Michael Sander
Conceptual Proposals for Measuring the
Impact of International Regimes on Energy Security
Abstract
The paper proposes a simple indicator to assess the effect of international regimes on energy security. Existing indicators focus mainly on state-level factors, excluding international influences. International relation scholars on the other
hand see a clear connection between international regimes and stable energy relations. International regimes stabilize
energy relations by providing frameworks for negotiations, defining, controlling and sanctioning compliance and allowing
the actors to engage in package deals. The researcher needs to include these factors in a complete assessment of political energy security risks. As first step, the paper uses the effectiveness of control mechanisms as basis for such consideration. The simplest indicator is the share of a county’s energy imports covered by a certain regime. The paper applies
the Oslo-Potsdam-Solution to account for regime effectiveness. The resulting calculation uses the number of unresolved
conflicts under current conditions, compared to the overall number of conflicts and to the ideal solution, where all conflicts are resolved. The researcher can use the result either as an independent indicator or as a coefficient in existing indicators. The paper finally suggests several directions for further research.
Erschienen in Energy Policy (2013) DOI 10.1016/j.enpol.2013.07.127
NOTICE: this is the author's version of a work that was accepted for publication in Energy Policy. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other
quality control mechanisms may not be reflected in this document. Changes may have been made to this work
since it was submitted for publication. A definitive version was subsequently published in Energy Policy, (2013)
DOI 10.1016/j.enpol.2013.07.127
Working Paper 2013/06
Universität Siegen
FoKoS
Hagener Str. 139
57072 Siegen
www.uni-siegen.de/fokos
Conceptual Proposals for Measuring
the Impact of International Regimes
on Energy Security
Michael Sander1
1. Introduction: Why to Assess Regime Effectiveness
Energy security is a complex and multi-faceted phenomenon. Different ways of thinking
about energy security lead to different definitions which in turn consider different aspects
out of their specific focus. These definitions encompass topics as diverse as for example
climate change, social development or piracy and terrorism (see Sovacool 2011: 3-6).
This paper aims to improve our understanding of the crucial international governance dimension of energy security by proposing some venues for its systematic consideration in
political risk assessments. In this context, it understands energy security narrowly as security of energy supply. Largely following Winzer's recommendation (Winzer 2012), it refers to security of energy supply as continuos supply of energy commodities at stable
prices. This includes the price dimension despite warnings against such “subjective severity filters” (Winzer 2012) in order to capture the whole range of regime effects on security
of energy supply. Due to its focus on political actors and political regulation of energy
systems, this paper's situates its definition of “energy security” within a political securityoriented perspective on energy or what Jessica Jewell and Aleh Cherp called the “sovereignty mind-set” (Cherp & Jewell 2011a: 332, Cherp & Jewell 2011 b: 206).
1
I want to thank the two anonymous reviewers for Energy Policy, especially reviewer 1, as
well as Annika Fischer and Wolfgang Fischer from the Institute for Systems Analysis and Technology Evaluation at Forschungszentrum Jülich (IEK-STE) for their feedback on earlier versions of this
paper. I also want to thank IEK-STE and the Research Center Siegen for their support.
On important school within this mind-set regards political security of energy supply as a
zero-sum game for control over scarce energy resource with the potential to escalate up
to full-scaled military conflicts. However, this article situates itself within another important
substream of political energy security research that views international energy relations as
positive-sum coordination games between actors with different but compatible preferences. See also (Finon & Locatelli 2008) and (Correlje & van der Linde 2006) for a closer
assessment of these two schools, which more or less resemble what Ciuta describes as
the “logic of war” and the “logic of subsistence” (Ciuta 2010: 129-134).
Several indicators exist to measure the different dimensions of energy security (see for
example Winzer, 2012, Kruyt et al., 2011, Kruyt et al., 2009,) for overviews). Only few of
them explicitly consider political factors. None of these cover explicitly cross-border factors like international regimes or transnational cooperation.
Some indicators try to determine political risks through conclusion by analogy to other
more or less connected policy areas. Frondel et al. use the OECD risk classification to
account for the probability of politically motivated energy supply disruptions (Frondel and
Schmidt, 2008, Frondel and Schmidt, 2009, Frondel, 2009). Löschel et al. also refer to the
OECD classification, but use it only as a proxy to illustrate an ex-post indicator for energy
security (Löschel et al., 2010). The OECD developed its system to account for the default
risk of external credits (OECD, 2011).
Jansen et al. take a more general approach in accounting for overall political stability in an energy exporting country, using the Human Development Index as a
base. The HDI is calculated on the basis of four indicators that measure health,
education and living standard. The authors assume that a higher HDI score implies higher political stability and hence a lower risk for a disruption of supplies
(Jansen et al., 2004). The HDI excludes factors as the internal structure of (energy) markets or the political process in energy. Hence neither the resource control
of certain actors nor the adaptability of exporting countries in case of a crisis is
measured. This might result in an underestimation of existing risks as some autocratic countries with a (semi-)monopolised market structure, most prominently
Russia, figure comparatively high on the HDI. For example, Algeria (0,713; rank
93.) figures lower than Russia (0,788; rank 55.), which would make the latter the
more secure energy trading partner according to the indicator (UNDP 2013). Actually, from the two countries it was only Russia that repeatedly caused disruptions
in EU energy supply. Hence, the somewhat paradox order of the two countries
points to the general danger of excluding national and international political factors
or market structure from the assessment of international (energy) risks.
The HDI also excludes the risk of international conflicts with participation of the member
state. This is another source for possible flaws. Israel, for example, figures very highly on
the HDI (0.9; rank 16) (UNDP 2013) and should therefore be regarded as stable and secure energy supplier. This assessment of Israel’s – hypothetical – role as energy supplier
ignores the highly unstable and conflict-prone regional environment of the Middle East.
The International Country Risk Guide (ICGR) of the Political Risk Services Group (PRS)2
measures stability along political, economic and financial dimensions. The editors of the
ICRG value the different indicators for political stability following a subjective assessment
of several pre-set questions. These cover inter alia government stability, investment climate, democratic accountability and the risk of internal and external conflicts (The PRS
Group, 2011). Both the earlier version of the IEA indicator (Blyth & Lefevre, 2004) and
Eshita Gupta (Gupta, 2008) apply the ICRG to account for the political stability of energy
exporting countries. The IEA later replaces the ICRG with the World Wide Governance
Indicators of the World Bank (Lefevre, 2009, International Energy Agency, 2007), which is
also used by Helen Cabalu (Cabalu, 2010). Most recently, the IEA published a model to
2
The PRS Group is a private consultancy in New York that specializes in the assessment of
political risks. The ICRG is one of their main products and is available under
http://www.prsgroup.com/ICRG.aspx.
assess short-term energy security (MOSES) that classifies states according to the external and internal risks they face and their potential external and internal resilience against
the effects of realised risks (Jewell 2011). MOSES refers to the OECD political stability
indicators to assess political risks from supplying states, which it includes as a secondary
assessment item for crude oil and natural gas (Jewell 2011: 11)3.
The WGI tries to capture perceptions of six different indicators, namely voice and accountability, political stability and the absence of violence, government effectiveness, regulatory quality, rule of law and control of corruption. The authors gather data on these indicators from surveys by firms, country analysts, nongovernmental organisations and
commercial business information providers, including the PRS Group (Kaufmann et al.,
2010). The WGI therefore covers fewer aspects than the ICRG and only considers secondary sources. It does however integrate a greater amount of information including the
ICRG and could hence be considered the more effective instrument to assess political
instability. Kruyt et al. (2009) note that for both Jansen et al. (2004) and the IEA indicator,
the relation between political and market-based indicators is arbitrary. They see the results of Gupta to be more robust due to her application of Principle Component Analysis
(Kruyt et al., 2011).
All these indicators locate political risks in certain properties of the supplying state, most
generally in its stability. Hence, important influences on energy security remain excluded,
which could lead to flawed assessments in some cases. Even thorough, substantial and
exhaustive syztematizations of the whole energy security complex only mention the national and the global level of geographical thread extension (e.g. Winzer 2012).
Due to this situation, existing instruments exclude crucial risks and influences on energy
security, leading to potentially flawed assessments. This might contribute the general lack
of confidence of policy makers in complex indicators, partly due to the neglect of more
3
Jewell also lists political stability of suppliers as risk factor for coal imports, but does not
use it in her assessment due to lack of historical evidence for its relevance (Jewell 2011: 29).
qualitative factors (Cherp & Jewell 2011b: 209). It also obstructs the consideration of essentially international and transnational factors in scenario-based energy security assessment of possible future development paths (see for example Jewell (2012: 2) on the
preferability of quantitative indicators for scenario formulation). Existing indicators also fail
to offer quantitative data for statistical research on energy governance. Hence, research
on energy security falls back behind comparative research programs, especially on environmental governance.
Regime effectiveness has a great influence on the conduct of international energy relations and is therefore a necessary element for any comprehensive assessment of security
of supply (see for example Dannreuther (2011a)). It also allows shifting the level of analysis in energy security from the currently dominating state centred perspective to the international level. That should allow for more appropriate risk assessments, since political
security of energy supply is an inherently cross-border4 concept – trade behaviour of or in
one state affects the security of another – and many important influences – e.g. transnational business cooperation, general relations between these states and transit states and
indeed regimes – are situated on the transnational and international level. To assess
cross-border factors is therefore not only important in order to allow more comprehensive
policy oriented research. It is also an important step in analysing and comparing the effects of different regimes on energy security (see for example Young, 2001), which is currently one of the most important and (still) underdeveloped topics in energy research
(Florini & Sovacool, 2011).
From an IR perspective, the state-centred perspective of current indicators largely corresponds to the neo-realist paradigm that dominates – often implicitly – many studies on
international energy security (see Dannreuther, 2011b). The systematic assessment of
4
From here on, I use the term „cross-border“ to refer to both international and transnational
relations simultaneously.
regime effectiveness would allow considering factors derived from the liberal paradigm of
international relations and hence widening our conceptual perspective on international
energy policy. Liberal scholars agree with neo-realists that states are important actors but
also see an important role for transnational relations and international regimes, which
might overcome coordination problems and enable lasting cooperation. Concerning energy, liberal authors argue for strengthening the role of market forces and international law
to govern international energy relations in a cooperative way. They also call for improved
consumer-producer cooperation in order to maximise the absolute gain of a stable trade
relation (Typical representatives for this school are (Goldthau & Witte, 2009) and Wenger,
Orttung & Perovic 2009). Currently, these factors are mostly disregarded in quantitative
energy security assessments.
Therefore, this paper describes possible venues for the systematic incorporation of international regime effectiveness in energy security evaluations by proposing some assessment concepts and potential roads for their future development. In doing so it contributes
to the research agenda on energy security by providing a methodological approach to
capture systematically the effects of international regimes (also see (Cherp & Jewell
2011b: 211)). The rest of the paper is set out as follows: In section 2, the influence of
international regimes on energy security is described. Section 3 proposes some ideas and
preliminary test on potential quantification concepts. Section 4 concludes the paper and
suggests some directions for further research.
2. Regimes and Energy Security: What to Assess
2.1 General Effects of International Energy Regimes
According to the seminal definition by Krasner, international regimes are “…sets of implicit
or explicit principles, norms, rules and decision making procedures, around which actors’
expectations converge in a given area of international relations” (Krasner, 1982).5
Research on energy security considered international regimes and transnational
interdependencies early on. Most notably, Robert O. Keohane developed his new
institutionalism on an analysis of, among others, the global regime of oil (Keohane
1984).
Nevertheless, political science research on energy security became
dominated by an – often implicit – neo-realist paradigm that focused on the relative
(economic) power of national states and geo-political conflicts rather than
transnational business relations or international rule-making. Meanwhile, even an
essentially neo-realist scholar as Michael T. Klare (Dannreuther 2011b)
acknowledged the impact of regimes and institutions, when they call for “market
mechanisms” or “multilateral agreements” as instruments to reduce the level of
conflict in international energy systems (see for example (Klare 2001)).
Only recently, scholars of energy security revived systematic analysis of
international regimes, starting from a fundamental critique of the predominant neorealist perspective. Most studies concluded that current energy systems are
insufficient in addressing the challenges to global energy systems, given the
urgency and complexity of the transformation required (see for example Cherp et
5
In a report to the EU's Polinares project on international resource security, Roland
Dannreuther applies the term “regime” in a broader sense than this article, referring to the general
structure of global political-economic relations. In this view, international regimes as defined by
Krasner serve as intervening variables between the physical and economic characteristics of an
energy carrier and these overarching structures (Dannreuther, 2011). However, in this article I only
consider explicit regimes as defined by Krasner.
al., 2011, Goldthau and Witte, 2009, Goldthau and Sovacool, 2012, Florini and
Sovacool, 2011). Different authors propose both a stronger role for governance
clubs as the G8 or the G20 (Lesage et al. 2010) and the establishment of an
International Energy Stability Board (Victor and Yueh, 2010).
While these studies shared a global perspective on energy regimes, other looked
at the motives and policies of individual states. One study concluded that both oil
and gas importers and exporters base their decision to join an international
organisation in energy on the membership of (other) important exporters (Baccini
et al. 2011). This result concurred with the finding that transnational integration
was stronger between different upstream companies than between upstream and
downstream firms (de Graaf 2011). Another study interpreted the development of
the regime complex in energy as the result of growing dissatisfaction of powerful
regime members with an insufficient regime performance (Colgan et al 2011). The
authors assessed this performance in form of (oil) prices. But it is possible to
extent their central point to volume disruptions. One member of this research
group later traced the origins of IRENA to the dissatisfaction of domestic interest
groups, who engaged in institutional hedging strategies against the dominance of
conventional energy companies in the IEA (van de Graaf 2013).
An analogy to the research on international environmental regimes potentially
allows drawing further insights on the effects of regimes. According to several
studies, the centrality of a state in the network of international environmental
regimes increases both the likeliness of its entry into further regimes and its own
sustainability record (Ward, 2006, von Stein, 2008). It is plausible to assume that
the same mechanisms apply to the energy sector.
On a regional level, several studies applied the theory of external governance to
analyse the EU’s attempts to export its energy market rules. They concluded that a
combination of conditionality and active involvement of the Commission is most
effective in establishing international rules for energy. They also agreed that the
existence of a strong external actor with the capability to influence actions of
regime members – specifically Russia – severely impedes the effectiveness of
external rule transfer (Hofer, 2007, Hofer 2008, Dimitrova and Dragneva 2009;
also see Oliva and Sorbello 2012).
2.2 Dispute Settlement by International Energy Regimes
International regimes facilitate cooperation by providing a framework for negotiations, controlling compliance and sanctioning non-compliance and by allowing for package deals
between different areas of cooperation (Keohane 1984). Of these instruments, formal controlling and sanctioning mechanisms are most easily evaluated by analysing the respective provisions in the governing documents of international regimes. International arbitration is the most important instrument for dispute resolution in energy (Martin 2011). Therefore, at this point, this paper proposes to use expressions of opportunities for and effectiveness of international arbitration as values for assessing different energy regimes.
The proposed assessment procedures concern primarily regimes that govern a relationship between energy exporters and importers. They consider important regional and sectoral organisations as IEA and OPEC only insofar as they govern trade relations. But
since this is not their main task – their core logic is one of “common defence” rather than
“common security” - they are not in the focus of the proposed procedures (see for example (Florini and Sovacool, 2011) and (Victor and Yueh, 2010) for an overview over the
structural cleavages between regional and sectoral energy organisations in the current
energy governance system).
Global multilateral regimes include the WTO and the Energy Charter Treaty. The WTO
provides the parties to a conflict with a clearly institutionalised and binding sanction
mechanism, namely the Dispute Settlement Mechanism laid down in Art. 23 of GATS and
in the Dispute Settlement Understanding, annexed to GATT 1994 (World Trade Organization, 1994b, World Trade Organization, 1994a).
The Energy Charter Treaty differentiates between conflicts between an investor and a
member state on the one hand and between two member states on the other. Contracting
parties that fail to resolve their conflict diplomatically may submit the matter to an ad hoc
tribunal, set up in The Hague and governed by the UNCITRAL rules. Investors on the other hand may choose to submit the conflict to either the International Centre for Settlement
of Investment Disputes, to the Arbitration Institute of the Stockholm Chamber of Commerce or to an ad-hoc committee under the UNCITRAL rules ((Energy Charter Secretariat, 2004) also see (Konoplyanik and Wälde, 2006)). Hence both the WTO and the ECT
offer mechanisms to resolve disputes and sanction non-compliance in fields that are important for international energy relations, namely trade, transit and investment.
Regional agreements that include dispute settlement provisions are the main instrument
of the EU's external energy diplomacy (Lavenex 2009). Most prominently, both the European Economic Area and the Energy Community oblige their members to implement EU
law into their national legislation. Both agreements also give the competence to control
this implementation and sanction non-compliance to the European Court of Justice,
whose decisions are binding for the parties (European Union, 2011, Energy Community
Secretariat 2011). The EU's extra-regional agreements regularly include dispute settlement agreements at least for state-state disputes. This extension of EU rules beyond the
Union's borders is most effective in the preparatory stages of an agreement and in absence of competing governance providers (Dimitrovna & Dragneva 2009). However, even
the formal expansion of these rules and especially of the EUCJ's decision competences
stabilise international energy relations and reduce the risk of non-cooperative behaviour
(Lavenex 2011, Lavenex 2009).
Bilateral Investment Treaties (BITs) are the most important agreements for transnational
investments and the investment provisions of the ECT draw strongly on modern BIT variants (Konoplyanik and Wälde, 2006). Most importantly, BITs regularly include provisions
for international settlement both for state-state disputes and investor-state disputes. Empirical studies found that any pending arbitration reduces FDI inflow by nearly 86 billion
US$ and any decision against a government or any settlement between the parties by 300
to 350 billion US$ (for this paragraph see Allee and Peinhardt, 2011).
International and transnational dispute settlement mechanisms become increasingly pervasive on the global regional and bilateral level. They also cover more and more aspects
of international and transnational energy relations and can credibly threat sanctions
against non-compliance. Due to their growing empirical importance, comprehensive energy security assessments need to include these regimes.
3. Conceptual Ideas to Assess Energy Regime Effectiveness
Assessing energy security requires prior clarification of the spatial and substantial boundaries of the system under consideration, the respective mind-set concerning its future development and the subjective perspectives of the researcher/ policy maker, including the
priority of issues (Cherp and Jewell, 2011).
This paper understands energy security narrowly as security of supply, defined as the
absence of political and economic risks to energy resource imports. Environmental and
social dimensions of energy security are excluded. The proposed assessment procedures
refer to a given country or a group of countries and their relations to energy suppliers as
their geographical boundary, including the countries' relations or the sum of their relations
to energy suppliers. The substantial boundary is the import portfolio of a given energy
carrier. The rationale of the following discussion falls into what Aleh Cherp and Jessica
Jewell named the “sovereignty” mind-set of the future, since it sees the major vulnerabilities of the energy system arise from the collusion of the “interests, intentions” and actions
of social actors. It differs slightly from the account of Cherp and Jewell by seeing the key
threat not in the rise of “malevolent powers” (Cherp and Jewell, 2011) but in inefficiently
solved dilemmas of common interests.
One assessment option is to consider the share of a country’s imports of a given energy
source or carrier that is governed by a certain regime. If one assumes that any regime that
allows sanctioning non-cooperation has a certain stabilizing effect on international energy
relations, then an import portfolio with a higher share of institutionalized trade relations
should ceteris paribus be more stable than a portfolio with a lower share.
This paper offers two ideas on how to assess systematically energy regime
effectiveness. The first proposal is the Oslo-Potsdam solution (see (Hovi et al.,
2003a) for a description of this solution and Young, 2003, Hovi et al, 2003b) for a
discussion). This solution expresses effectiveness in the term
AP - NR
CO - NR
(1)
Where AP is the actual performance of a regime, NR is the hypothetical situation without
the regime, and CO is the collective optimum, i.e. the ideal solution for the problem the
regime addresses. To use the Oslo-Potsdam solution (OPS), one has to establish two
counterfactuals, namely NR and CO. The authors of the solution propose different approaches to this task, including expert interviews, simulations or simply referring to the
status-quo ante before the regime was established (Hovi et al., 2003a). This paper sees a
combination of expert interviews and simulation as the best option to establish counterfactuals for qualitative factors and evaluating the development of regime effectiveness over a
certain period. However, the time and resource requirements to establish and apply such
a research tool are considerable. Using the ratio of unresolved to resolved conflicts with
the sum establishing the value for NR might offer a – not unproblematic – preliminary solution.
Another question concerns the selection of values for the variables. Concerning volume
risks, either the number of conflicts or the number of realized disruption risks are optional
values for assessing regimes. The number of resolved cases before a formal international
dispute settlement body could serve as a dummy variable for the number of avoided conflicts. The data is imperfect, not only because it omits any conflicts that were resolved by
negotiations or in another forum, but also because it ignores the overall reduced level of
conflict that results from the general functions of regimes as facilitating communication or
increasing generalised trust. Therefore, this formula can only serve as a preliminary instrument to assess effectiveness until a comprehensive counterfactual is established by
expert interviews and simulation. Also, there is currently no database that includes all energy-related conflicts for a given relation. Therefore, the researcher has to gather the necessary data from several sources.
The OPS considers actual regime output to measure effectiveness. Alternatively, an attribute-based approach focuses on the process dimension by comparing actual regime
structures to an ideal type most-effective regime.
This paper proposes to use the data protocol of the International Regimes Data Base
(IRDB) to quantify energy regime effectiveness (Breitmeier et al. 1996). Out of the IRDB's
130 factors, it suggests 13 that are most applicable to quantify formal regime structures.
These include the explicit or tacit nature of a regime, the binding or non-binding effect of
its rules, the precision of its rules, its depth, the (non-)existence of an independent secretariat, the types of decision it makes, the rules by which it decides and the bodies that
decide formally, the actual involvement of these bodies in decision-making, the existence
of external bodies, reporting procedures and review processes concerning regime implementation and the question, if the formally agreed bodies are actually in operation.
The data protocol formulates specific questions to assess the characteristics of each factor. The IRDB then assigns distinct numbers to these characteristics, but uses them only
as coding instruments. To use them as quantified expressions of regime effectiveness is
therefore somewhat of a conceptual stretch. While the specificity of the questions and the
distinct assignment of numbers and characteristics justify this preliminary approach, some
modifications are necessary to utilise the IRDB-based data for the proposed assessment
procedure. Where the data protocol assigns higher values to a more effective regime
characteristic than to a less effective, I reversed this order. This was necessary to align
the codings with the general orientation of most assessment instruments for political energy security risks, where higher values reflect a higher risk rather than higher security.
In some cases the data protocol allowed mentioning more than one characteristic for a
single factor – for example in the case of types of decisions or formal decision making
bodies. Here, I propose calculating the sum of applicable characteristics and subtract it
from the highest possible value plus one. The results varied between one and the highest
possible value with one reflecting the most effective regime structure. I also established
categories in order to assess the existence and type of external bodies and divided the
factor “review process” into the two aspects “information gathering” and “assessment and
sanctioning”, leading to a final set of 14 factors. Table 1 gives an overview over these
modifications.
[Table 1 here]
The researcher could assess regime effectiveness either individually or use it as input to
more comprehensive analyses. By including both national and international risk factors.
the latter option is useful to assess the overall political risk in an energy relation.
Most authors (see for example Blyth and Lefevre, 2004, Lefevre, 2009, Gupta, 2008, Löschel et al., 2010) use a modified Hirschman-Herfindhal index to assess political risk factors. In the formulation of Nicolas Lefevre, this index runs:
ESMCpol= Ʃi (ri*sij²)6
(2)
Here, r is the political risk-rating of an exporting country and s is the share of an energy
carrier in the importing country’s primary energy consumption. Including a regime effectiveness coefficient into this equation offers a straightforward way towards a comprehensive political risk assessment.
6
Andrew Stirling repeatedly suggested replacing the HHI with the mathematically stronger
Shannon-index (Stirling, 1998, Stirling, 2010) . The new formula would then read:
ESMCpol=Ʃ(ri*(sij*lnsij))
4. Two Preliminary Applicability Tests
I tested the basic feasibility of the proposed concepts including the availability of required
data by applying them to two rudimentary assessments. However, the following illustrations only represent very rough and preliminary applicability tests for the concepts.
Firstly, I applied the OPS concept to Germany's gas import portfolio in 2009. I chose this
year, because it was the last time when all of the country's gas imports were covered by
an international regime with formal dispute settlement provisions. Using it as point of reference allowed me to apply the indicator's OPS variant in a comprehensive assessment of
a complete import mix. The regimes in question were the Energy Charter Treaty that governed trade with Russia and the EU energy regime that applied directly to imports from
the Netherlands and via the EEA agreement to imports from Norway.
For the ECT conflict data, I referred to the list of arbitration cases on the homepage of the
Energy Charter Treaty Organisation and the Annual reports of the European Court of Justice and the EU's Court of First Instance.These courts cover not only all energy-related
aspects of EU law but also control the implementation of EU law within the European
Economic Area (EEA) that includes all EU member states as well as the EFTA members
Island, Norway and Lichtenstein. Together, these regimes governed all gas imports of
Germany until October 18 2009 when Russia decided to end her provisional application of
the Energy Charter Treaty. To calculate the OPS concept for the Energy Charter Treaty, I
excluded all cases that began later than 2009, since it is to early to judge their results.
Nine of the remaining 25 cases are still unresolved either due to revision or annulment
procedures or due to lack of a decision on the original claim. All cases in the latter group
are pending for more then five years, which lend additional support to a negative judgement of the respective arbitration procedures. 13 of the 16 successfully resolved cases
ended with an award. Settlement agreements between the parties concluded the other
three cases. I also considered the three disruptions of Russian gas supplies as failures of
the ECT, leading to an absolute number of 12 unresolved conflicts. Calculating with these
numbers, OPS-based regime effectiveness for the ECT reached a normalised value of
0.43. This lies close to the IRDB-based effectiveness value for the ECT of 0.45.
I referred to the annual statistics of the European Court of Justice and the Court of First
Instance / General Court to assess the EU's energy regime effectiveness. These documents included data on new, pending and resolved cases as well as the average time
required to resolve a case. Using this data posed a delineation problem, since the EU
courts resolve all cases before them in one way or the other. But assigning a perfect effectiveness value to the EU regime would probably overstate the case. Therefore, I used
the sum of the average annual numbers of pending cases as proxy value for NR and the
sum of the average annual numbers of resolved cases for AP. For both variables, I used
the sum of the respective values for the European Court of Justice and the Court of First
Instance. I also used the general case data, due to the insufficiently low numbers of energy-related cases. Calculating on this basis led to a comparatively high normalised regime
effectiveness of 0.44.
I tested the concept's usability as input in comprehensive assessments at the example of
Lefèvre's ESPAI, which measures the physical availability risk component of resource
concentration as the share of primary energy consumption that is covered by pipelinebound gas imports (Lefevre 2010: 1640). Referring to the data of the German Ministry for
Economic Affairs and Technology (BMWI 2013), I calculated Germany's 2009 ESPAI to
be approximately 26 or 0.26 normalised. Naturally, this very low value reflects the overall
share of gas in Germany's primary energy consumptions. Using the share of gas imports
instead – all direct German imports are by pipeline – leads to a considerably higher modified ESPAI of 87. This might better capture some qualitative aspects of security of supply,
e.g. the importance of gas in providing medium and peak load in Germanys power sector.
Combining these results with the average of the two regime effectiveness values of 0.435,
led to modified risk values of 11.3 or 37.8 respectively.
Naturally, this result serves merely illustrative purpose and the outcomes for the ECT and
the EU regime require substantially different interpretations: In the first case, ineffective-
ness refers to actual failure to resolve a dispute. In the second case it merely points to
difficulties and obstacles in the proceeding. Therefore, the illustration proved the basic
applicability of the OPS concept to measure energy regime effectiveness. Nevertheless,
establishing appropriate and sufficient data for an actual application requires considerably
more work.
Secondly, I tested the IRDB-based concept by calculating the energy security risks for the
natural gas imports of the EU in 2011 – the last year for which EU data is available7. Different regimes govern each of the Union's gas imports from Norway, Russia, Algeria, Nigeria, Qatar and other states. I used the IRDB questionnaire to quantify the characteristics
of these regimes. If more than one regime governed an import relation, I analysed the
strongest regime. Table 2 gives the results of this process. All information this step required was publicly available on the homepages of the responsible General Directorates,
the EU External Service and the organisations in question. Using this data allowed to assign rough numerical values to every regime's effectiveness. For a concentrated assessment, one might use either the average value itself or the normalised average.
[Tabel 2 here]
Again, I referred to Lefèvres indicators to test the concept's usability as input in more
comprehensive assessments. In this case, I used a modified version of ESMCpol. While
the indicator mainly aims to measure price risks for energy carriers on spot markets rather
than for pipeline bound gas imports, it also includes state-focused political criteria and
hence might serve as foundation for more comprehensive assessments. For this preliminary applicability test, I modified the ESMCpol concept in the following ways: Firstly, used
overall gas supply rather than primary energy consumption as point of reference. While
gas is generally more substitutable than oil, it nevertheless serves some specific purpose,
7
The BP Statistical Review of 2013 offers more recent data, but does neither include an EUlevel assessment nor explicit numbers for each EU member state and but does include a category
“Other Europe and Eurasia” for trade movements in LNG (BP 2013: 218). This justifies the use of
the EU's slightly older but more complete and more specific data at least for a preliminary applicability illustration.
for example in providing German medium and peak load. This specificity is perhaps better
captured in an energy carrier-specific assessment rather than in an analysis of the overall
energy system. Secondly, I scaled the World Bank's political indicators to a range of 0-5
rather than 0-3 to simplify the scaling procedure. Hence, the highest possible value for the
modified ESMCpol is 500.000 rather than 300.000 as in the original version. After calculating the ESMCpol values, I added the regime effectiveness values from the IRDB-based
assessment as multipliers. Table 3 reports the resulting values from this procedure.
[Table 3 here]
Overall, the IRDB-based concept also proved to be generally feasible. Nevertheless, a
comprehensive assessment requires quantification of regime effectiveness for all energy
governance regimes based on the modified IRDB data protocol.
Naturally, these examples illustrate only that the two proposed assessment concepts are
generally applicable both for individual use and in comprehensive evaluations and that
required data is available. The obvious next steps is to develop the concepts further and
especially to test them against empirical cases and in comparison with other energy security assessment concepts.
5. Conclusion
Moving from this preliminary propositions to full-fledged assessment concepts requires
more and extensive research. The first step should establish the data base required. This
is more easy in the case of the IRDB-based concept. Here, the quantification instrument
exists – albeit in form of a coding system – and primary data is easily available in the public domain, namely in the formal treaties and agreements that set up the regimes in question. Hence, in order to begin with developing and testing specific indicators, the researcher only needs to translate this qualitative data for all energy regimes into quantified
codes using the modified IRDB code book. However, future research might – and proba-
bly will – point to the importance of more informal factors for procedural regime effectiveness.
The task is more difficult for the OPS-based concept. Here, the researcher needs to establish two plausible counterfactuals – for an ideal situation and for a situation without any
regime. If one uses the ratio of resolved to unresolved conflicts the task becomes seemingly more easy, with the ideal situation being zero unresolved conflict and the worst-case
situation being the sum of all conflicts. However, there are several problems with this way
of proceeding. Most importantly, as mentioned before, regimes are most effective when
they prevent conflicts to arise rather than resolve those they could not prevent. This requires another approach to quantifying effectiveness in order to capture the long-term and
structural regime effects. A combination of expert and actor interviews and simulation
based on the outcomes of these interviews seems to be the most appropriate way to do
so. One approach to the interviews might be a comprehensive Delphi survey (Dalkey,
1969) on the structure and effects of the institutional framework for a given import portfolio. Such a study can be conducted comparatively fast, if one applies the internet-based
real-time Delphi method (Gordon and Pease, 2006), The interviews would – hopefully –
offer insights on the structural regime effects. The simulations would combine these insights with general scientific knowledge on regime functions in order to establish the two
counterfactuals. Obviously, this is considerably more complex than the data requirements
for the IRDB-based concept and constitutes a veritable research agenda in its own right.
Therefore, this paper proposes to start with elaborating the IRDB-based concept.
If successful, this research process will develop indicators for the impact of
international regimes on trade stability within bilateral relationships. This indicator
will mainly focus on intended short-term volume disruptions that result from
economic or political disputes but might also cover international reactions to
unintended disruptions which could result, for example, from terrorism. It will also
be useful in assessing potential price risks that follow such disruptions. This new
instrument will contribute to other quantitative measurement systems, which it can
supplement either as distinct value in a disaggregated assessment or as input into
more complex aggregated formulae. It will contribute to comprehensive
assessments by considering for the first time the impact of international regimes
and will therefore significantly expand existing political risk assessments that focus
on national characteristics.
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