Energy diplomacy

Why does it matter today?

Energy is central to today’s most significant global challenges, making energy diplomacy more importnt than ever.

Firstly, security is a pressing issue. The war in Ukraine taught us a harsh lesson about how energy can be used as a political weapon. It compelled an entire continent to restructure its energy dependencies within a matter of months, highlighting that reliance on a single source or country creates vulnerabilities that can be exploited.

Secondly, the race to lead the green transition represents the new great game. The United States, China, and the European Union are fiercely competing to dominate future industries, including solar panels, wind turbines, electric vehicles, and batteries. Their diplomatic and economic actions will determine who will succeed and who will fail in this emerging economy.

For developing countries, energy diplomacy serves as a vital lifeline. It provides them with the means to attract the investments and technologies necessary to establish clean and reliable energy systems, combat energy poverty, and ensure a sustainable path to development. The focus is shifting from simply owning oil reserves to controlling the technology and supply chains that will shape our shared energy future.

How is it practiced?

An energy diplomat’s toolkit is diverse, combining traditional diplomacy with economic and technical expertise.

One of the most visible methods is negotiation. This can occur bilaterally, such as when two countries agree on a long-term gas contract, or multilaterally, as seen within the European Union where 27 member states work together to create a unified energy market.

Economic promotion is another key tool. Governments often send trade missions abroad and provide financial support to help national companies secure contracts or attract foreign investment for their own renewable energy projects.

Advocacy and lobbying are also essential. During climate talks at the United Nations or in technical committees that establish standards for new technologies, countries continuously strive to shape rules and agreements that benefit their interests.

Finally, a significant amount of this work is conducted through informal channels. A casual conversation between the CEO of a major energy company and a government minister can often yield more results than months of formal discussions. In this field, relationships and trust serve as valuable currencies.

A brief history

The story of energy diplomacy dates back over a century, originating from the industrial world’s increasing demand for oil. In the early 20th century, diplomats from Britain, France, and the United States were heavily involved in securing oil concessions for their companies throughout the Middle East.

The turning point came in 1973 when Arab oil-producing nations declared an embargo on countries that supported Israel during the Yom Kippur War. This led to an economic shock felt worldwide, as oil prices skyrocketed, economies faltered, and energy was suddenly recognized as a critical matter of national security.

In response to this crisis, the International Energy Agency (IEA) was established in 1974 as a coalition of consumer countries aimed at coordinating responses to future supply disruptions. The end of the Cold War marked the opening of Russia’s vast energy resources, ushering in a new era of pipeline politics.

Since the late 1990s, the growing awareness of climate change has introduced an urgent new dimension to energy diplomacy. Today’s energy diplomacy is characterized by the challenge of managing the traditional geopolitics of fossil fuels while simultaneously navigating the emerging geopolitics that accompany the green transition.

Who are the actors?

The field of energy diplomacy involves a diverse range of participants.

National governments are the primary actors, utilizing their foreign and energy ministries to negotiate agreements and establish policies.

State-owned companies, such as Saudi Aramco and QatarEnergy, play significant roles as they often serve as direct extensions of their governments.

International organizations function as referees, advisors, and venues for dialogue. For instance, the International Energy Agency (IEA) advises consumer countries, the International Renewable Energy Agency (IRENA) promotes renewable energy, and the Organization of the Petroleum Exporting Countries (OPEC) coordinates oil-producing nations.

Multinational corporations, including Shell, TotalEnergies, and ExxonMobil, wield considerable technical expertise and financial influence, allowing them to have a strong voice in discussions.

Non-governmental organizations (NGOs) and civil society groups are crucial advocates, pushing for enhanced environmental protection and a fair transition for communities affected by energy policies.

Scientists and engineers provide the technical expertise needed to ensure that diplomatic agreements are practical and grounded in reality.

Energy diplomacy in action

1. The 1973 oil crisis and the birth of the IEA: The OAPEC oil embargo was a stark demonstration of energy as a political weapon. In response to U.S. support for Israel, Arab nations cut off oil supplies, causing prices to skyrocket. This event destabilized Western economies and placed energy security at the top of the foreign policy agenda. The primary diplomatic outcome, led by the U.S., was the creation of the International Energy Agency (IEA), which serves as a collective defense mechanism for consumer countries.

2. The European Union’s Energy union: Launched in 2015, the Energy Union represents a significant ongoing diplomatic project. It was initiated following repeated gas disputes between Russia and Ukraine that threatened energy supplies across Europe. The goal is to establish a single, resilient EU energy market by developing physical infrastructure (such as pipelines and power lines connecting various countries), harmonizing regulations, and presenting a united front to external suppliers. This initiative exemplifies regional energy diplomacy aimed at enhancing collective security (European Commission, n.d.).

3. The US-China Clean Energy Research Center (CERC): This example illustrates how energy diplomacy can foster collaboration. Initiated in 2009, the CERC is a joint project between the world’s two largest greenhouse gas emitters, designed to accelerate clean energy innovation. It connects scientists and companies from both nations to address shared challenges. Although political tensions have affected the initiative, it has served as a crucial channel for cooperation for over a decade, demonstrating that even strategic rivals can find common ground on global issues like climate change

The road ahead

Energy diplomacy has changed. Its focus has expanded from a narrow quest for fossil fuels to the broad and complex task of managing a global transition. The new map of energy is not drawn with oil fields, but with lithium mines, gigafactories, and wind farms.

New challenges and opportunities for conflict are emerging, but they also pave the way for new forms of cooperation. The primary task for diplomats today is to navigate these changes. They must strive to ensure that the transition to a clean energy system is not only successful but also fair and just for all nations. This mission aims to create a future that is not only powered differently but also more equitably.