Introduction
East AsiaFootnote 1 is having an increasingly profound impact on global energy security. Spurred by rapid economic development, the region's energy consumption levels rose five-fold between 1970 to 2010, while the average world energy consumption rate only doubled. In 1970, East Asia accounted for just an eighth of world energy consumption but by 2010 this share had grown to a quarter of the world total, and current estimates predict the region's share will rise to well over a third by 2030.Footnote 2 This is being driven particularly by China's growing energy demand requirements, which already accounts for over half East Asia's primary energy consumption.
We may expect East Asian states to afford increasing priority to tackle the energy security challenges for the following general reasons. First, China's dynamic economic growth will continue to impel the region's own future economic development, manufacturing industry-driven and high energy-intensive process, and hence a burgeoning demand for energy resources. Furthermore, many parts of the region are still poor and underdeveloped, and the socio-political pressures on East Asian governments to raise levels of energy service provision will remain strong for some time to come. Second, East Asia's own conventional energy resources—concentrated in Southeast Asia and China—are fast depleting, thus requiring all the region's states to increasingly seek resources from outside the region. East Asia now consumes three times more oil than it produces, and the region is more dependent on oil imports than any other in the world. As a result, East Asian countries will become increasingly dependent on international energy partners and stable energy governance in the global system. Third, competition for conventional energy fuels (oil, gas and coal) is intensifying globally as stocks of these fuels dwindle and access to known reserves have become either restricted or logistically difficult to secure. Every three years a new Saudi Arabia is required in production terms just to maintain oil consumption rates at current levels.Footnote 3 The explosion of the BP Deepwater Horizon rig in April 2010 was indicative of existing pressures to push out exploration and production frontiers into areas of increasing operational difficulty and risk: positioned 1,260 metres above the seabed, the rig drilled the deepest oil well in history to a vertical depth of 10,683 metres. Fourth, pollutant emissions from energy consumption is the prime known cause of climate change, and East Asian states will come under increasing international pressure to address the environmental risks associated with their intensifying demand for fossil fuels.
As an important consequence of the above, East Asian states are affording greater priority to energy security objectives in their foreign policy and development strategies, and will adopt more proactive energy diplomacies in forthcoming years. We may also expect a stronger conflation between their energy and environmental diplomacies as global concerns regarding climate change grow, leading to expanding international dialogues on implementing green energy technologies and practices. While there will be intensified competition amongst East Asian states over securing access to energy resources, their energy diplomacies will also be oriented by the imperatives to internationally co-operate given the interdependent nature of many energy security predicaments and challenges confronting them. For the above reasons, understanding the energy diplomacies of East Asian states will be vital to analysing key aspects of the region's future international political economy.Footnote 4
Scholarly work on East Asia's energy diplomacy has hitherto largely focused on specific energy sectors (oil), specific energy actors (China) or actor types (national oil companies), or specific energy projects (oil or gas pipelines). Only a few comprehensive academic studies related to the region as a whole have thus far been conducted, and moreover these have had a generic focus on energy security rather than specifically on energy diplomacy.Footnote 5 In addition, definitions, concepts and theories of ‘energy diplomacy’ in the academic literature remain largely ill-defined. The analysis that follows seeks to address these issues, positing that energy diplomacy may be broadly understood as how states and other actors pursue their energy security interests in the international system. The section that follows discusses definitions and understandings of energy security itself, what are the main international energy actors, and the nature of international energy markets. Thereafter, the paper develops a framework of energy diplomacy analysis that is applied to empirical evidence from the East Asia region.
Energy security and international relations
Context
The perceptions and objectives of energy security have changed significantly over time. As a general principle, energy security concerns come into sharper focus during periods of acute crisis, such as the oil shocks of the 1970s and the 1991 Gulf War.Footnote 6 Increasingly, however, energy security is a permanent foreign policy priority, given that conventional fossil fuel sources are becoming critically depleted.Footnote 7 As Fortov et al.Footnote 8 observed, ‘Today, energy security has become a new important component of the sustainable development of modern society, alongside the three traditional concerns: economic prosperity, social well-being, and a healthy environment’. An international energy security system of sorts has operated under the International Energy Agency (IEA), created in response to the 1973/1974 oil crisis and whose membership is based on the Organisation of Economic Co-operation and Development (OECD) nations. This ‘system’ fosters co-operation on energy supply flows, energy policy learning, safeguarding global energy markets, and the non-use of ‘energy weapons’ for achieving geopolitical objectives.Footnote 9
Analysing energy security
Defining energy security
As energy diplomacy may be understood as the pursuit of energy security interests in the international system by states or other diplomatic actors, energy security is a foundational concept in its analysis. Generally speaking, many proposed definitions of energy security are somewhat narrow and overtly economistic, considering only energy supply and price aspects. Those embracing the environmental dimension of energy security are the most analytically useful, perhaps the most succinct of these being offered by the Research and Information System for Developing Countries,Footnote 10 namely the securing of energy supplies (minimizing supply or quantity risk) at stable and affordable prices (minimizing price risk), and taking into account the environmentally damaging effects of energy consumption (minimizing environmental risk), especially from the combustion of fossil fuels. A further helpful definitional approach that adds an important temporal sustainable perspective to energy security is offered by Froggatt and Lahn, who contend that ‘meeting the dual challenges of maintaining stable energy services in the short-term, without jeopardising them in the long-term, means reformulating “energy security” as “securing the transition” to a low or no carbon economy’, and which ‘prepares for a long-term vision of efficient, clean, safe delivery of energy services to meet societal needs’.Footnote 11 The explicit emphasis on managing ‘long-term’ energy security provides a welcome balance to most definitions that implicitly emphasize short-term energy market supply and price stability.
Ideological and theoretical perspectives
Energy security is a concept often invested with strategic intent, especially when linked closely with discourses on hard security issues and geopolitical competition. This is particularly evident in the academic literature of the United States, where a neo-realist vernacular (for example, China's ‘aggressive’ quest for oil) of energy security analysis generally prevails, thus emphasizing the use of energy ‘weapons’ and competition for scarce energy resources based on simmering inter-state or great power rivalries.Footnote 12 Taking the example of China's so called ‘string of pearls’ policy to establish a series of deepwater naval ports in partner countries such as Pakistan along oil shipping routes from the Middle East, this is presented as China challenging the United States-led geo-strategic order in the region, and where there is a clear and strong energy-military security nexus in Beijing's strategic thinking. While the involvement of military agencies in strategizing resource diplomacy in many countries (including those of East Asia) has produced ‘hard’ security thinking on how international energy relations should be managed,Footnote 13 energy diplomacy decision-making is a generally broad, multiple agency process, in East Asia and elsewhere.
In contrast, neo-liberal institutionalist analyses emphasize the salience of energy interdependencies in the international system, and thus the imperative for strengthening international co-operation on common or strongly linked energy security challenges. According to this view, national energy independence is a mirage: whilst the striving for greater energy self-sufficiency (resource autarky) became a primary strategic goal for many Western governments after the 1973/1974 oil crisis, the idea that attaining complete energy independence broadly equates with having ‘achieved’ energy security is somewhat of a misnomer. Energy sectors and relations have become increasingly internationalized and in some aspects globalized, hence reflecting contemporary social, political and economic trends generally. Disruptions in one part of the international energy system have implications for many states, societies and organizations.Footnote 14 As Chester usefully summarizes, ‘twenty-first century access to energy sources depends on a complex system of global markets, vast cross-border infrastructure networks, a small group of primary energy suppliers, and interdependencies with financial markets and technologies’.Footnote 15 Thus, managing various interdependent energy relationships is the reality confronting all states and other international energy actors. Furthermore, this interdependence links different sectors of activity to energy. For example, Japan has provided clean coal technology transfers to China in order to reduce acid rain levels in the Yellow Sea and East China Sea zones, mostly caused by China's numerous coal-fired power stations located in the northeast of the country. Footnote 16
Politico-economic debates on energy security often centre on the relationship between the market and the state, and accordingly this affects the actions and interpretations of energy diplomacy practice.Footnote 17 Thus, liberal democracies should in principle view energy security solutions in market-oriented terms in which competitive markets and ‘independent’ regulation are considered the ‘most effective way of delivering secure and reliable energy supplies’, and that the ‘correct’ level of security ‘depends on the balance between the costs and benefits of increasing supply. . .[and] is left to the market as suppliers are better placed than government or the regulator to understand the value that their different customers place on security of supply’,Footnote 18 ChesterFootnote 19 presents two different market paradigm approaches, the first being the pure Walrasian market (self-equilibrating) that allocates resources to welfare optimal and efficient supply and demand outcomes, hence there is no need for market ‘corrections’. The second is the market institutionalist view which posits that market development occurs within an institutional order and framework nurtured principally by the state, and that markets occasionally fail to produce optimal welfare outcomes, thus necessitating occasional correction. Many prescribing to the pure Walrasian market argue that market institutionalism is not too far departed from mercantilist approaches to energy security whereby the state assumes control of, or supplants, the market with regard to matters of supply, allocation and price.
East Asia's main energy security predicaments: an overview
East Asia, like Europe, is a major net energy importing region. Its conventional energy resources are concentrated in Southeast Asia and China, whereas Northeast Asia's developed economies—Japan, South Korea and Taiwan—have extremely scarce energy resources and have long maintained high-level dependencies on energy imports. China too has now become a major oil importer, the second largest after the United States. Acquiring the necessary levels of energy inputs (increasingly from foreign sources) to maintain the momentum of the region's burgeoning economic development has become a challenge for all East Asian countries. Huge flows of energy supplies shipped into the region are funnelled through a series of narrow sea-lane ‘chokepoints’ that are highly susceptible to blockade and piracy, the most important being the Malacca Straits which, at its narrowest point, is only around 1.5 miles wide but through which a quarter of world trade (approximately 100,000 ships per year, including around half the world's oil-tankers) passes. Energy and other resource imports are also transported through other chokepoints such as the Sunda Strait between Java and Sumatra, the Lombok Strait between Bali and Lombok, and the Makassar Straits between Borneo and Sulawesi. In addition, territorial and sovereignty disputes persist amongst a number of countries over zones in the South China Sea (Spratly Islands and Paracel Islands) and the East China Sea (between China and Japan) through which this energy trade passes, and where there is thought to be potentially significant oil and gas reserves. These factors create a strong maritime dimension to East Asia's energy security interests and energy diplomacy.Footnote 20 Improving hitherto low levels of investment in green energy sectors (renewables and energy efficiency/saving) represent another key energy security challenge, and where international co-operation—and hence energy diplomacy—can make an important contribution.
International energy actors
Energy diplomacy analysis requires an understanding of the expanding range of actors engaged in international energy relations, the most important may be classified as follows:
• International oil companies (IOCs): large multinational oil-sector companies, most prominently the ‘Seven Sisters’ group: BP, Chevron, Conoco Philips, Exxon, Mobil, Shell and Total. These firms have diversified operations in the exploration, production, processing and distribution of a wide range of crude oil and natural gas based products, and have more recently developed, albeit still relatively small, renewable energy portfolios.
• National oil companies (NOCs): state-owned or partly state-owned energy companies that have become increasingly powerful in recent years. As we later discuss, NOCs operate in quite different political spaces to other commercial energy actors given their position in the government apparatus. East Asia is home to a large concentration of NOCs, the earliest being established in the 1940s and the most important being: Taiwan (China Petroleum Corporation, now known simply as CPC, established in 1946 by the Republic of China government); Japan (Japan Petroleum Exploration, JAPEX, 1955 and Japan Oil, Gas and Metal National Corporation, JOGMEC, 1967); Indonesia (Pertamina, 1957); Philippines (Philippine National Oil Company, PNOC, 1973); Malaysia (Petronas, 1974); Vietnam (PetroVietnam, 1977); South Korea (Korea National Oil Corporation, KNOC, 1979 and South Korean Gas Corporation, KOGAS, 1983; China (China National Offshore Oil Corporation, CNOOC, 1982, China National Petroleum Corporation, CNPC, and subsidiary PetroChina, 1988, and China National Petroleum and Chemical Corporation, SINOPEC, 2000).
• Business consortia: a mix of IOCs, NOCs and other energy companies that collectively bid for energy resource contracts, for example, the collaboration between China National Petroleum Corporation, Petronas, the Oil and Natural Gas Corporation, ONGC (India), and Sudapet (Sudan) to form the Greater Nile Petroleum Operating Company in 2006.
• Financial institutions: exerting considerable influence through their dealings in energy commodity markets, derivative markets, etc., which in turn influence international market prices for energy products. Futures market exchanges and companies such as the New York Mercantile Exchange and Intercontinental Exchange (ICE Futures Europe) are extremely influential in this regard, managing billions of dollars of energy products (mostly oil) on a daily basis and affecting energy market transactions around the world.
• International energy-related organisations (IEOs): the most important multilateral energy organisztion is the aforementioned IEA, providing a trusted and comprehensive source of energy statistics and market projections, and oversees an emergency oil-sharing system that can be activated in times of crisis. The still powerful Organisation of the Petroleum Exporting Countries (OPEC, Indonesia was a former member, 1962–2008) is a cartel of mostly Middle East producers. Established in 1991, the International Energy Forum (IEF) brings together the world's largest gathering of energy ministers biennially from countries (including Japan and India) that represent over 90 per cent of the global oil and gas market. China and South Korea also participate in the Forum as partial members. Meanwhile, the World Trade Organisation (WTO) remains the principal body governing the rules for international energy trade.
• Regional organizations: such as the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Co-operation (APEC) forum, ASEAN Plus Three (APT), Shanghai Co-operation Organisation (SCO) and European Union (EU) that have all become increasingly active in fostering regional energy co-operation, as is later discussed.
• State governments: exercise energy diplomacy through various means, including the sponsorship of NOCs; wielding sovereign control over local energy resources through contract and licensing agreements; signing bilateral, regional or multilateral energy-related agreements with others; and working within international and regional energy co-operation organizations and initiatives.
• Miscellaneous private and civil sector interest groups: including oil business lobbies (Global Wind Energy Council), environment and human rights organizations, local community action groups, and other agencies that seek to influence energy policy and diplomacy.
• Energy research institutes: performing roles of ‘knowledge agency’ by providing trusted sources of energy data and analysis (Institute of Energy Economics Japan, IEEJ), thereby shaping and influencing the knowledge structures in which energy diplomacy occurs.
The growing internationalization of energy markets and deepening energy security interdependencies in the global system are proliferating different configurations of relationships between the above actor types. In short, the web of international energy relations is expanding and becoming ever more complex. Perhaps the most noteworthy change in the balance of power amongst international energy actors concerns the rise of the NOCs and the corresponding decline of IOC influence.Footnote 21 Whereas in the 1960s, the ‘Seven Sisters’ IOCs possessed access to 85 per cent of the world's oil and gas reserves, and also dominated global production, the situation had completely reversed by the late 2000s, the NOCs now controlling close to 90 per cent of reserves and production. The world's current top ten oil and gas reserve holders are all state-owned companies, all of which exercise strict controls on inward foreign direct investment in their energy sectors.Footnote 22
International energy markets and East Asia
The nature of the world's energy markets, and East Asian countries situation regarding them, varies from sector to sector. The world's oil market is the most globalized and integrated of all, and current structures of global energy security are more dependent on oil than any other fuel source.Footnote 23 The regional distribution of proven oil reserves is heavily skewed towards the Middle East (56.6 per cent), whilst Latin America holds 14.9 per cent, Africa 9.6 per cent, the former Soviet Union 9.2 per cent, North America 5.5 per cent, and the rest of the world 4.2 per cent.Footnote 24 Around 60 per cent of the Middle East's oil exports go to East Asia, and approximately 70 per cent of East Asia's oil imports come from the Middle East—90 per cent for Japan, 70 per cent for China, 95 per cent for the Philippines. China is the region's largest and world's fifth-largest crude oil producer, but in 1993 it became a net oil importer. Over the last decade, it has accounted for half of world growth in oil consumption. East Asia's other major oil producers in order of significance are Indonesia, Malaysia, Vietnam, Brunei and Thailand. However, only Brunei, Malaysia and Vietnam are the region's only net oil exporters.
Unlike oil, the natural gas market is regionalized or localized rather than globalized. Whereas oil is mostly distributed by tankers by sea, most gas is transported by land-based pipeline networks. This limits the geographic scope of sourcing natural gas for importing countries as they are reliant on gas supplier nations in their regional neighbourhood. Furthermore, pipelines are extremely expensive to construct, thus presenting additional supply constraints. The regionalized fragmentation of the natural gas market also limits the degree of competitive contact amongst suppliers at global level.Footnote 25 Prices for internationally traded natural gas are far more static than for oil as agreed fee rates of supply are set under inter-state contracts as part of the terms of constructing international pipelines. Arguably the most recent significant development in global energy markets has been the emergence of the ‘unconventional’ or shale gas industry.Footnote 26 This energy source is produced by the hydraulic fracturing (use of pressurized liquids) of natural gas-permeable shale rock that recent technological advances have enabled to be extracted in commercially viable quantities. The United States has pioneered the industry's rapid development and is thought to have enormous shale gas reserves, as are many others, including East Asia and Europe, that have also invested significantly in exploration.
Liquefied natural gas (LNG) is a small but fast-growing sub-sector of the gas market. LNG is produced by super-cooling natural gas until it reaches a temperature of –162°C., liquefying it and thereby reducing its volume by a ratio of 600:1. Thermally insulated tankers are used for transportation to special facilities where it is reconverted into natural gas and thereafter distributed by pipeline or other means. LNG infrastructure costs are huge but industry expansion and scale economies are helping to reduce average unit costs in this sector. Although LNG only accounts for around 7 per cent of the total world demand for gas, it is fast becoming a globalized market and is by far the most traded form of natural gas in East Asia. Up to the mid-2000s, the region had both the world's largest exporters and importers of LNG. Indonesia, Malaysia and Brunei, as well as Australia, are the major suppliers of LNG to Northeast Asia: Japan, Taiwan and South Korea together accounted for around two-thirds of the world's total LNG imports in 2008.Footnote 27
Once a relatively localized industry, the coal market has become increasingly internationalized. Like oil, it is a comparatively easy and cheap fuel material to transport, and therefore trade. Some East Asian nations are significant coal exporters (Indonesia the world's second largest, China the sixth) and importers (Japan the world's largest, South Korea the second, and Taiwan the fourth). China maintains a heavy dependence (70 per cent) on coal for electricity generation and is the world's largest coal producer by far with a 42 per cent share. Over the last 20 years, international trade in coal has increased by an annual average of 7 per cent. Australia, the world's largest exporter, sends the majority of its traded coal to East Asia, while Russia, South Africa and Canada are other major foreign sources for the region. Despite the announced plans of East Asian governments to reduce CO2 emission levels, many countries in the region are relying increasingly on coal (the most carbon-intensive fuel) in their energy mix given concerns over high and volatile oil prices, comparatively limited natural gas reserves, persisting fears over using nuclear power and the relatively high-cost of developing renewable energy alternatives.
The essential nature of renewables and nuclear power makes them highly localized energy sources, and the international market for these sectors is primarily concerned with technology and equipment. Regarding renewables, the growth of the wind power industry is particularly noteworthy, which is fast becoming a mainstream industrial market.Footnote 28 According to Roland Berger Strategy Consultants,Footnote 29 East Asia will account for around one-third of total global wind power capacity by 2020, just behind Europe's 35 per cent share but ahead of North America's 29 per cent. China has become East Asia's leading player in this sector, raising its wind power capacity from just 1.2GW in 2005 to 41.8GW by 2010, and now possesses more installed capacity than any other nation. China also has some 80 turbine producers, the three largest of which—Sinovel, Gold Wind and Dongfang Electric—are now significant exporters. East Asia's other major economies have proved comparatively less ambitious yet have still expanded capacity over the same period: Japan's capacity has doubled to 2.1GW; Taiwan's quadrupled to 0.4GW and South Korea's tripled to 0.3GW.
Meanwhile, international trade in the nuclear sector is largely confined to sales of reactors and other technological components. As a highly capital-intensive energy industry, only minute amounts of the fuel derivative, uranium, are required in nuclear power generation. Thus, international energy security issues in this sector centre more on dependencies on foreign technology rather than on foreign material resources. There are currently 444 reactors in operation in 30 nations, most of these located in the OECD.Footnote 30 Japan, China, South Korea and Taiwan are East Asia's only current producers of nuclear energy. Before the March/April 2011 Fukushima disaster in Japan, all these nations had policies for future capacity expansion. Indonesia, Thailand, Vietnam and Myanmar had also announced plans to develop nuclear power generation facilities over forthcoming years. Post-Fukushima, it is likely that such plans for expansion and development will be either paused or scaled back, at least in the medium-term. There are, in addition, various security-related complexities concerning North Korea's long held aspirations to also become a nuclear power.
Multilateral economic co-operation and East Asia
Multilateral energy co-operation frameworks remain generally under-developed in comparison to its international trade, finance, regional integration and other economic-related equivalents. The Organisation of Petroleum Exporting Countries (OPEC) was the first substantive multilateral energy grouping, formed in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Responses to the 1973/1974 oil crisis are also cited as an important landmark of multilateral energy co-operation, being instrumental in not only creating the IEA but also the G7 grouping in 1975 with Japan as an original member of both. As host of the G8 summit in 2000, Japan proposed the establishment of a multilateral, multiple agency task force on promoting renewable energies development.Footnote 31 At the 2008 summit, also hosted by Japan, G8 leaders agreed to adopt in the United National Framework Convention on Climate Change (UNFCCC) talks the commitment to reduce global carbon emissions by at least half by 2050. In addition, G8 leaders invited China, South Korea and India to join the International Partnership for Energy Efficiency Co-operation. Japan and South Korea are currently Asia's only IEA members but the organization works at a certain advisory level with key non-members such as China.
Regional-level energy co-operation in East Asia began with relatively low-level ASEAN-led endeavours dating back to the 1970s, starting with the creation of the ASEAN Council on Petroleum (ASCOPE) in 1976 as a forum for discussing oil and gas industry matters and later developing various analytical functions. Subsequent initiatives included the ASEAN Petroleum Security Agreement and ASEAN Energy Co-operation Agreement (signed in 1986), the more programmatic five-year ASEAN Plans of Action on Energy Co-operation (APAEC) from the 1990s onwards, and an ASEAN Centre for Energy established in 1999. However, it was not until the 20th ASEAN Ministers of Energy Meeting held in July 2002 that high-level consultations on advancing regional energy co-operation occurred, that in turn led to a common understanding on ‘Energy Co-operation among Japan, China, Korea and ASEAN’ being signed at the ASEAN Plus Three (APT) Energy Ministers Meeting, this comprising a five-point initiative: (i) the creation of an energy emergency network; (ii) development of a strategic oil reserve; (iii) joint studies on the ASEAN oil market; (iv) improvement of natural gas development; and (v) improvement of energy efficiency and renewable energy. These are all still works in progress, partly managed through six APT energy working groups, namely: energy security, national gas, oil market, oil stockpiling, renewables, and nuclear safety. Under the larger regional membership of the East Asia Summit (EAS) group (additionally including India, Australia and New Zealand), the region's leaders signed the Cebu Declaration on Energy Security in January 2007, committing EAS states to similar sets of objectives previously agreed with ASEAN and APT. In 2001, China formed the Shanghai Co-operation Organisation (SCO) with Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan where managing cross-border energy security related issues have particular prominence.Footnote 32 In 2005, China also entered into a trilateral agreement with the Philippines and Vietnam (with their respective NOCs also as signatories) for joint oil and gas prospecting in the South China Sea. A number of ambitious sub-regional ventures have also been proposed, such as Gobitec, a South Korean initiative that conceives a huge solar panel array in the Gobi desert feeding electricity to the industrial centres of Northeast Asia.Footnote 33
In the wider Asia-Pacific context, APEC's Energy Security Initiative (ESI) introduced in 2001 consists of various short-term measures to respond to temporary energy supply disruptions (for example, oil price volatility, and occasional security threats to sea-lanes supply routes), as well as longer-term policy measures aiming to address challenges concerning the region's security of energy supply, such as technology and infrastructure co-operation. Under a Japan-led proposal, the APEC Peer Review of Energy Efficiency Mechanism (PREEM) was created in 2008 whereby member economies demonstrated their plans to achieve energy efficiency objectives, these then being reviewed by specialists from other member economies. Meanwhile, the Asian Development Bank (ADB), a largely Japanese dominated institution, has for many decades facilitated energy sector development assistance for the region's lesser developed countries, and its recently introduced Clean Energy Programme promotes the adoption of low-carbon energy practices in Asia through investment projects, shared best practice dialogues, and other means.
Two new and potentially very important regional level government-business dialogue initiatives have recently emerged within the Asia-Pacific. The Asia-Pacific Partnership on Clean Development and Climate (APP) was established in 2006 where seven member governments (Australia, Canada, China, India, Japan, South Korea, and the United States) work in partnership with private sector actors on a range of energy-environment nexus themes. The inaugural Pacific Energy Summit (PES) was held in November 2009 in Tokyo, convened by America's National Bureau of Asian Research and sponsored by various organizations including the ADB, Japan Foundation Centre for Global Partnership, and Exxon Mobil. Amongst its key recommendations were to incorporate stronger energy security provisions in FTAs, especially on green energy technology trade and intellectual property rights, and on fostering stronger co-operation on transnational energy issues generally.Footnote 34 The second PES was convened in February 2011 in Jakarta, and biennial summits are planned for the future.
Still wider afield, since 2005, Asian and Middle East governments have been discussing energy security issues in Asian Ministerial Energy Roundtable meetings. There has also been growing East Asian participation in Europe's Energy Charter Treaty (ECT), which was established in the early 1990s as a framework for international co-operation and trade rules on the land-based transit of energy supplies across third world countries (WTO rules mainly cover maritime based energy trade such as oil and coal), with particular focus on pipelined natural gas. Japan was an original signatory, a substantial ECT budget contributor, and has advocated strong Asian participation from the start. China, Indonesia and South Korea have all seconded officials to work at the ECT Secretariat in Brussels, and APEC is currently looking to adopt some ECT principles in an Asia-Pacific context.Footnote 35
In summary, there have been a number of interesting developments in East Asia centred multilateral energy diplomacy, especially at regional level, that have emerged since the early 2000s in particularly. However, most are yet to progress beyond the level of structured dialogue about how to achieve substantive international energy co-operation rather than actually realise it. The energy diplomacy objectives of East Asian states are still predominantly subordinated to national interests rather than those of the regional or other multilateral collective, despite deepening interdependencies in East Asia's international energy relations. This is later discussed in the analytical framework section under multilateral energy diplomacy.
A framework of energy diplomacy analysis: application to East Asia
Empirical perspectives and generic task-oriented terms
After having discussed the key issues and developments in international energy security relations, this section presents an analytical framework of energy diplomacy that is applied to empirical evidence from East Asia. Diplomacy is essentially a method of political interaction entailing the management of relations between states, and between states and other actors, whereby issues and conflicts arising between them are resolved principally by peaceful, co-operative and mutually agreed means.Footnote 36 From a state's perspective, diplomacy involves the operationalization and implementation of its foreign policy. The scope and forms of diplomacy have gradually expanded owing mainly to globalizing and integrational processes that have produced the following trends.
• The permeating effects of globalization are deepening foreign policy's connections with various domestic-level policy domains.
• Stronger issue-linkage in and the broadening of foreign policy agendas generally, for example, trade, energy, climate change.
• Consequent widening of the range of state, quasi-state and non-state actors involved in diplomacy and therein more stakeholders seeking to influence it.
• The proliferation of bilateral, regional, plurilateral and multilateral diplomatic fora in which these actors engage.
Given the above first two points especially, establishing neat empirical domains for particular diplomacy sectors, such as energy, is inherently problematic. Taking the notion of issue-linkage to the extreme, it could possibly be argued that almost all aspects of diplomacy are in some way energy security-related. As CiutaFootnote 37 has argued, energy security is a potentially total field of scholarly enquiry, in that the effective functioning of economies and societies critically depend on energy services, whether providing the means for production, exchange, transportation and communications, or the facilitation of education, health or other welfare services. Thus, where any of these functional aspects of economy and society connect with foreign policy, they may be considered in some way within the ambit of energy diplomacy, albeit at times tenuously and indirectly. Taking the example of energy–trade linkage, many East Asian states (especially China and Japan) have sought free trade agreements (FTAs) with Middle East states—including with the Gulf Co-operation Council (GCC) groupFootnote 38—as part of their strategy of securing long-term access to the region's oil and gas supplies. Many other FTAs with other partners contain energy security provisions, such as the ASEAN–China agreement and Japan's FTAs with Indonesia, Vietnam and Brunei. At the WTO Doha Round negotiations in early 2010, Japan proposed that a unified energy efficiency standard be developed to facilitate trade in products like low energy-consuming household appliances, computers, monitors and televisions.Footnote 39 It could be argued that these aspects of trade diplomacy have a clear energy dimension, and conversely, it is an example of energy diplomacy with a strong trade dimension.
It is therefore neither possible nor perhaps desirable to establish strict empirical boundaries when studying energy diplomacy. A holistic approach is required that enables us to capture the comprehensive nature of the international energy security predicaments. Moreover, depending on the extent to which energy diplomacy is linked to and pervades other related areas of foreign policy (trade, environment, development, aid), any empirical aggregation of energy diplomacy practice will vary from state to state. Notwithstanding the above points, certain degrees of conceptual and theoretical specificity may be established on which to develop a meaningful framework of energy diplomacy analysis. As a foundational definition, we may broadly assert that energy diplomacy entails the pursuit of energy security interests in the international system. Hence, it concerns diplomacy actions to address the aforementioned composite of supply, price and environmental risks arising from energy insecurity. Furthermore, energy diplomacy may be considered a function or derivative of a state's energy policy as operationalized through foreign policy actions. From an empirical perspective, energy diplomacy may thus be viewed in the following generic task-oriented terms assuming the state as the primary energy diplomacy actor.
(i) Strategizing energy diplomacy, including the discussion of diplomacy objectives and methods, and how the former is linked to the state's energy policy goals generally.
(ii) Representation of the state's energy security interests vis-à-vis foreign state and non-state actors.
(iii) Managing various forms of international energy co-operation and conflict resolution.
(iv) Managing order and orderly change in international energy relations that includes fostering energy systemic stability (of markets, flows of energy supply) and systemic development in partnership with other states and actors.
(v) Negotiating various kinds of energy agreement with foreign partners.
(vi) Creating, drafting and amending international rules of a normative and regulatory kind regarding energy matters.
There are certain overlaps between the above in conceptual and empirical terms but the main aim here is to delineate the general technical tasks of energy diplomacy. Particular divisions of labour may also be analysed. Typically, a wide range of actors may be involved in (i), certain government agencies as well as energy companies may be involved in (v), while foreign and energy ministries may take exclusive or lead responsibility especially for (ii) and (vi). Competition between actors over task competences may also be analysed, and how well energy diplomacy tasks are co-ordinated within or between actors. Illustrative examples of each from East Asia are discussed in the following section.
Agential influences on the formation and organization of Energy Diplomacy Practice
Three-level game dynamics: domestic, international and transnational
Whilst acknowledging the increasingly influential role played by non-state actors in diplomacy processes, state governments remain the primary actors of energy diplomacy in most circumstances. Nevertheless, close interfaces between domestic and foreign policy domains, deepening issue-linkage effects, and the transnationalization of energy security relations means that the state's energy diplomacy corps are involved in an increasingly complex ‘three-level game’ dynamicFootnote 40 of having to mediate the pressures and interests of various stakeholder constituencies. A state's energy diplomats invariably have to reconcile domestic level interests (local business, civil society) and international energy actors, some of which apply pressure at the ‘foreign’ level (other state governments) and some at the transnational level (IOCs operating across states that lobby all governments and other involved parties), this being indicative of the aforementioned complex web of energy relationships in the global system. The approach that state governments take to managing these relationships, and to energy diplomacy generally, will to a significant extent be determined by polity-type. For example, domestic public consultation is more likely to occur in democratic political systems such as Japan and South Korea rather than highly state-controlled systems such as China and Vietnam. At the same time, the growing strategic importance of energy has meant that national security agencies have become increasingly involved in energy diplomacy decision-making and strategizing, consequently closing off certain aspects to public consultation and scrutiny where this is seen to compromise national security. National security agencies are particularly concerned, in East Asia and elsewhere, with how disruptions to imported energy supplies may cause significant damage to the economy and societal welfare, and subsequently lead to civil unrest and possibly serious political instability.
The apparatus of energy diplomacy decision-making and strategizing
Whilst state actors are open to various contesting agential influences, governments construct their own particular institutional apparatus in which strategizing and decision-making on energy diplomacy occur. ‘Strategizing’ refers to long-term planning, thinking and process aspects and will tend to involve a core set of government agencies or representatives from them, typically from the premier's office and those responsible for national security, energy policy, foreign affairs, economic development and, increasingly, environmental affairs. ‘Decision-making’ processes are shaped by the strategic framework of energy diplomacy but may involve additional relevant agencies to the above in helping make, or providing advice on, day-to-day tactical decisions on current issues as they arise. For example, NOCs representatives may be brought in to discuss the implications of a sharp oil price spike, or science and technology departments for their views and evaluations of a proposed green energy technology co-operation agreement with another country or international organization.
The functional coherence of an energy diplomacy apparatus may also differ significantly. For example, that operated by China was widely considered to be rather dysfunctional, which also applied to its energy policy generally.Footnote 41 As often arises in large state entities, where multiple competing interests tend to exist, China's energy policy and diplomacy were being pulled in many opposing directions due to the varying agendas and objectives of energy-related state agencies. In acknowledgement of this, the State Council announced in January 2010 that a new National Energy Commission (NEC) would be created under the leadership of Premier Wen Jiabao to bring greater co-ordination to China's energy policies and diplomacy. The NEC's membership comprises ministers from the National Development and Reform Commission, Ministry of Finance, Ministry of Foreign Affairs, Ministry of State Security and the People's Liberation Army. This re-established a single centralized authority with comprehensive policy competence on all China's energy affairs since the country's Ministry of Energy and Industry was abolished in 1993. Prior to the NEC's formation, the National Energy Administration (NEA) department and its predecessor National Energy Bureau (formed in 2008 and 2003 respectively) had limited authority and resources to exercise meaningful control. Using another illustrative example, Taiwan's energy diplomacy is primarily co-ordinated under its National Security Council through monthly meetings with the Bureau of Energy, Ministry of Foreign Affairs, and Environmental Protection Agency, the latter being more involved as Taiwan's energy diplomacy and climate change diplomacy increasing conflate under President Ma Ying-jeou's leadership. Ma's administration has made climate change a top foreign policy priority (with ensuing implications for energy policy and diplomacy) given Taiwan's increasing apparent susceptibility to extreme weather (typhoons) that is thought to be climatic-change induced.
Multilateral energy co-operation and diplomacy
It was earlier noted how deepening energy security interdependence in the international system has compelled states to afford greater priority to co-operative energy diplomacy in various ways. This goes beyond exclusive bilateral energy supply deals, focusing rather on multilateral dialogues, agreements and co-operation frameworks, and thus extends the ‘three-level game’ dynamic of energy diplomacy to broader foreign and transnational agential influences, originating mainly from: inter-governmental networks of energy diplomats and policy-makers; transnational advocacy groups that comprise actors working across national borders such as representatives from multinational business, NGOs and international organizations; and epistemic communities consisting of miscellaneous opinion-shaping professionals (including academics) with representation from many countries.
Following on from the earlier overview of multilateral energy co-operation involving East Asian states, the following progressive levels of multilateral energy diplomacy and the inter-related types of foreign and transnational agential influence that shape them may be identified.
• Formation of an international consensus on identifying common energy security predicaments and the co-operative means to address them: this includes convergent thinking on the need to move towards low carbon, cleaner energy practices. A consensus may in some way be codified to varying degrees by agreements ranging from basic non-binding principles of common energy policy and diplomacy behaviour (for example, the EAS 2007 Cebu Declaration on Energy Security) to treaties that contain more well defined commitments on realizing policy objectives, like the UNFCCC. The recently launched APP and PES dialogue processes may yield greater convergence in thinking amongst governments, business and other actors on East Asia and Asia-Pacific energy security issues. In addition, the formation of shared knowledge structures on addressing energy security challenges (ASEAN Centre for Energy, APT's energy working groups) have created new forms of epistemic community and ‘knowledge agency’ with the potential for strengthening consensus amongst states within their geographic memberships. However, this potential is yet to be substantially realized.
• Compliance to international or shared norms on energy policy practice: following on from the above, where a consensus of thinking leads to common forms of action. The PREEM programme of APEC seeks to achieve this through ‘peer pressure’, and the ECT takes this further through its endeavour to establish a rules framework on land-based ‘transit’ energy trade. Institutional cultures of international energy organizations are relevant here: the IEA is significantly influenced by the politico-economic ideology of America and thus has a strong predilection towards market-based solutions to energy security challenges. Likewise, the ECT is a European-centred institutional framework and is thus heavily influenced of European Union norms of energy policy practice.
• Participation in international energy security systems and programmatic co-operation: involving more structured forms of common energy policy and diplomacy practice where states and other actors systemize their co-operation on energy security matters, this often involving a deeper institutionalization of multilateral energy-related organizations and frameworks. Such instances are rare outside the European Union. The most relevant in East Asia's case concerns Japan and South Korea's participation in the IEA's emergency oil reserve management system. The region's states also participate in the UNFCCC's Clean Development Mechanism (CDM) programme as both donor and recipient that has involved states meeting their carbon emission reduction targets by financing new green energy projects in developing countries, these accounting for 63 per cent of CDM projects by 2010, and around half of all projects were located in East Asia.Footnote 42 This is a clear example of policy issue-linkage between energy, environment and development. Other lower level forms of programmatic co-operation include the aforementioned ASEAN and ADB work schemes and agreements. While ASEAN's endeavours in this area are long-standing (for example, ASCOPE), they have achieved relatively little due to limited technocratic and institutional capacity, financial resources and pooled sovereignty. Meanwhile, the ADB's work has mainly amounted to aggregation of micro-level projects.
• Formation of an energy security community: a progression from the above whereby collectives of states deepen their co-operation through the more comprehensive management of integrated energy systems such as markets, infrastructure, research and development, production and exploration networks. This is most likely to arise on a regional basis, especially where deepening energy security interdependences arise from closely integrated regional economies, and where regional co-operation is already highly institutionalized. The European Union qualifies in both criteria but East Asia on the first only, and the European Union is the only region that has anything currently approximating an energy security community. Different levels and forms of energy security community may be nested within, or linked to others. For example, sub-regional or cross border communities (Greater Mekong Subregion, ASEAN) may potentially exist inside larger regional arrangements, and these form the basis for inter or trans-regional community formation. These communities may be extended to include new members (for example, from Central Asia) and make important contributions towards global energy governance, and be part of the longer-term evolutionary process to ultimately creating a global energy security community.
The above inter-relationships build on each other, entailing progressively deeper levels of co-operation as well as foreign and transnational agential influence. More generally, multilateral energy diplomacy is a conduit through which foreign or transnational influences can potentially shape domestic level energy practices, as well as for achieving international convergence of energy policy and diplomacy practice.
The energy–development nexus
The imperatives of domestic development often determine key energy diplomacy objectives. Thus, China's growing demand for foreign energy resources, and the expansion of its energy diplomacy, may be largely explained by its burgeoning economic development and the need to improve socio-economic welfare in its poorer interior provinces. More advanced, post-industrial developed economies like Japan, South Korea and Taiwan place generally greater emphasis on, or have a competitive advantage in, higher-tech green energy sectors, this in turn influencing their energy diplomacy. Ideological approaches to development and its relationship with energy security are also relevant. East Asia's developmental statist and socialist market paradigms of development strategy—whereby the state has in various ways orchestrated economic development processes and managed development relationships—help explain why the region's governments either currently or in the past operated strong state controls over energy supply processes as part of realizing various economic transformation objectives. Of significant relevance here are East Asia's NOCs, which for the region's major economies have been vital instruments for minimizing energy supply and price risks.
The energy resource situation of the nation concerned will, in addition, significantly shape its energy diplomacy in relation to development objectives. Northeast Asia's resource-poor but fast industrialized and thus energy import-dependent economies (Japan, South Korea and Taiwan) have hence for some time maintained a strong reliance on foreign energy partnerships and international energy markets in order to manage potential resource constraints on rapid economic development. Both China and Southeast Asia's shift towards net energy resource importing positions has required them also to develop increasingly proactive energy diplomacies if they wish to realise similarly ambitious goals of techno-industrial transformation.
However, in East Asia there is a growing acknowledgment that energy's role in raising levels of socio-economic welfare must be aligned with sustainable development objectives.Footnote 43 There is rising societal concern across the region about the health-damaging effects of conventional energy-intensive ‘dirty development’, thus providing growing public support for greener energy diplomacy conduct. Taiwan's development of an internationally competitive solar photovoltaic panel industry, largely based on long-standing technological competences in the electronics sector has, for example, been used to establish green energy partnerships with developed nations such as Sweden, as well as forming part of its development assistance diplomacy with Pacific Island countries.Footnote 44 China's aforementioned rapidly growing wind energy sector is also relevant here, although this has hitherto developed in accordance with a mercantilist ‘infant industry’ approach.
Transaction mechanisms of energy diplomacy
At a general conceptual level, energy diplomacy involves the use of different ‘transaction mechanisms’ in order to realise energy security objectives. Transaction mechanisms refer to the means of facilitating all forms of energy diplomacy interactions and exchanges arising between relevant actors. This provides a different conceptual perspective on certain earlier noted generic tasks of energy diplomacy, and most importantly adds further functional specificity to analysing energy diplomacy practice. Some mechanisms may be more economic in nature (purchases in energy spot markets, acquisition or control of foreign energy sources), others more political (government or NOC contracts on sourcing fuels, other inter-state agreements, international and multilateral energy dialogues and forums), some technological (energy transportation infrastructure such as pipelines, energy technology transfers, technical aid to developing countries), and may also be viewed in physical or environmental terms in that energy material transactions between countries involve extraction and processing activities and thereafter the tangible transportation of these materials. States and other relevant actors have choices to make concerning preferred transaction mechanisms in their energy diplomacy framework. In relation to ideological perspectives and polity-type considerations earlier discussed, liberal democracies are more likely in theory to choose market-based transaction mechanisms while highly state-controlled countries tend to exhibit a greater predilection for government-based contracts and energy mercantilism, eschewing the market where this cannot guarantee control over international energy transactions. For the same reasons, the latter polity-type is more likely to possess national oil companies to exercise these forms of energy diplomacy.
Politico-ideological determined choice regarding transaction mechanisms, however, only really applies at a highly generalized level. Even ardent liberal democracies such as the United States do not adhere that strictly to pure Walrasian market solutions to energy security predicaments given the risks to national security posed by periodic market volatility. Strategic oil reserves have been developed by many countries, including America, as insurance against any major supply disruptions arising in international oil market. Managing international security predicaments generally tends to involve significant state interventions. Conversely, the energy mercantilism of East Asian states—as typified by the expanding international operations of the region's NOCs—can be somewhat overstated, especially in the Western media. For example, while it is true that East Asian NOCs procure the majority of their oil and gas through long-term contracts signed with foreign host NOCs or governments (for example, 60 per cent of Taiwan's oil imports, 70 per cent of Japan and South Korea's LNG imports), large shares are bought on international spot markets, just like Western countries.Footnote 45 Moreover, in the region's more open market economies, NOCs compete with fellow domestic IOCs. For example, the state-owned CPC imports half of Taiwan's oil imports and the private company of Formosa Petrochemicals the other half. Japan's national oil companies, JAPEX and JOGMEC,Footnote 46 meanwhile compete with the Japanese IOCs of Nippon Oil and Arabian Oil Company, and the part state-owned INPEX Corporation.
Nevertheless, East Asia's NOCs have become important transaction mechanisms of energy diplomacy in their own right, mediating between foreign energy source-holders and their ‘home’ state owners. By developing and securing both domestic and foreign sources of energy, they are the organizations with the operational capacity to actually realise many key energy diplomacy objectives. Although being state-owned, at an operational level East Asia's NOCs function on a commercial basis in accordance with the conventional business objectives of growth and profit yet are also supported by government policies and diplomatic activities.Footnote 47 Furthermore, they are still relatively small players compared with their counterparts outside the region, accounting for only around 5 per cent of world oil production in 2005, and about one-fifth of this was foreign production (1 per cent of the world total). Chinese NOC cumulative investment in foreign exploration and production operations between 1995 and 2006 was around US$27 billion whilst American oil company investments for 2004 alone was higher at US$29 billion. Paik et al.Footnote 48 estimated that the foreign equity production from all Asian NOCs (including India) might reach 2–2.5 million barrels per day over 2008–2012, or only about 3 per cent of world production. This, though, is equivalent to up to 15 per cent of East Asian oil imports. Rising East Asian NOC investment levels should increase world energy supply capacity due to their taking on higher risk and higher cost projects that IOCs would view as commercially non-viable.
Energy diplomacy decisions on transaction mechanism choice will be based on assessing the balance of transaction costs, benefits and risks. These may be broadly viewed in economic, political, technological and environmental terms, taking each of these in turn by way of illustrative example as follows.
• Economic: obtaining imported energy resources at the lowest possible financial cost in terms of actual resource price, and transportation and distribution costs.Footnote 49 Choices regarding the relative costs, benefits and risks of importing different energy fuels (foreign oil, coal or LNG for domestic electricity generation) and capital or technology (China's currently protected wind energy sector). Risks for states dealing with energy buyers and suppliers with considerably stronger market power (‘near monopoly’ local gas producer nations such as Russia) concerning terms and conditions of energy resource transactions.
• Political: risks and costs of dealing with ‘vilified’ energy suppliers, including pariah states such as Sudan and energy multinationals guilty of documented social and environmental malpractices. Conversely, the benefits of dealing with trustworthy politico-diplomatic partners in energy-related transactions.
• Technological: what are the benefits, risks and costs associated with states striving at one extreme for technological independence, or being heavily dependent on foreign technology transfers and assistance at the other concerning energy-related fields? Similarly, what are the technological costs, risks and benefits associated with different forms of energy transportation infrastructure, for example, gas pipelines or LNG?
• Environmental: primarily relating to the pollution and ecological effects of international energy transactions (including from physical transportation of materials), the subsequent domestic use of the energy resources consumed, and how this impacts on the climate change and other environmental policies of states.
Trade-offs across the different types of transaction costs, risks and benefits are made all the time, an obvious example being how the economic or financial benefits derived from importing cheap carbon-intensive fuels like oil and coal, or using cheap but energy inefficient transportation methods, simultaneously pose environmental costs and risks. There may also be instances where states may be willing to pay high or ‘irrational’ economic costs as a strategic decision to secure long-term supply of energy resources. China's early forays into oil diplomacy through CNPC in Latin America and Central Asia during the late 1990s are an example of this.Footnote 50
Furthermore, the transaction mechanism choices of energy diplomacy actors may be constrained by limited energy supply options. For example, the Chinese government and China's NOCs often choose to work with pariah African states (hence taking particularly political transaction risks) because many alternative energy source countries are already dominated by either host country NOCs or Western IOCs. Limited transaction mechanism choice also applies to countries that have developed a dependence on foreign pipelined oil and gas, each pipeline normally requiring lengthy and complex negotiations mainly between governments to finalize a contract that set out the agreed terms of supply quantity and consumption price rates. This is therefore a highly politicized transaction mechanism of international energy trade, unlike the international spot market for crude oil where a ‘pure market’ transaction mechanism prevails. Many East Asian states are engaging in foreign gas and oil pipeline projects out of supply security necessity, and therefore have no choice but to enter into inter-state contracts for this kind of imported energy. China, Japan and South Korea have competed intensely over the past two or three decades to secure pipeline links with Russia.Footnote 51 In 2010, the first full stage of the Eastern Siberia Pacific Ocean (ESPO) was completed, with its spur to Daqing in China becoming operational in September 2010 and its full extension to Nakhodka serving Japan planned for completion by 2015.Footnote 52 To meet China's burgeoning energy demand, it has established an oil pipeline with Kazakhstan and a gas pipeline with Turkmenistan that transits through Uzbekistan and Kazakhstan to connect with the Chinese gas pipeline network.Footnote 53 Meanwhile, in Southeast Asia, the Trans-ASEAN Gas Pipeline project has endeavoured to link up different national pipeline systems in the region but has been confronted with problems of an institutional-legal (regulating cross-border gas flows and trade), regulatory (transit rights through third world countries, tax and tariff issues) and technical (harmonizing design parameters and construction standards, co-ordinating operations) nature.Footnote 54
Conclusion
Energy diplomacy will become an increasingly salient feature of the foreign policy and international relations of East Asian states for the foreseeable future. This paper has presented a framework of energy diplomacy analysis based on four prime elements: (i) empirical perspectives and generic task-oriented terms; (ii) agential influences on the formation and organization of energy diplomacy practice; (iii) the energy–development nexus; (iv) ‘transaction mechanisms’ that facilitate all forms of energy diplomacy interactions and exchanges arising between relevant actors. Applying this framework to East Asia, the following main concluding arguments are made.
Firstly, due to the region's developmental statist and socialist market traditions of economic development there has been a predilection for mercantilist approaches to energy diplomacy generally, whereby states seek to extend control insofar as possible over foreign sources of energy supply through particular transaction mechanisms. The prevalence of state-owned national oil companies in the region is a key example, as has been the comparative preference for ‘political’ transaction mechanisms (inter-state contracts) to secure energy resources. This approach may to some extent be explained by long-standing acute energy import dependencies experienced by important East Asian economies—Japan, South Korea and Taiwan—where pure reliance on stable international energy markets posed too great a national security risk. The close entwining of energy security, economic development and national security means that such thinking still largely prevails in the region, and national security agencies invariably have considerable influence in the strategizing and decision-making apparatus of East Asian states’ energy diplomacy. However, East Asia's more liberal countries have for some time moved towards more market-based transaction mechanisms when pursuing energy security interests in the international system. Nevertheless, they are more likely to prescribe to market institutionalist rather than pure Walrasian market approaches, thus leaving scope to ‘correct’ international energy market failure. Current ideas being discussed under the APT framework to develop a regional oil stockpiling system is a case in point.
Secondly, and partly restating earlier points made in this conclusion, energy diplomacy will not only become a more salient feature of East Asian states’ foreign policy in the future but will also increasingly pervade other forms of diplomacy, such as trade, environment and development assistance. The main effects of this are two-fold. As a consequence of such issue-linkage, an expanding range of multiple agencies now are engaged in energy diplomacy strategizing and decision-making than was previously the case, the inclusion of state environmental agencies being especially noteworthy as energy diplomacy and climate change diplomacy increasingly conflate. Additionally, this process will draw in more contesting stakeholder influences shaping the formation of energy diplomacy, thus making the three-level game dynamic of agential influence increasingly complex, although as was discussed this will depend on state polity-type.
Thirdly, we may expect East Asian states to afford greater priority to multilateral energy co-operation. Notwithstanding the resilience of national security interests in the calculus of energy diplomacy strategizing, these states have becoming increasingly engaged in a growing number of regional and global energy-related forums and organizations. At this stage, the level of commitment amongst East Asian countries to jointly manage regional or wider international energy security interdependencies is still low, yet this is likely to gradually increase over time as these interdependent challenges become more critical. This could in due course help to ease the mercantilist impulses of East Asian states of simply serving national interests. Yet this is not an assured outcome given the primacy still afforded to national energy security thinking in the region. Participation in the new multilateral energy co-operation also involves expanding representation from business and civil society, as the recently inaugurated Pacific Energy Summits demonstrate.
Fourthly, East Asia's growing reliance on sourcing energy fuels from outside the region will make it more dependent on stable international energy markets, another factor that may confer greater priority to multilateral energy co-operation. As was discussed, these markets are becoming increasingly internationalized and globalized, oil already being at an advanced stage in this respect with LNG, coal and certain renewable sectors (such as wind and solar) following this trend in terms of equipment and technology. The continuation of this process will broaden the options of East Asian states for developing new international energy partnerships that in turn will be a vital element of their expanding energy diplomacy agendas generally.
