Lecture II: An Alternative Conceptualisation of Energy Policy Formation

1
Lecture II An Alternative Conceptualisation of
Energy Policy Formation

• David Dusseault
• Eurasia Energy Group
• Aleksanteri Institute

2
Introduction

• Energy issue is complicated by the numerous
  factors that influence the sectoral decision
  making process
• Existing approaches focus on specific aspects in
  the sector, but are limited in scope and
  explanatory power and
• There is a niche to be filled in energy research.

3
Background

• Provides a new conceptualisation of the formation
  of energy policy
• Applies it to the case of Russia and its external
  energy relations and
• No parallel international conceptualisations or
  theoretical efforts.

4
Research Traditions
5
Structuration Paradigm
6
Scientific Approach

• Apply social structurationist theory to the study
  of energy policy and
• Define what factors contribute to the formulation
  of energy policy, how they interact in specific
  cases, and why and how specific energy policy
  outcomes emerge.

7
Research Question Hypothesis

• How is Russias energy policy structured and what
  is its external impact?
• The relationship between the balance of enabling
  and constraining factors and the ultimate energy
  resource maximisation strategy is a direct,
  negative correlation
• The lower the level of structured constraints,
  the more likely it is that an actor will be able
  to maximise the benefits enabled by its energy
  resources over time
• The higher level of constraints, the more likely
  it is that an actor will not maximise its
  benefits in principle enabled by its energy
  resources and therefore becomes more dependent
  upon other actors for its energy policy.

8
Independent Variables Enabling and Constraining
Conditions

• Physical Constraints uneven resource
  distribution, finiteness of natural resources,
  existence of energy sector infrastructure,
  geography, climate, accessibility of resources
• Informational Constraints elites do not possess
  full information regarding their resources or how
  to fully maximise their benefits accrued from
  natural resource wealth
• Financial Constraints finite financial resources
  for investment and resource exploitation,
  commodity prices, market size and
• Institutional Constraints ability of state
  institutions to flexibly determine the rules of
  the game over time without marginalising actors
  or seeking rent.

9
Methodology

• The generic hypothesis will be tested and
  specified in the context of a hypothesis
  generating case study format.
• Three interrelated case studies
• 1) Russias energy policy decision-making and the
  domestic sources for Russian energy policy
• 2) Russias northwest interface with the EU and
• 3) Russias Asian interface in the Far East.

10
Noto-Bene

• Conditions change
• Time is a factor in that hydrocarbon resources
  are finite
• Changes in demand, reserve stocks, prices can
  directly influence actor interests agency
  therefore
• What was once at equilibrium can become
  securitised under new conditions.

11
Application Russia the EU

• Physical Maturing West Siberian fields ageing
  pipeline and other infrastructure high costs for
  developing new smaller fields and transportation
  in difficult climatic conditions in the extreme
  north high dependence on transit states
• Financial High costs of new fields development
  ill developed financial sector in the country,
  could lead to high dependence on international
  financial consortia somewhat unclear investment
  climate for attracting FDI
• Informational Lack of domestic know-how on
  exploiting the new fields lack of clarity
  regarding relevant negotiation partners (EU
  Commission and individual member states) lack of
  access to all information regarding concerns and
  developments within the EU
• Institutional Market conditions and competition
  laws in Europe to an extent preventing
  monopolistic behaviour pressures for joining
  multilateral frameworks like the ECT that are not
  fully suited to the perceived Russian conditions.

12
General Conditions of EU Russian Energy Relations

• Mismatch between EU Russian Strategies
  Liberalisation vs. Monopolisation
• Each actor suffers from Institutional
  peculiarities
• EU Power is diffuse preferences and policy
  signals come from various levels of the
  institutional hierarchy.
• Russia Centralising yet institutionally feeble
  highly personalised political control over
  strategic economic resources.
• Result is Ironic self-reinforcing, diametrically
  opposed strategic calculi in energy relationship
• Russia seeks to maximise competitive advantage
  downstream while EU continues to push for
  domestic and Russian market liberalisation.

13
Problems with NEGP

• EU is not a unified energy space in terms of
  demand or supply
• Sources to fill the line
• Costs of the project and
• Reliance on long term contracts delivery of gas
  regardless of demand.

14
How did this happen?

• NEGP is the result of Russias weakness vis-à-vis
  transit countries (reduction 22 percent)
• Desire to operate bi-laterally versus
  multi-laterally (suits institutionally)
• Weakness of EU institutions
• Underdetermined capacity to organise member state
  strategic preferences and
• Lack of Institutional voice what is energy
  security?

15
Results

• Incentives exist for cynical, short-term
  approaches outweigh the benefits of a long-term
  constructive, consensus based institutional
  solution to the continents energy needs.

16
Conclusions Implications for the EU Russia

• Expectations Who determines EU energy security?
  Russian energy policy?
• Anticipation Will Russian energy majors be able
  to deliver? Will the EU be a cooperative partner?
• Contingency What can EU member states Russia
  do under changing conditions?

17
Project details

• Research questions How is the Russian energy
  sector structured or What are the external
  effects of Russian energy policy?
• Test the structuration hypothesis
• Data start with course materials, lecture
  presentations
• Discuss your findings and
• Academic format/ maximum ten pages