Trends of global energy markets: challenges for a binding climate protection agreement

From 30 November to 11 December 2015 the 21st session of the Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) takes place in Paris. At this COP an international successor agreement to the Kyoto Protocol is supposed to be adopted by the 195 member states in order to set binding targets for the protection of the world climate. Among other things, the so-called two-degree climate policy target, which aims at keeping the global temperature increase below two degrees Celsius, and the long-term abandonment of fossil fuels will be discussed. Furthermore, the Sustainable Development Goals, which were adopted in September 2015 by the UN General Assembly, will be taken into account in order to support in solidarity the endeavors of emerging countries to fight climate change.

When considering the trends of global energy markets, the heterogeneous starting points and fragmented divergences of interests are striking, they are reflected in the very specific climate policies and the scope of measures taken by the actors. Within the OECD countries the demand for energy is stagnating, whereas a high growth of demand can be observed in the Asia-Pacific region and the Middle East. The challenge at the summit is to codify the sub-goals of climate governance into an internationally binding agreement, which also needs to be comprehensively implemented and monitored. Simultaneously, fundamental interests of the different signatory countries, as well as their diverse energy profiles must be taken into account. This field of tension intensifies due to the dynamics of multipolar energy markets, which also kindle the emergence of geopolitical tensions. Technological developments like fracking shift the power relations and patterns of dependence within the energy markets, so that for example the US has taken over the fairly new role of being an exporter of energy.

From the perspective of climate policy, how fracking develops is particularly problematic, because it caused a boom of non-conventional fossil fuels. Given that the energy demand in Asian countries is rapidly growing, it also remains doubtful in how far the goal of a “low-carbon” energy system remains realistic in the near future. In this regard, broadening the energy governance of – actually undesirable - fossil fuels might make sense. Meeting the paradigmatic challenges of energy security, sustainability and economic efficiency against the background of the complex situation, constitutes a tremendous problem in itself which needs to be tackled during the negotiation process for reaching an agreement.

In their contribution “Global Energy Markets in Transition” Kirsten Westphal and Susanne Dröge analyze the dynamics of the worldwide energy industry and their influence on global climate and geopolitics (pdf document).