricity and gas around the country, and good access to world market. Australia also has huge reserve of Uranium but unlike other developed countries Australia do not have nuclear power plants. Howard government had a visison but Rud government is against it. Power generation is predominantly coal based. The research for clean coal technology is at the advanced stage. But some people have genuine doubt of its applicability. But Australia has tremendous prospect of expanding solar and wind energy. Rud government has a vision to concentrate on expansion of Solar and wind power. Green power will have to play a major role if Australia has to cut its emissions to Kyoto Protocol level. But Rud government has vowed to wait for Garner report in June 2008 to assess the financial implications of emission cut.

Australia needs to know what measures are required to be taken to manage the economic and strategic implications. The Australian interest may be significantly affected by the actions taken by other countries to deal with their energy security challenges. Policy settings in EU countries and USA in response to the decisions taken by the emerging energy importers in Asia will be a guiding factor also. Nevertheless, Australia is uniquely placed to be a major player in shaping how international community deals with these intersecting issues.

Australia is relatively close to the fast growing economies of Asia. It has political stability and has reputation as a reliable supplier to the region. Economic boom -- double- digit growth of GDP in China and India is having significant impact on the energy world. It is the major factor of higher energy prices and changing pattern of energy trade and energy geo politics. To fuel their fast developing economy China and India are seriously concerned to access to secured longer term supplies. India now considers that energy security for it now is what food security was in earlier decades. India and China are also working on developing strategic oil reserves, expanding nuclear power and working on energy efficiency. China and India seemingly adopted Sir Winston Churchill’s dictum, “safety and certainty in oil lie in variety and variety alone.” In their quest for energy
Australia learned the lesson from history that when vital resources are perceived to be short supply or vulnerable to disruption, there is risk of rapidly escalating into conflict. But China and India realized this. For their mutual benefit they adopted strategy of cooperation. They are cooperating each other instead of competing in investing equity abroad to secure sources of supply.

Australia thinks if they choose the wrong strategies for dealing with energy issues --competition for resources could undermine cooperation on other issues of vital importance such as counter terrorism and maritime security. This may also impede progress towards greater regional economic cooperation and integration. Coopeartion among nations is important to ensure open sea-lanes in the region.

Half of the oil headed to East Asia and two-third of global LNG shipment pass through the Strait of Malacca between Indonesia and Malaysia. At some points the shipping channel is only 500meters wide. These choke points are vulnerable to terrorist attacks and other problems. Concerns over sea-lanes could be a factor in the development of naval capabilities around the region. There is also risk of territorial disputes over access to seabed resources in the region. Already some competition over routes for oil and gas pipelines has been observed. Russia recently faced rival Japanese and Chinese bids to build a pipeline from Siberian fields to either North East China or the sea of Japan Coast.

Australia realized that the search for energy resources might complicate the way international community deals with humanitarian, human rights and security challenges. But in many cases there is a clear convergence of interests among the nations of the region to make cooperative approaches to energy security. The management of vital resources and commodities can be catalyst for enhanced cooperation among states. Australia as the major energy exporter must play important role in catalyzing regional cooperation. It must exploit its bilateral relations with Japan, South Korea and China, which have been constructed on solid foundation of reliable supply of energy and minerals for more meaningful cooperation among those nations. Australia is also working closely with these countries on regional trade and security issues through APEC, the ASEAN Regional forum, the East Asia Summit and Asia Pacific Partnership on clean Development and Climate-called AP6.

Australia considers that the best route to Energy Security for Asia’s energy Consumers is through efficient markets, aided by free and open trade and secures frameworks for investment.

Australia hosted meeting of G-20 group of countries in November 2006 and APEC summit in 2007. APEC has an Energy Security Initiative, with a dozen or so practical projects to stimulate investment, improve efficiency and encourage transparency. Australian energy producers availed the opportunity of APEC Summit. Some multi-billion dollar deals were inked with China for export of LNG from Western Australia. Australia also discusses energy security issues in the Trilateral Strategic Dialogue between Australia, Japan and the United States. Australia continues to pursue energy security within the Asia-Pacific Partnership, the AP6, which has mechanism for cooperation on the diversity of energy sources.

The most significant development in recent times is the defeat of Liberal Government of John Howard in the national election. One of the major issue upon which Australians voted the Labor Party of Kevin Rud to power is the management of climate change issue. Howard government failed to properly assess and realize the national & international response to climate change. Australia remained one of the leading per capita emitter of GHGs but blindly following the trails of USA it did not sign the Kyoto Protocol. Howard Government also was actively considering nuclear power generation as one of the preferred option of managing emissions. Labor always opposed it and in keeping up with the election agenda Australia signed Kyoto Protocol within a week of formation of Government by Rud. Australia also played a catalytic role in conclusion of an agreed declaration in the recently concluded UN sponsored climate conference held at Bali, Indonesia.

Government must fully seize of the importance of the serious climate change problem and contribute to international efforts to combat global warming. Australia is not really required to pursue nuclear option. Australians do not want it. Australia has great scope to expand solar, wind and bio-fuel options. The clean coal technology must be developed to keep on utilizing its huge coal reserve for future power generation in the more environment friendly ways. Australia is yet to commit to a specific emission reduction target. Rud stated that Labor Government is waiting for the report of Garner Commission to assess the financial implications of emission reduction. The report is expected by June 2008. But the Government has pledged additional budget for R&D in green fuel development. For a bright future Australian government is more or less on track to achieve 25% renewable energy by 2020.

Like US, Liberal government of Australia used to insist that unilateral and arbitrary emissions targets would shift Australian industry offshore, for no benefit to the climate. It also thought if Australia shuts down its entire economy straightaway and stops emitting carbon dioxide, it would take only 10months for the growth of China’s emissions to offset the 1.4 % of Gobal CO2 emissions saved by Australia. Well, there is truth in that. But this does not justify Australia not to cut emissions progressively as it has access to better technology. It should also transfer technology to China, India and Brazil which are the greater emitters so that the global situation of emissions improves.

Rud Government has signed Kyoto Protocol and sooner or later may also agree on specific emission reduction target. It should also clarify its stand on nuclear power generation. Australian situation is also linked with its huge uranium reserve. If Australians do not feel it safe to have nuclear power plants in its backyard why should it support nuclear plants in other countries where even the environment and safety standards are not same as Australia.

Australia has a high degree of energy security. So energy security reasons alone should not propel them to seek nuclear option. Traditional fossil fuels alone can keep its energy secure for many years. The huge potential of non-renewable will make its energy generation environment friendly. Clean coal may be reality by 2015. So Australia may not need to pursue nuclear at all. Australia is free and free loving country and society. Democratic institutions are very active. People are very conscious. It should not only think of itself. But it must take leading role in ensuring the most efficient and environment friendly ways of utilizing renewable and non-renewable fossil fuels. It must lead the world in its fight against global warming and climate change.