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An Energy Charter Perspective on Energy Security

An Energy Charter Perspective on Energy Security. NEEDS Forum 2 Krakow, 5-6 July 2007 Tim Gould Senior Advisor to the Secretary General Energy Charter Secretariat. Energy Prices. Source: BP Statistical Review 2007. World Fuel Shares. Source: BP Statistical Review 2007.

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An Energy Charter Perspective on Energy Security

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  1. An Energy Charter Perspective on Energy Security NEEDS Forum 2 Krakow, 5-6 July 2007 Tim Gould Senior Advisor to the Secretary General Energy Charter Secretariat

  2. Energy Prices Source: BP Statistical Review 2007

  3. World Fuel Shares Source: BP Statistical Review 2007

  4. Shares of World Energy Consumption Source: BP Statistical Review 2007

  5. Supply curve(cost of supply) Price Economic growth Technology Under influence of consumers Energy efficiency Replacement value-oriented price Hotelling rent Demand curve Cost-oriented price Ricardian rent Under influence of producers E&P Volume Production capacity limit Elements of Interdependence

  6. The Energy Charter Treaty

  7. Energy Charter Principles • National sovereignty over energy resources • Respect for contract and property • Stable and open frameworks for flows of energy, capital, technology and investment • An orientation towards market solutions • Non-discrimination • Transparency • Energy efficiency and sustainable development

  8. ECT and Investment Security • Energy Charter Treaty is the only broad multilateral investment protection treaty(equivalent to 1000+ BITs) • Reduction in non-commercial risk for private investors from other participating states • Promotes respect for contract and for property • Enforceable through state-state and investor-state arbitration • Functioning instrument of international law: currently 15 cases brought to arbitration (2 awards, 2 settlements, 11 pending)

  9. Oil and Gas Project Investment Total Investment Needs(2006-2010):$ 306 Billion Source: IEA WEO 2006

  10. Energy Trade Source: BP Statistical Review 2007

  11. Reliable Cross-Border Flows • Provisions based on WTO • Particular focus on specific challenges associated with transit of energy through fixed infrastructure (pipelines, grids) • Obligation on participating states to facilitate transit and to ensure the reliability of existing flows • Unique conciliation procedure in case of transit disputes

  12. GDP, Energy and Carbon Emissions Source: BP Statistical Review 2007

  13. Efficiency and Security • With limited direct leverage over resource-owners, energy efficiency is a major instrument for net energy importers to improve security (together with fostering renewables, diversification and improving energy production technology) • Resource-owners also have interest to improve efficiency: low domestic prices come with a technological cost, and limit available export volumes • International cooperation to improve energy efficiency likely to be major element of post-2012 framework for combating climate change

  14. Priorities • Ratification and implementation of the Treaty by all signatory states • Ensuring that the Charter responds to new challenges and developments on international energy markets • Substance: possibility of additional Protocols, Declarations, non-binding instruments (Model Agreements, Best Practice Documents) • Geographical expansion: East and Southern Asia, the Middle East and Mediterranean regions

  15. More information Energy Charter web site www.encharter.org tim.gould@encharter.org

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