A New International Energy Charter fit for the 21st Century
2 June 2015, Oil, Gas
Howard Chase, Director of Government Affairs for Dow Europe and Chairman of the Industry Advisory Panel of the Energy Charter.
In 1991 when the European Energy Charter was first signed, the world was a different place. Back then, the Charter was designed first and foremost to connect the resource rich, fuel producing regions in Eastern Europe with much-needed Western European investment. The Charter aimed to introduce a new era of East-West energy co-operation that protected investment and underlined the rule of law in the pan-European energy market.
Today, we are facing a very different situation. The world has globalised much faster than could have been imagined, leading to new economic giants on the world stage putting climate change onto the international agenda. It has consequently been clear for some time now that a new and renewed Energy Charter is required; one that is truly global in scope.
To that end that the Ministerial Conference on the International Energy Charter was held in The Hague, the Netherlands, between the 20th and 21st May 2015. A total of 75 countries, the European Union, the European Atomic Energy Community and the Economic Community of West African States (ECOWAS), signed up to or adopted a new and expanded International Energy Charter, with new signatories from right across the globe. Importantly, this list includes China; arguably the single most important energy market on the planet. It was a real success and great credit should go to the Government of the Netherlands, the Energy Charter Secretariat and all involved
As with the Charter it has replaced, the International Energy Charter commits signatories and adopters to the efficient functioning of energy markets, investment protection, free transit of energy resources, promotion of trade in energy and energy-related goods, and co-operation in energy policy development, including energy efficiency and environmental protection. Building on the ’91 Charter, the International Energy Charter also recognises the importance of fair access to modern energy and the growing importance of low-carbon and renewable energy.
The success of the new International Energy Charter demonstrates that signatories and adopters understand the critical need for investment in accessible, affordable, secure and sustainable energy, underpinned by appropriate legal protections.
Across all areas of the energy chain, the potential benefits of the Energy Charter framework for businesses and investors are clear. Businesses, in particular, need pragmatic investment and innovation rules and a level playing field in order to flourish, and the International Energy Charter promises to deliver both.
Moreover, the International Energy Charter also plays into a wider trend for better regulation, recently championed in Europe by Commission President Jean-Claude Juncker and First Vice-President Frans Timmermans. For me, better regulation means more effective regulation and the promotion of innovation. In order to flourish, innovation needs successful economies which are open, flexible and dynamic and which reward effective risk management. This is recognized in the International Energy Charter and we should welcome the support for such an environment to be created in the energy field.
With the International Energy Agency forecasting that around $48 trillion in investment is needed to meet the world’s growing energy demand up to 2035, the International Energy Charter has come at precisely the right time. To meet these future energy challenges, focus must be given to cooperation, investment and innovation and the International Energy Charter is the significant next step in this effort.
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