The issue of energy between Europe and Asia


Asia is of strategic and security importance for the European Union. Therefore the EU’s relationship with Asia has become more comprehensive, expanding from its initial focus on economic and trade matters to encompass the political, strategic and security dimension. As a provider of peace and stability through effective multilateralism and integration, the EU is supporting the building of a security architecture in Asia to address and manage the various security challenges. Thereby the EU is guided by a comprehensive approach to security, which can be summarized into three Ds: Defense, Diplomacy and Development.

There are broad similarities in the energy situation in Asia and Europe, such as a high import dependency notably on the Middle East. Energy security is therefore an issue of common concern in the two regions. Energy security also has a strategic dimension given the strong interdependence between the two regions. Any policy option chosen by one region will also have an impact on the other region. These spillover effects have to be taken into account in the policy decisions of the various parties.

The rise in energy demand in Asia has substantially affected the global energy balance and will have obvious implications for the rest of the world, and Europe in particular. China’s economic future depends to a large extent on how, if at all, it is able to solve its energy resource gap. In the context of a globalized economy, both Asia and the rest of the world have a stake in China’s ability to keep one of the world’s major economic engines going. The soundness of its approach to energy security is therefore of equal concern to China’s global partners.

Geography provides a further rationale for the two regions to address energy issues collectively: Russia occupies a central position as a possible source of oil and gas for both neighboring regions. New resource exploration and concession, the construction and maintenance of pipelines and the attendant issues of geopolitical concern, are of primary interest to both Asians and Europeans, who will be the primary consumers of these newly tapped resources.

Finally, energy security exhibits to some extent the characteristics of a public good which may be usefully managed in a collective way.

Beyond broad similarities, two major differences can be pinpointed between the two regions. The first one has to do with the much wider diversity of Asia, compared to Europe, and the second with the much longer experience accumulated by Europe in terms of regional cooperation. As a result, cooperative schemes in the two regions obviously do not work along the same lines. In the case of Asia, Japan has often taken the lead and supported efforts of regional energy cooperation financially or by providing technical assistance. Within the European Union, by contrast, cooperation has been conducted among equal partners.

Asian and European economies are major players on the international energy markets. They definitely have a high stake in stabilizing these markets and are in a position to do so, or at least to somewhat mitigate risks. Several of them already participate in cooperative schemes, in particular under the aegis of the International Energy Agency (IEA). Yet, these mechanisms focus primarily on short-term supply disruptions. The rise of Asia as a whole, and China in particular, as one of the largest energy consumers in the world makes it all the more necessary to revamp existing mechanisms. In particular it renders arrangements such as the IEA far less relevant because the stabilization of the global energy market requires the participation of China.

A challenge is thus to determine how countries such as China, and to a lesser extent ASEAN economies, could be associated or could benefit from accumulated experience. Beyond such existing schemes, some degree of co-ordination may be warranted in the dialogue with oil producers for instance, or in the conventions dealing with environmental issues. Again, as one of the major emitter of pollutants, China should also be associated as a participant to various schemes dealing with environmental aspects of energy security. Overall, it is in the interest of both Asia and Europe to strive to shape and improve global governance on energy-related issues.

To summarize, the two regions can be said to be converging in some respects and diverging in others. First, they are faced with a problem of low energy availability and also have concurring interests in another area, namely the affordability of energy. This means that they both have a major interest in the greater transparency of the oil market in particular and in the quest for fair prices.

By contrast, the two regions are in a different position with respect to accessibility of energy resources. Essentially, adequate energy supply infrastructure is not currently in place in Asia although ensuring a reliable access to electric power and other energy sources is an indispensable condition for sustained economic growth. The same does not hold true in Europe, which has developed a reliable power grid and possesses an extensive network of natural gas pipelines. A daunting task in Asia is thus to attract investments to build power plants and construct transmission facilities for electricity (including cross-border networks).

Finally, while countries from the two regions may have a common interest in enhancing the acceptability of energy use, reflected in the need to mitigate the environmental impact of robust energy use, such is not necessarily the case in the least advanced economies of the partnership such as China. Most Asian emerging economies do not have legally binding commitments for the so-called Kyoto protocol. Conditions may not yet be ripe for public pressure on governments and business circles to curb the environmental impact of energy use whereas in Europe, public awareness on environmental issues has played a major role.

Yet, it would probably be premature to push Asia-Europe cooperation too far, too fast on all

energy-related issues. A gradual approach is certainly warranted, with closer intra-Asian cooperation as a first step. A major stumbling block on the road to Asia-Europe cooperation on these issues is the persistent disagreement between Japan and China on such issues as the Siberian pipeline. Unless China and Japan act in unison, there may be little hope for bridging Asia and Europe. However, learning from the European experience may also be instrumental in tightening regional cooperation in Asia.

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