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Energy politics and poverty
A strategy for energy security, climate change, and development assistance
June 2007
Global Economic Governance Programme

Acknowledgements: FANRPAN acknowledges the Global Economic Governance Programme as the source of this report: www.globaleconomicgovernance.org/docs/epp_lr.pdf


Introduction

Securing energy supplies is vital in a fast-growing world economy. It evokes, for some, a race among countries to control and plunder energy resources - all the faster to burn them in cars, electricity plants, and their own economic growth. The unfortunate consequence is climate change and worsening poverty in some of the poorest parts of the world.

The UK government has committed itself to a different vision. It hopes to secure energy at the same time as it addresses climate change and global poverty. UK energy policy does not attempt to acquire direct national control over resources. Rather, it focuses on competitive markets to deliver secure and affordable supplies. The UK government is committed to reducing emissions which cause climate change. And alongside these policies, the UK has one of the most ambitious programmes in the world to reduce global poverty.

Can energy security, climate security and reductions in world poverty be achieved simultaneously? This report argues that they can be but that it takes explicit coherence across all three goals. At present UK policy is a hotchpotch of measures unlikely to deliver the government’s vision. Different government departments control policies in each area. Energy policy is mostly formulated within the Department of Trade and Industry. Environment policies are mostly fashioned within the Department for Environment, Food and Rural Affairs. Development assistance strategies are planned in the Department for International Development. This report makes recommendations under which the UK could move as a whole towards all three goals.

The report begins by outlining what is at stake. The wrong energy policy, misaligned with goals on climate change and global poverty, risks creating new enemies for Europe, new threats to energy supply, greater damage from climate change, and worse poverty in the poorest parts of the world.

Unfortunately, some present policies are heading in this direction. The UK government has failed to meet its targets on CO2 emissions which have been rising not falling for the last four years. The UK government has no coherent strategy for replacing the one third of UK electricity generation which is about to be retired (much of it nuclear). Its equivocation on this is deterring necessary policy commitments and investments in renewables and carbon-neutral technologies. There is no wellfunctioning single market in gas in the European Union, nor a common European policy towards Russia, yet these are vital to meet the risks emerging as Gazprom purchases downstream energy assets in Europe and Russian policy takes on a geo-political colour. China and India are key players in all three areas of energy security, climate change, and development assistance, but they have yet to be engaged as serious partners in all the key institutions addressing these issues. The UK, in common with other OECD countries, has failed to prioritize the transfer of low-carbon technologies.

In developing a better set of policies, it is clear that the UK, as a medium-sized power, can do little alone. The UK will need to work closely with the European Union to forge a strategy better to meet its priorities. This means a strategy designed to produce policies for energy, climate change, and development which are mutually sustainable.

The key elements of a better strategy include, first, deeper and more effective European energy markets and policies which are linked to climate change goals. Second, there should be a better European approach to neighbouring energy producers. Third, the EU should build a new compact with India and China, which includes the United States, and works towards all three goals of energy security, climate change, and development. Fourth, UK and EU development assistance policies should be shaped to address climate effects already being felt and the new global politics of energy. The best strategy for reducing the impact of climate change on the world’s poor is stringent mitigation. However, with developed countries, including the United Kingdom, failing to mitigate, priority must be accorded to helping developing countries to adapt to climate change. Finally, the UK itself needs a better UK energy policy framework. We elaborate each of these in more detail below.

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