OK. Good afternoon. I feel like I'm coming to bat with three strikes already on the first one like for Kim I'm a relatively recent convert to an interest in energy security. It was probably the Iraq war. I had previously worked mainly on European security issues in that nothing having to do with energy and the Iraq War suggested there might be something more to it then he tried to kill my father. The second strike is that I don't know anything about Asia. I didn't get the spend three weeks in Japan this past summer and that I learned a lot especially thanks to the companionship of Dr would all but I'm relatively new to that area as well in the third strike is that my presentation is entirely bereft of illustrations. So that in combination with the lateness of the time in a nice lunch won't completely put you to sleep but nevertheless I'll try to hold your attention for a few minutes. So my I am tempted to respond to the theme of this third channel which is the prospects for regional energy cooperation and conflict and my brief as I understood it was to see what lessons. One could draw from the European experience of regional energy cooperation what less relevant lesson there might be for Asia. So get this right. So my presentation will unfold in four parts first I'd like to describe what Europe has and has not done in terms of energy cooperation we we may tend to assume that there is a lot more has been a lot more energy cooperation there than there really is that in fact energy cooperation in Europe has lagged behind other forms of cooperation perhaps somewhat surprisingly. But there has been a lot and a lot more than there has been in East Asia. I would argue. I'd like to talk about the causes or sources or determinants of that cooperation as well as the factors that have that have impeded cooperation and that remain and that still stand in the way of maximum optimal energy cooperation in Europe and then I'll try to draw a few lessons for Europe out of that. So overall a few things. The first one is that Europe has achieved significant cooperation. But it has taken decades much of the most important cooperation has only been achieved in the last several years of the last decade somewhat surprisingly. And there's still a ways to go at least in comparison with the degree of cooperation achieved in other areas like the single market or the Economic and Monetary Union. Nevertheless the fact that there were was this broader framework of cooperation or integration even has made it has contributed a lot to what cooperation has occurred with regard to energy and unfortunately many of the conditions that I see as facilitating and promoting cooperation in Europe are present aren't present present to the same degree as they are in East Asia at least so far like to point out a few limitations of what I'm going to say before I get into it. So you can experience your disappointment right up front. ROSEN saving it for later one. I'm really focusing just on the European Union and that of course doesn't leave out a lot there's been significant energy cooperation between Western Europe and this in the Soviet Union and now Russia and other states in the in the post Soviet space. There's been significant energy cooperation between members of the E.U. and other Western countries. He's like Norway which is a major source of oil and gas. So in that sense it may be unfairly circumscribed I've found that it was impossible to separate out energy cooperation with regard to security from other dimensions of energy cooperation but I guess that's really been the theme of the overall conference so I don't feel so bad about that now. I come with very limited knowledge. Well basically what I know about South Korea I learned today. I knew a little bit about Japan. I might add to others that I'm really focusing more and more high lateral forms of cooperation and I see that could be a potentially big look. Given that much of the discussion has been about bilateral forms of cooperation between different pairs of countries and again I'm sort of leaning when thinking about this in preparing for it. I for some reason forgot about Russia and was thinking about the consumer countries in the potential of cooperation the net consumer countries that important countries but obviously it's important to think about Russia as well. And finally I guess the discussion is raise the question mind what do we mean by cooperation how do we measure cooperation I'm probably coming at this with an unfairly high bar unfairly high point of comparison for for energy cooperation in Northeast Asia I like the list of actual and potential forms of cooperation that professor calls are put up there that not of that not many of them not particularly dramatic but nevertheless significant and not worth overlooking so I may be in my being blinded in Nambour by grand schemes of European integration I may be overlooking other important but lesser forms of cooperation sort of like the traditional distinction realists like to make between high politics and low politics. So. Let me proceed with a little overview of the evolution of energy cooperation in the European context. They obviously got off to a with a bang the very the the core foundation of the European Union today was the European capital and steel community. Went into effect in one thousand fifty two which was very significant in terms of energy cooperation coal was the principal energy source of the day provided about ninety percent of energy consumption and member countries at the time and so in overnight sort of like the The Big Bang in financial services some years ago they completely eliminated quotas in tariffs on trade in cool and created a single collective super national institution to regulate to establish common policies in that area and then that was followed in one thousand nine hundred eighty eight by the European Atomic Energy community or your atom. Which was rather less ambitious and ended up being limited to some cooperation in research in the creation of a common European nuclear supply agency but left most decisions about the investment of resources in the nuclear sector up to the individual countries and the third early important step in energy cooperation was even before the International Energy Agency was established the creation of an oil stockpile requirement originally sixty five days and later increased to the to ninety but in many other respects. There was a there wasn't in energy cooperation and indeed you could say that the amount of energy cooperation declined especially as the coal and steel community became increasingly irrelevant. Because like everywhere else. The Europeans began to rely more and more heavily on oil and then in the late. Sixty's and early seventy's natural gas and coal became a relatively marginal source of energy and in the meantime there was no effort and no successful effort to to to develop a common energy policy that covered the other sectors now maybe in some ways it was less important because they had generally had liberal markets with exceptions in say oil but every attempt by the European Commission the main principle super national body of the European communities to propose a common energy policy was beaten back by the national interest represented in the Council of Ministers. And then when the oil shocks came along in one nine hundred seventy three seventy four. Rather than the E.U. or the European community at the time developing its own urgency response system they ended up deferring to the broader framework that was created within the O.E.C.D. the International Energy Agency led by the United States was probably a lot of sense because the U.S. was a much greater potential energy supplier and so in that important area the E.U. has been subordinated to the now things that. So after really almost twenty thirty years of status and limited progress things began to pick up again in terms of moving toward a common energy policy and a greater energy cooperation in the one nine hundred ninety S. The key was the adoption of the Single European Act in the late one nine hundred eighty S. and the commission seized upon that as an opportunity to cry to try to create a single energy market as well. It took a while but eventually by the late one nine hundred ninety S. The commission was able to get the member states to accept the first legislation for liberalizing the gas and electricity markets which had been entirely national up. To that point. And that was followed by some important legislation promoting renewable production use of renewable resources in electricity biofuel some reason some legislation for energy efficiency with regard to the efficiency of buildings the emissions trading scheme that taps the amount they are allayed the amount of carbon dioxide emitted in about half of the carbon dioxide emitted in the member countries. And some modest steps toward having a common extremal energy policy beginning with the Energy Charter in the energy charter treaty in the ninety's and then when that didn't immediately grab the enthusiasm of the Russian authorities the alternative attempt to maintain an energy dialogue with Russia. But there were a lot of limitations for example when the commission tried to get the question of supplies security on the agenda with a green paper in two thousand it was written back by the national interest as represented in the council and nothing specific was done to promote energy security. Then things have really accelerated in just the last four years probably the key with a watershed moment was two thousand and six when the commission issued a green paper getting a green paper in the E.U. context they should probably explain a sort of a think piece about ways in which their members might cooperate where they haven't before though this one. In contrast to the two thousand green paper on security supply had been invited by the member states actually before the first gas crisis the first Russia Ukraine gas crisis so that certainly gave lot of impetus to taking some further steps toward having a common energy policy. So the commission put out a green paper that was. As well received by the Council of Ministers the intergovernmental body of the E.U. They asked the commission to come back with more detailed proposal so they came up with something called the energy policy for Europe which is most noted for its twenty twenty twenty and twenty goals that is until I get this right. A twenty percent improvement and a reduction in in energy use at least over projected levels by twenty twenty twenty percent reduction in greenhouse gas emissions and a lot of money going on the third one twenty percent. Back to me ten percent twenty percent in renewables and ten percent in twenty percent of the energy mix from renewables and ten percent from biofuels. By two thousand and twenty and that was followed by efforts to further take further steps to liberalize the internal market these things tend to take a while they don't all get done at once anymore in contrast to the coal and steel community new directives from other renewables further tightening the emission trading scheme and finally sort of a more direct outgrowth of the two thousand and seven action plan a detailed set of proposals having to do with common infrastructure interconnections between electricity and gas improving the capacity to move energy across national boundaries steps toward further cooperation on export energy relations establishing common especially gas stocks in a common oil and gas crisis response mechanism and other steps toward energy efficiency in this all culminated just a little over a year ago with the entry into force of the Lisbon Treaty which for the very first time. Time. Includes a comprehensive chapter it's really just a few paragraphs. But it basically makes energy policy a formal competence of the institutions of the European Union the commission no longer has to draw upon its competence with regard to the internal market or with regard to the environment now can now can go right ahead and propose issues because they deal with energy policy. It always have to and that's the issue therefore So we may be at the beginning of yet some important progress but it remains to be seen what will happen. So what are the enduring limitations I guess they've sort of been emphasising the achievements but there are important limitations in terms of the European Union having a common energy policy. Embedded in the commission in the chapter on energy in the Lisbon Treaty is the recognition that states will continue to have the final say in the exploitation and the use of energy resources on their territory and a good example of that can CERN's nuclear power where states are whether they are really pro-nuclear or anti-nuclear though that has been changing you might have noticed the recently elected German government has backed off on its. The ten year old plan to phase out all nuclear power plants by about twenty twenty but still that's an area that where states have been unwilling to concede any national control over the nuclear power industry at least in terms of whether or not to build nuclear reactors. There's still problems with completing the internal market the major sticking point has been the question of unbundling in gas and electricity where you have integrated companies that want to be both into. Production or import and distribution which is seen is anti-competitive and in fact is. And the commission has been trying to get them to in one way or another but ideally legally and unbuckled the ownership of production or or import and and distribution but have not been successful so far there are important differences over they can agree on general goals for what percentage of the energy mix should be renewables of course and they fight over how much each individual country should should should go in that direction but they say they can't even agree agree over the general approach to promoting renewable should there be a renewable portfolio portfolio standard or should there be feed in tariffs energy efficiency is been an area where they are the targets have been particularly loose they have this they have the aspirational goal of a twenty percent increase. But they still don't have any firm binding commitments there and perhaps the biggest most obvious area of divergence is in their extreme energy policy where different countries in different companies continue to deal often bilaterally especially with gas from Russia in terms of deciding where to build pipelines and where to get their gas supplies. So there are still some important limits at least judging by the sort of the standard European integration which is proceeded so far in other areas like the single market and the Economic and Monetary Union. But let's focus on the bright side for a moment. Let's look at the look at the glass as being more than half full. What has silicate are motivated the cooperation that has occurred and I would say it's been obviously facilitated by a preexisting high degree of interdependence in terms of there's always been a lot of energy trade and trade of other things and other goods and as well. More lots of physical interconnections to begin with. Obviously it's the overall internal market dynamics move toward a single market has facilitated or dragged along energy cooperation with it. More recently concerns about climate change. They're actually worried about that over in Europe and I guess in much of Asia too but you wouldn't know it too often walking around the streets near here that it's galvanized them to be especially with regard to efficiency and and renewables and especially in recent years they've all been the major countries have been alarmed to some degree about their the precariousness of their energy security situation as exemplified by the repeated conflicts between Russia in the transit States through which much of their gas and some of their oil supply traverses but there have been a longer Porton obstacles and I imagine a lot of these will look familiar to you all who are experts and Asian energy security a big obstacle has been an Indian logical one that is different countries prefer or see the state is playing a different different roles or being involved to different degrees in the economy with the you know the French being an example of one extreme with the government. Having a lot of control over major and energy industries nuclear gas electric the British having gone to the complete opposite extreme completely liberalizing their market so they're often at loggerheads along that dimension. Obviously you know prior investments in things like earlier power and and expensive networks condition the preferences of states for different types of cooperation. Third source of trouble concerns the economic structure the industrial structure in particular whether there are powerful energy companies or not whether the mayor of that and that that correlates a little bit with the first point about the third role of the state but in even in Germany. You have several small number of very powerful gas and electric companies that aren't aren't state controlled but because they are so powerful they have the ear of the government the ear of the ministry of economics and have exert a lot of influence over German policy preferences and E.U. discussions and despite the common concerns about energy security. They have been exposed to different degrees to say their dependence on on on on Russian gas and the degree to which they can ride out crises by the by themselves because they do or don't have say a lot of storage. I would go a little bit further and try to a den of five sort of the deeper sources of cooperation and that again my differentiate Europe from from East Asia. One would be the geographical proximity and in particular the fact that many of these countries share borders is thinking you know how much different. Would it be on the one hand Japan and Korea South Korea and China look fairly close together but they're still separated either by North Korea or by bodies of water that that means the kind that complicate the creation of those kinds of interconnections an infrastructure that it's so easy to lay down in Europe you have the issue of property rights doesn't come up very much. It's interesting you know the one place where there could have been conflict was the North Sea But fortunately just a few years before the first discoveries there the liberal states had reached an agreement over half. The the sea the resources under the sea would be shared and so when the sky every started popping up there wasn't any dispute over whose territory they they lay on and obviously that's a different story in Asia. I would argue that comparable levels of economic development employ tical development the fact that have similar government systems and maybe echoing through France are still birds argument. The issue of there's symmetry in terms of transparency in these countries that you don't have in East Asia this facilitated cooperation and perhaps as well. The rough equality of economic power at a minimum perhaps that removes the more traditional security dilemma concerns about its I guess with the with regard to East Asia would be worried about the rise of China. Well thanks. And maybe the other thing I should have added here is NATO and security cooperation with the US that as Justice Germany commentator once described the America as Europe's a great pacifier so with U.S. security guarantees hovering over all of the European countries there's much less There's no reason to worry about whether one country or another is going to benefit from cooperation you obviously don't have that in East Asia as well. So I probably already drive. Most of the lessons that I had thought of but to summarize some of them cooperation. I would say this fight the progress cooperation overall this has been difficult. It's taken a long time even in Europe. Despite all the favorable circumstances and the fact that there is cooperation owes largely to the fact that there is this broader move toward integration economic and even political that makes it not only possible but in some ways necessary to have energy cooperation. Possible or necessary in the sense of the idea if you study integration theory the idea of functional spillover that once you enter great one part of the economy. There is economic logic and market pressure to expand that to other areas. So for example. It turned out. You couldn't have a single market without making sure that the currencies were more or less but there was little fluctuation in the currency value so in the one nine hundred seventy S. the Europeans first experiment with the exchange rate mechanism to keep the relative values of their currencies almost fixed and then then that was replaced by the Economic and Monetary Union that eliminated independent national currencies and so that same logic has constantly pushed toward greater cooperation in energy even if it took a while to achieve and you also have the idea of political spillover that there are actors like the European Commission that have an institutional interest in promoting cooperation actors that are absent from the Asian scene and who use various forms of linkages with non-state actors and their bully pulpit and their access to information to push initiatives wherever they can. And so one conclusion I came to is and I think it's about some of the papers is you know should we. How much should we get hung up on the idea of regional cooperation. There are potential there. And I believe this was a theme of the last two presentations Well there's potential for promoting energy security at least still at the international level or outside of the region. I should say it would have added maybe as a third point the I.E. A which has been mentioned a couple of times that that continues to be an important source of security and maybe that she is as some papers of suggested. How do we get China and India. In there as well but. Hopefully this these reflections Well you know aren't too irrelevant to the north to the Asian case and I leave them for your consideration. Thanks. Three X. one paper so it's my duty now on and on. I guess to ask for questions from the audience and I believe might want to start open them up to everybody so questions. Let's call them. Actually All right. Drivers and or original group parallel might have to do with your just thinking about it in the days of well I guess my question would be about the price you talked about below their rising rate just after working for a very pricey right from the early days that you were rather Russia for your role. So I guess when they get there. Russia is manipulation of the Ukraine. You're out of there though. What would you bet your grace. In particular just talk lightly about interest there. You know that all right you will. Yeah I think right. That's sort of where my dad got the principal writer coincidence or Russia great or health minister is this your summit held or never brought you're right. Going on there wide wide. They're very interested but it was rushed back to Britain with very little in order to their heart with their gaffe structures Britain got a wake up call really a leader there in real life with crazy probably true friends and more recently is the fact that it could be heard earlier France of bunch of nuclear power plants really quickly ran a lot of nuclear power for their useful life during which there's around the next generation that's their right. With regard to their habit of the book or energy. You're sure to come either from NATO headquarters for us or for Poland and most of the Brewers get really for their work in NATO really you know all that but that's not the piracy read in the background and they're concerned with. Overly militarized broaching security also Russia which will cost or vested through the Europeans were really in the rain. Crisis or no I meant I think it did but it put them there really managing your place but within a couple of years it has declined because again because one is just doing crazy. Everybody using some crises resulting in some winning so I think great great pressure in two thousand everybody. I think that was Jewish. I think if you look carefully. There isn't who didn't agree there were desperately trying to but I would argue some of these factors are sitting there and Europe really. So I think I was I already experiencing. What if whatever it is that young the suggesting in the difference. I did they go the other side of the Russia. Maybe learning the wrong lessons and you know I think that there. They tried to play off Japan and China and while they got the first stage of the pipeline develop. It's not clear that that you know there really was you know I had a love letter and so they may be learning the wrong lessons for money or you do crazy things but one other thing that it also was interesting is the relationship between Russian foreign minister and what happened that it was two thousand two thousand and nine where there was a problem to the Ukrainians or the Germans say one day the Russians say another thing but while there were gas not being and that created an opportunity for China to really accelerate its action. So why do you think crises can affect things on the individual side great and but I do think we need to distinguish and maybe the kinds of phrases that would be game changers or with their old blues or the holes I lose by Dr Brown just comment and question comment on the day's scenes over here. I have a sense that one thing this sort of missing a lot of. Now there are all just basically they're just placed on G. natural gas. It's hard lines on the recent yes off to surprise I mean. Yes by why there's a limit like Christie is a limit on oil is very cheap movement of energy sources by Chef water is generally very violent and I think it is right. Hundred miles land is worth Australia the South Pole. So if you have a coal mine a hundred miles and one better off in forty years so I mean mode of transportation costs. Don't look at that you're looking at your graph of trees away. That may not make sense. Also with China so much talk about so much of their demands on jobs driving very much like South Korea. So they're really happy about our transit and I sent several questions for you. I think if you travel around China a lot of trouble rather than what sort of thing America people travel by a lot of below zero travel by train. We never call and try and rarely get people on the train China it's just stunning. The amount of whole the trials by truck I mean it's just you see truck drivers and giant train light winds coming from you're not going to get right to Beijing points out just saying. So where you have you have reasoned with. I mean I can understand our cars my real friends were told that if you look at the high gas price. The same thing for gas. Does that best gas is all was well priced is different from the rest of them are so if you look you know you either like Buffalo respect. This is you know favorite because the other developing. Yeah the Chinese government doesn't look like yeah there's no way. Yes so it works well in the cities because there's a zero zero zero zero zero. You know. Look you have to realize the government also sees the very edges the bright little eyes market that go where the worst market reality. Yeah like a very tragic. Just real real real because you're cold and you know here's here's your real. So call our trucks. Really cool. I think this will change your life. Now then you are just more used to the east coast. So I question. Really. What he's trying to we're talking a lot of our cooperation Bailo trilateral why I tend to distinguish that from a regional cooperation which involves some sort of transfer of sovereignty. Yes all your books. I haven't seen a whole Asia but the I'm troubled by two things that are looking at the scene in your piece Asia one you have placed on the discussion about energy disarray. Rian Japan and then your discussion about Russia. He seems like governments in this region very very frightening comes to energy policy and then their inability to control powerful national champions Well state owned energy tied hand. So if that's the case to what extent can we really expect much cooler. Gratian on the regional level and to come to the conflict in the long haul read you know how leadership transition. Coming up there's in twenty twelve China while we are sure translation and then. Russia the same thing and then Japan's political stability has been by one of my recent one water how the how whole facts of this this process for regional cooperation. Now region. We had a workshop shot by the sun by analysts a lot of experts walked away pretty pessimistic about the Profitable Moment while reaction was Well I mean that's basically my argument is that I think this will say this too should play works let's take some risk when people today some people today were talking about bilateral cooperation the opportunities. You know whether we were talking about a regional cooperation argument is there to hear any of those things. It's going to require domestic is a judicial reform. Because the signals are not are being distorted the market mechanisms are being distorted as well as well. So I share your concern about having any kind of regional issue with the way they are that said I would say that a number of the players are a lot weaker out of David think they so there might be a lot of posturing that may not lead to big escalation of things because the actual resource power of the market power of the players actually happen in the last long but it will still conflict with your you. I mean there is a live devil's advocate here and I guess the firing line about what about the case of your first or last thing we of course are your opinion of the gracious was driven mansion security challenge Russia did the big bear out in the background there you know and in trying to maintain a tiny bit of the interaction with result the limited. Even today thinking about now or fourth story is a very complex picture with security challenge. Now contrast that Russia. It was huge and the security threat that it was growing there was a very deeply integrated their you know. Well maybe Germany is down the street Asia and the ME in between Japan and China and I can see the problem here. The regulatory barriers geostrategic here to go to the other side to take for example China or the backers or. Somewhere. Greta more than the flow of a nation that is growing as rapidly as child dramatics levels of this reality I guess I'm looking at the relationship or course just. You're right it seems to me like look at some of those other places others like you have some rather different word Gratian I think you're not going to go a little dryly. The fact that a scholar looking at how we're getting for you should try playing the game trying you know almost two years now we're functional cooperation right through trilateral China. So this is some stuff. Talking about those ties are getting closer. It isn't a legal list that you're here but there were were things like Yeah you're right on the stuff there. Really like that some of this one of the vision. I'm struck by the similarity of this is a little less pressure from the why isn't there or whatever it rather than their letters the friendships that survive on the national with our back to some of them very well thank you. Real life real very well there John. There were three or so first time years but it hasn't translated as you say at the level of the real life. Here's the deal there. That girl I think it macro you're getting word that a star like you have time for two quick questions is a quest for help while you're here for a lot of your work beyond your thought yes you're right you can't live your life that I would rate your wife your wife your eight and your wife what you think you may feel like life progress more ground. Yeah. You go back to what word could go so revival. With your interview. This is the next project. I want to work on this off the top of what is really rather that your question where first a dark market for well I suppose I'm part of the dark ages like the old station. You're actually hardly had his brother back that's what he further integration energy policy was not the only form of integration it was the share prices where France were qualified your to go through the seventy's downgraded from then was for a problem transcended you're now the logical place to cooperate was within you. For the cooperation within just a couple of factors one the general slowdown your energy cooperation hijacked by the low as far as the early ninety's I guess it really has a goal or to establish relations with a lot of countries there were areas cooperation with Russia so grew out of opportunities cooperation which had existed there had been West trade for the whole or the cut off never to have a crisis that relied on a lot of the over there is just part of the overall package of cooperation naturalism.