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Rethinking Market Governance and Energy Security

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Energy and Non-Traditional Security (NTS) in Asia

Part of the book series: SpringerBriefs in Environment, Security, Development and Peace ((BRIEFSSECUR,volume 1))

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Abstract

Energy security is no longer just a matter of securing access to adequate energy supplies—it is concerned with other aspects as well, such as the environmental and social costs of energy use. This chapter presents the principles of good market governance and argues that proper market governance in the energy sector, combining government regulatory measures and the workings of the free market, would be instrumental in ensuring long-term energy security. Japan is presented as a case country. The chapter illustrates that Japan, by adopting proper market governance in the energy sector, has not only ensured the sustainability of energy supplies but also mitigated accompanying environmental and sociopolitical risks of energy use, albeit the Fukushima accident, which has forced it to review and upgrade its market governance.

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Notes

  1. 1.

    Demand was, in fact, projected to increase by more than a quarter in 2015 alone.

  2. 2.

    Tensions were caused by the Iranian nuclear weapons programme and the possibility of a US or Israeli military strike on its facilities as well as due to militant attacks on the Royal Dutch Shell pipelines in the Niger Delta region; see “Oil Creeps above $125 on Iran, Nigeria Tensions”, in: Reuters (29 July 2008).

  3. 3.

    “Gazprom Predicts Global Energy Shortage after 2012”, in: Reuters (23 July 2008).

  4. 4.

    “Cut Carbon Emissions before It’s Too Late: Pachauri”, in: The Hindu (28 July 2008).

  5. 5.

    The failure to agree on emission targets was due to disagreements between developing nations (which were calling for higher emission cuts by richer developed countries) and the G8. The latter argued that emission cutbacks could only be a global effort if it involved China and India as the two countries are in the midst of socioeconomic development and thus account for a large share of global emissions; see “G8, Emerging Nations Seek ‘Deep Cuts’ in CO2 but Wrangle over Target—yodo”, in: BBC Monitoring Newsfile (9 July 2008).

  6. 6.

    Compared with the US$3.4 million in earnings from over 800 GW of energy sold in Newfoundland and Labrador, Canada, profits from the Chalillo Dam raked in US$5.6 million for Fortis Inc. even as Belizeans paid the company more than three times the average energy rates in Canada; see Loverock (2002, pp. 1–2).

  7. 7.

    “Amnesty International Says US Consortium’s African Oil Pipeline Threatens Human Rights”, in: Associated Press (7 September 2005).

  8. 8.

    “ANALYSIS—Oil Firms to Take Latest Chavez Bombshell in Stride”, in: Reuters (10 January 2007).

  9. 9.

    President Chavez announced that his government had uncovered a plot by active and retired Venezuelan military officers, with alleged US tacit approval, to stage a coup against his government; see “Venezuela Expels US Ambassador, Threatens to Cut Oil”, in: Agence France Presse (12 September 2008).

  10. 10.

    “Activists Urge UN to Impose Energy Sanctions on Myanmar”, in: The Oil Daily (21 November 2007).

  11. 11.

    This is the case in many countries worldwide, where political security is deemed as top priority in the face of massive street protests over populist calls for the government to raise subsidies in order to alleviate increased energy prices. Such measures might invariably lead to economic slowdown; see “With Fuel Subsidies, Solutions Beget Problems: Unrest Quelled, but No Incentive to Save”, in: International Herald Tribune (29 July 2008).

  12. 12.

    Reports suggest that probably less than 300,000 metric tonnes of oil would be supplied instead of the 500,000 metric tonnes that was contractually agreed upon; see “Czechs Report ‘Sharp’ Cut in Russian Oil Supplies after Signing of US Radar Deal”, in: BBC Monitoring European (14 July 2008).

  13. 13.

    Member states would not easily agree to transfer control of their energy stocks to the Commission or empower it to dictate crisis measures for the entire regional body given the lack of an adequate framework that was based on general consensus; see “EC Energy Crisis Measures Ill-Timed, Diplomats Say”, in: Reuters (25 October 1990).

  14. 14.

    Ibid.

  15. 15.

    Investments totalling over US$11 trillion are required in the power sector; capital expenditure is expected to be US$4.3 trillion and US$3.9 trillion in the oil and gas sectors, respectively. About half of all energy infrastructure investments will be in developing states, where demand and production are projected to increase the fastest. (Bochkarev and Austin 2007, p. 3).

  16. 16.

    The Organisation for Economic Co-operation and Development (OECD) has refocused its efforts on reducing energy consumption in the transportation sector and to embark on second-generation biofuel research instead; see “Biofuels: OECD Report Blasts Biofuels as ‘Costly and Ineffective’”, in: Europe Agriculture (28 July 2008).

  17. 17.

    “Energy Policy Branded as Pitiful by Friends of Earth”, in: South China Morning Post (7 March 1991).

  18. 18.

    “Legal Battle Brews over EC’s Regulatory Agency Plan”, in: EU Energy, 176 (8 February 2008).

  19. 19.

    “Thailand: Democrats Criticize Government’s Energy Policy”, in: Thai News Service (11 August 2006).

  20. 20.

    “Proposed Changes Would Raise Accountability of Market Operators”, in: Platts Commodity News (21 June 2007).

  21. 21.

    “Gov’t Calls for Energy Savings, Cites Gulf Crisis”, in: Associated Press (13 August 1990). In the US, meanwhile, the gulf crisis created public panic over the possibility of an energy crisis, with some blaming the surge in gasoline prices on energy firms’ greed; see “Half in US Fear Gas Crisis as a Result of Middle East Conflict”, in: Associated Press (13 August 1990).

  22. 22.

    The export of petrochemical plant technology to the Middle East registered a significant surge (48.9 %) between April–September 1990, notwithstanding the Iraqi invasion and subsequent allied military build-up, compared to the same period in 1989. Even so, industrial officials admitted that it would have been almost impossible to resume plant construction in the region, if the war expanded, due to physical security concerns; see “Japanese Industry Shocked, but Copes Coolly with War (Iraq-Kuwait Crisis, 1990)” in: Japanese Economic Newswire (17 January 1991).

Abbreviations

FERC:

United States Federal Energy Regulatory Commission

GHG:

Greenhouse gas

GW:

Gigawatt

HSS:

School of Humanities and Social Sciences

IEA:

International Energy Agency

IPCC:

Intergovernmental Panel on Climate Change

mmbd:

Million barrels per day

NEA:

National Environment Agency, Singapore

NMD:

National Missile Defence

NTS:

Non-traditional security

NTU:

Nanyang Technological University

OECD:

Organisation for Economic Co-operation and Development

R&D:

Research and development

RSIS:

S. Rajaratnam School of International Studies

SLOC:

Sea lines of communication

SME:

Small- and medium-sized enterprise

UK:

United Kingdom

US:

United States

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Author information

Authors and Affiliations

  1. HSS-04-65, Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore, 637332, Singapore

    Youngho Chang

  2. S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Block S4, Level B4, Nanyang Avenue, Singapore, 639798, Singapore

    Swee Lean Collin Koh

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  1. Youngho Chang
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  2. Swee Lean Collin Koh
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Correspondence to Youngho Chang .

Editor information

Editors and Affiliations

  1. S. Rajaratnam School of Int. Studies, Centre for Non-Trad. Security Studies, Nanyang Technological University, Centre for Non-Trad. Security Studies, Singapore, 639798, Singapore

    Mely Caballero-Anthony

  2. , Division of Economics, Nanyang Technological University, Nanyang Drive 14, Singapore, 637332, Singapore

    Youngho Chang

  3. Energy Studies Institute, Energy Security Division, National University of Singapore, Block A, #10-01, Heng Mui Keng Terrace 29, Singapore, 119620, Singapore

    Nur Azha Putra

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Chang, Y., Koh, S.L.C. (2012). Rethinking Market Governance and Energy Security. In: Caballero-Anthony, M., Chang, Y., Putra, N. (eds) Energy and Non-Traditional Security (NTS) in Asia. SpringerBriefs in Environment, Security, Development and Peace, vol 1. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-29706-9_2

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