The Energy Charter: 2015 and into the future – stakeholder interviews

January 20, 2016 | 00:00
The Energy Charter: 2015 and into the future – stakeholder interviews
The Energy Charter: 2015 and into the future – stakeholder interviews
The European Energy Review Journal has been privileged to collaborate with the Energy Charter Secretariat in 2015 and deliver the Energy Charter Article Series to our readership, offering analysis and insights into the core themes across the spectrum of the Energy Charter’s work in the context of changing global energy dynamics.

This final publication of the 2015 Energy Charter Article Series will offer a concise overview of the articles published throughout this project, illuminate the highlights of the 2015 Energy Charter Conference (which took place on 4 December in Tbilisi), as well as introduce the priorities of Japan’s 2016 Chairmanship of the Energy Charter Conference.

Overview of the 2015 Energy Charter Article Series

The Article Series was opened by an interview with the Energy Charter’s Secretary General Dr Urban Rusnák, who discussed the modernisation of the Charter, the way the International Energy Charter redefines the notion of global energy security (that is, integrating security of supply, demand, transit and the need to tackle energy poverty), as well as the role of the Energy Charter as a tool for the EU’s energy diplomacy and as a mechanism to tackle the external dimension of the Energy Union initiative.

The road from the European to the International Energy Charter was further analysed, focusing on the institutional evolution of the Energy Charter. The analysis offered to our readers traced the dynamics which guided the Charter’s modernization process and the focus shift from the European to the global energy scene, as well as the holistic understanding of energy security.

The theme that constitutes the backbone of the Energy Charter’s raison d'être – that is, facilitating a predictable investment climate in the energy industry, was then examined in the context of the global investment needs in energy infrastructure. This publication highlighted the good practices developed through the Energy Charter process and the relevance of the Energy Charter Treaty for securing investments in the energy sectors across the entire value chain (upstream-midstream-downstream) on both the national and regional level.

Subsequently, in May 2015 the European Energy Review had a chance to follow the historical signing of the International Energy Charter in The Hague (endorsed by some 75 countries and three international organisations) and discuss this milestone event for global energy governance with a number of high-level officials from across the globe – including the US, Latin America, Europe and Asia.

Notably, having signed the International Energy Charter in The Hague, the National Energy Administration of China give a clear indication of country’s intention to further deepen the relationship with the Energy Charter and to participate in the modernisation of the Energy Charter. The following article of the EER therefore addressed the role that the Energy Charter could play for China in achieving its energy objectives, in particular, in the context of the One Belt, One Road (or the New Silk Road) strategy as well as from the international energy governance perspective.

When discussing Energy Charter’s evolution, as well as the role of the Energy Charter Treaty, the relationship between the organization and the Russian Federation was important to address. In the article “Russia and the Energy Charter Process: Which Way Forward?” both political and legal aspects of this complex relationship were analysed, along with an outlook for the future interaction between the two parties.

Historically, the withdrawal of engagement of Russia catalysed the start of the Energy Charter’s modernisation process and the adoption of the CONEXO strategy. The following article analysed the regional expansion of the Energy Charter from MENA and South-East Asia to Latin America and the relevance of the Energy Charter in improving investment climate across the new member-states, thereby unlocking their energy and economic potential and helping to meet their energy needs.

Finally, as the Energy Charter Treaty (ECT) proved to be a useful working instrument for reducing and compensating regulatory and political risks for international energy investments, the October 2015 publication was focused on the application of the Treaty in the context of developing international energy infrastructure projects.

2015 Energy Charter Conference in Tbilisi

At the meeting of the Energy Charter Conference in Tbilisi on 4 December 2015, the Energy Charter’s governing body took stock of the year of Georgia’s Chairmanship and discussed the scope of joint work between the Charter and a number of international organizations, as well the transition to Japan’s 2016 Chairmanship and the Second Phase of the Energy Charter’s Modernization Process.

2015 was indeed a historical year for the Energy Charter Process, with the International Energy Charter adopted in The Hague – the first major political development in the process since the Energy Charter Treaty itself was signed in 1994. Eighteen new countries from across the globe supported this political declaration, which demonstrated the international relevance of the Energy Charter from Eurasia to Africa and the Americas.

Energy Charter Conference in Tbilisi. December 4, 2015

Notably, this year the Energy Charter was also invited to contribute to the G20 Energy Sustainability Working Group meetings and reports.

The core Ministerial Session of the Conference entitled “Fostering regional cooperation through cross border energy trade” brought together high level governmental officials, industry executives (with presentations of such key stakeholders in the region as BP), as well as top representatives from international organisations.

At the Session, the European Commission presented its 2016-2020 'Action Programme for energy policy in Eastern Partnership countries and Central Asia', which was welcomed by the Energy Charter’s constituency. Indeed, the Energy Charter’s member-states called for active involvement of the Charter in the Programme, highlighting opportunities for joint work in improving regional energy market conditions.

Referring to the achievements of the Energy Charter in 2015 and the strategic plan for 2016, Mr Christopher Jones, Deputy Director General of the European Commission’s DG Energy, stated that all that work “is important, if we are to cement the Energy Charter's reputation as an alliance between diverse countries united in their commitment to common goals: the goals of delivering open energy markets, of stimulating cross-border investment and trade, and of assisting countries in transition in developing an effective institutional and legal framework for energy”. Mr Jones continued: “… I'm here to tell you that the European Commission is fully committed to supporting the Energy Charter in making these goals a reality. Our aim is to ensure that the Charter and its Treaty continue to be among the cornerstones of global energy architecture” [italics added].

Overall, the Conference addressed a wide range of important topics for the region. In particular, covering the benefits of regional cooperation brought by the Energy Charter framework when it comes to facilitating the creation of regional power pools, interconnections and electricity trade as a means to ensure energy security and access to reliable and affordable electricity. Another issue highlighted by the Energy Charter’s constituency in the region was the need for a multilateral legal framework for energy transportation, transit and trade, along with the need for boosting the necessary investments in renewable energy and energy efficiency.

Drawing conclusions after a year of Georgia’s Chairmanship of the Energy Charter Conference, Georgia’s Minister for Energy, Mr Kaladze, gave an exclusive interview to the European Energy Review (the full version of the interview can be accessed here):

Looking back at the year of Georgia’s Chairmanship of the Energy Charter’s Conference, what have been the main results achieved? Were the priorities of Georgia’s Chairmanship fully realised?

“The estimated potential generation surpluses in South Caucasus create significant opportunities for electricity trade, which has been seen as a promising source of supply for the neighbouring countries in the near future. However, these energy resources are still largely untapped and require significant investments into the new generation facilities as well as into cross-border transmission infrastructure in order to develop international energy trade. To attract private investment in feasible energy infrastructure development projects and foster trade, need to create an appropriate legal/regulatory environment.

The Energy Charter Treaty (ECT) is an efficient and appropriate multilateral instrument containing legal principles and obligations of the Contracting Parties related to energy trade.

It is important to note that all countries in Georgia’s neighborhood are the signatories of the ECT.

Therefore, Georgia, as a connecting bridge for the North–South and East–West energy transportation corridors in the South Caucasus, proposed to initiate political dialogue on regional electricity cooperation under its Chairmanship of the Energy Charter’s Conference in 2015. This flagship initiative in the framework of Georgia’s chairmanship aims to foster electricity trade, develop efficient transport corridors and attract investments into regional energy infrastructure.

With this viewpoint the first meeting on Regional Electricity Cooperation in South Caucasus was hosted by the Georgian Ministry of Energy on 30 June–1 July 2015 in Tbilisi, Georgia.

The general objective of the meeting was to provide a forum for participating countries to exchange of views and information, identify specific cross-border issues and encourage open discussions, where Georgia presented concrete proposals to its neighbours on the electricity cooperation opportunities.”

The transition to the Chairmanship of Japan was welcomed by the Energy Charter’s constituency, along with the country’s ambitious vision for the work to be carried out in 2016. Mr Keiichi Katakami, Ambassador Extraordinary and Plenipotentiary to the Mission of Japan to the European Union, gave an exclusive interview to the European Energy Review commenting on Japan’s assumption of the Chairmanship and discussing its priorities for the year to come:

Ambassador Keiichi Katakami, what are the priorities and expectations from Japan’s Chairmanship of the Energy Charter’s Conference?

“The expanded utilization of energy and technological innovation has enabled us to enjoy improvement of our living standards and economic prosperity. On the other hand, we are facing a number of challenges such as lack of energy access due to geological isolation and economic disparity, as well as the impact of climate change resulting from the increase of greenhouse gas emissions. It is imperative that we address the global energy challenges with our wisdom and solidarity.

Since the advent of the 21st century, the developing countries have been driving the global energy demand to a steady increase due to their economic growth. Under such circumstances, the partnership with the private sector became becomes highly important in order to secure stable and continuous investment flow in the energy sector. In that respect, the role of the Energy Charter Treaty on the international energy scene has become very relevant in providing a stable legal basis for investment activities of the private sector.

Japan, as the Conference Chair in 2016, will take the lead to discuss the key energy-related challenges for the international community. Japan would like to address major energy issues of global concern, namely, enhancement of energy security, improvement of energy access and measures against climate change including the promotion of clean energy.

Japan will be the G7 Chair in 2016 as well, and will enhance cooperation through the international frameworks, such as the G7 and the G20, and work closely with major relevant international organizations.”

The First Vice-Minister of the Ministry of Energy of the Republic of Kazakhstan, Uzakbai Karabalin - the country that assumed the honorary right to become the first country-chair of the Energy Charter Conference in 2014 – discussed with EER the country’s perspective on the outcomes of Georgia’s chairmanship in 2015, expectations ahead of the chairmanship of Japan in 2016, as well as Kazakhstan’s involvement in the second phase of Energy Charter’s modernisation process (the full version of the interview can be accessed here):

“Kazakhstan became the first country in the history of the Energy Charter who assumed the Chairmanship of the Energy Charter Conference … In the framework of its Chairmanship the government of Kazakhstan made a significant contribution to the definition of the political agenda of the Conference, aiming at discussing the development of transit corridors to ensure global energy security.
At the end of our Chairmanship, as of 1 January 2015, Georgia has taken over commitment to Chair the Energy Charter Conference.

In 2015 during the presidency of Georgia high priority was given to implementation of the conclusions of the Review carried out in 2014 in accordance with Article 34 (7) of the Energy Charter Treaty (ECT) - that is, the Review of the CONEXO policy – the policy for the Energy Charter's consolidation, outreach and expansion.

The results of the successful implementation of policies to consolidate, expand and attract new members include the activation of the Energy Charter Process and the adoption of the International Energy Charter.

In the framework of its presidency of the Energy Charter Conference Georgia proposed to initiate a political dialogue on regional cooperation in the field of power markets in the South Caucasus. This innovative initiative is aimed at promoting trade in electricity, development of efficient transit corridors and investments in regional energy infrastructure.

Regional energy cooperation in Central and South Asia was also discussed at the 11th meeting of RECA (Task Force on regional energy cooperation between the countries of Central and South Asia).

It should be noted that regional energy cooperation will play an important role in the development and sharing of resources in response to global energy challenges.

Regional energy cooperation has always been the object of support and facilitation in the framework of the Energy Charter Process as an important element of energy policy definition, as well as the development and sharing of resources on the regional scale.

In this regard, I would like to note that issues of regional energy cooperation formed the basis of the political agenda of the recent 26th session of the Energy Charter Conference, which marked the assumption of the Conference Chairmanship by Georgia. 

Regarding the question of what we expect from the Chairmanship of Japan in 2016, I would like to note the following.

Before 2016 Energy Charter Secretariat faced serious budgetary problems and it is primarily due to the fact that some countries, for various reasons, do not pay their contributions since 2010, and the settlement of outstanding payments is not expected in the near future.

It is also likely that Italy will withdraw from the Treaty, and in this case it can no longer be included in the list of national contributors. Serious budget constraints can therefore have negative impact on the implementation of tasks ahead of the Energy Charter in the coming year.

Most of the strategic priorities for 2016 in fact present the continuation of current activities and above all the following ones:

• Implementation of the second phase of modernization of the Energy Charter;
• Implementation of the transit provisions of the ECT.

This is a big and complex task and we hope that the presidency of Japan for the Energy Charter Conference in 2016 will contribute to the implementation of the key objectives of the Energy Charter.

Finally, on the occasion of the Energy Charter’s Conference in Tbilisi, the Ministry of Economic Affairs of The Netherlands also provided their comments on the impact of the evolution of the Energy Charter over the past years on the global and regional energy governance and the transition to Japan’s Chairmanship (the full version of the interview can be accessed here):

“The Energy Charter is a cornerstone of international energy governance. During the past few years the Charter went through a logical transformation. The International Energy Charter (IEC’15), which was adopted by 75 countries and international organisations in May 2015 in The Hague, is the first political milestone in the Energy Charter process after the Energy Charter Treaty came into force in ’94. To be more precise: by extending its geographical scope the new Charter transcends the former Eurasian context. By including newcomers like China, Iran, Chile, Tanzania and South Korea the IEC’15 has presence on five continents (Europe, Asia, North America, South America, Oceania). Countries that sign the IEC’15 express their commitment to work together and engage in dialogue in the field of energy on basis of common principles and overcoming economic divisions. Signing the IEC’15 is a first step for countries to engage in the process towards the Treaty.
As founding father of the Energy Charter back in ’91 we always have been very closely involved in the evolution of the Charter. Following this tradition it has been an honor to organise the recent Ministerial Conference on the International Energy Charter in The Hague. Now we call upon other countries to take the political lead and to find common ground with the existing parties to the Treaty and newcomers to further develop the Charter’s basic principles, like investment protection, trade, transit and – since the adoption of the International Energy Charter – greening the energy supply and access to energy. We have high trust in the upcoming 2016 Japanese Energy Charter chairmanship as Japan, an important partner in the Energy Charter process, indicated to give an impulse to the second phase of the Charter’s modernisation.”

Daria Nochevnik is European Energy Review’s Chief Analyst Natural Gas, LNG and Integration of Energy Systems, Deputy Head of the Greek Energy Forum in Brussels, and an EU Energy Regulatory and Strategic Political Analysis Specialist.

The Energy Charter Secretariat monitors the implementation of the 1994 Energy Charter Treaty and provides support to the Treaty-based international organisation, the Energy Charter Conference (52 states). The Treaty strengthens the rule of law on energy issues, by creating a level playing field of rules to be observed by all participating governments, thereby mitigating risks associated with energy-related investment and trade. The Treaty focuses on: the protection of foreign investments; non-discriminatory conditions for energy trade; reliable energy transit; the resolution of state-to-state and, in the case of investments, investor-state disputes; and energy efficiency policies.

The International Energy Charter is a political declaration adopted in The Hague on 20 May 2015. It is designed to spread fundamental principles of international energy cooperation to new partner countries.

This series of materials is part of a wider awareness-raising campaign aimed at promoting the renewed role and creating further momentum behind the Energy Charter in today’s global energy markets.

Images: Both images are of the Energy Charter Conference in Tbilisi. December 4, 2015. Courtesy: Energy Charter Secretariat.
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