Since 1957 when the Gordon Commission on Canada’s Economic Prospects identified the need for a comprehensive energy policy, the call for a national energy framework, strategy, plan, program or policy has recurred at least once a decade.

Although the focus of these statements, the interests driving them and the political context and partisan balance varied (watch this space), all were triggered or influenced by events and pressures external to Canada. Meanwhile, Canada played a role in international institutional responses to global economic and energy developments. This experience offers lessons and even a template for crafting an energy strategy for Canada.

In 1992 after the fall of the Berlin Wall, the Breton Woods institutes, the Organization of Economic Cooperation and Development and the International Energy Agency (IEA) were besieged by delegations from the former Soviet Bloc ‘economies in transition’, seeking advice on how to shift from a centrally-planned to democratic, pluralistic, market-based economies.

IEA officials, when asked for energy policy advice, were loathe to dust off the agency’s only existing policy manifesto, the “12 Principles for Energy Policy” adopted by IEA energy ministers in October 1977 (at the annual Ministerial Meeting, chaired by the Canadian Energy Minister).

IEA Ministers in the seventies fervently believed that since oil prices were not market-driven, but subject to a foreign cartel, nonmarket response measures were justified. Not surprisingly, the 12 Principles had a Soviet Gosplan ring to them; hardly appropriate for newcomers to the market economy club! To paraphrase the Principles:

  1. Reduce oil demand;
  2. Environmental and safety concerns, yes, but ‘fast track’ approvals;
  3. Let prices go up to encourage conservation and alternatives (but note, not to world prices—the Canadian chairman could hardly reside over anything that conflicted with Canada’s polices, especially its regulated oil price regime);
  4. Promote and subsidize energy conservation and fuel substitution;
  5. Progressive replacement of oil in power generation, district heating and industry;
  6. Promote the use and trade of steam coal;
  7. Reserve gas for premium uses—not for power generation;
  8. Expand nuclear “as a main and indispensable, element in attaining the group objectives…”;
  9. Spend more on energy R&D directed to near term impact, new fuels, renewable;
  10. Provide a favorable investment climate, and increase flow of private and public capital to resource development, including incentives for exploration in offshore and frontier areas;
  11. Develop plans to fill supply gaps—the IEA, surrounded by economists, was obsessed with supply ‘gaps’;
  12. “Appropriate cooperation in energy” (this was code for dialogue with OPEC; appropriate” was code for, ‘Don’t breach US anti-trust laws’ by talking about price).

So, gingerly, the IEA Secretariat launched a dialogue among its member countries to ‘modernize’ what these industrialized countries thought should inform energy policies.  The word ‘principles’ was too sensitive or ambiguous for some cultures, so we settled on ‘Shared Goals’.

Getting agreement on a set of principles/goals to inform energy policies for (then) twenty three diverse countries was going to be a challenge given the context of 1991/92 when the project started: the end of managed economies (in Europe), a year after Operation Desert Storm (with all its lessons in price pass-through and the power of signaling the coordinated release of IEA strategic oil stocks), the first report of the Intergovernmental Panel on Climate Change had just been released, while Chernobyl still made the ‘N’ word awkward if not impossible for several delegations.

The first sentence of the Goals’ preamble is what energy policy aims to do:

The Member countries of the International Energy Agency (IEA) seek to create conditions in which the energy sectors of their economies can make the fullest possible contribution to sustainable economic development and to the well-being of their people and of the environment.

The second sentence reflected the core or fundamental starting point: “…the establishment of free and open markets is a fundamental point of departure”.

This was qualified with, “…though energy security and environmental protection need to be given particular emphasis by governments.”

Recognizing “the significance of increasing global interdependence in energy”, (this was before governments timorously deferred to energy ‘experts’ from Hollywood), the IEA countries sought “to promote the effective operation of international energy markets…”

To achieve their objectives, IEA countries aimed to create a policy framework consistent with the following ‘goals’ (but really ‘principles’).

Diversity, efficiency and flexibility within the energy sector are basic conditions for longer-term energy security: the fuels used within and across sectors and the sources of those fuels should be as diverse as practicable. Non-fossil fuels, particularly nuclear and hydro power, make a substantial contribution to the energy supply diversity of IEA countries as a group.

Energy systems should have the ability to respond promptly and flexibly to energy emergencies. In some cases this requires collective mechanisms and action: IEA countries co-operate through the Agency in responding jointly to oil supply emergencies.

The environmentally sustainable provision and use of energy are central to the achievement of these shared goals. Decision-makers should seek to minimise the adverse environmental impacts of energy activities, just as environmental decisions should take account of the energy consequences. Government interventions should respect the Polluter Pays Principle where practicable.

More environmentally acceptable energy sources need to be encouraged and developed. Clean and efficient use of fossil fuels is essential. The development of economic non-fossil sources is also a priority. A number of IEA member countries wish to retain and improve the nuclear option for the future, at the highest available safety standards, because nuclear energy does not emit carbon dioxide. Renewable sources will also have an increasingly important contribution to make.

Improved energy efficiency can promote both environmental protection and energy security in a cost-effective manner. There are significant opportunities for greater energy efficiency at all stages of the energy cycle from production to consumption. Strong efforts by governments and all energy users are needed to realise these opportunities.

Continued research, development and market deployment of new and improved energy technologies make a critical contribution to achieving the objectives outlined above. Energy technology policies should complement broader energy policies. International co-operation in the development and dissemination of energy technologies, including industry participation and co-operation with non-Member countries, should be encouraged.

Undistorted energy prices enable markets to work efficiently. Energy prices should not be held artificially below the costs of supply to promote social or industrial goals. To the extent necessary and practicable, the environmental costs of energy production and use should be reflected in prices.

Free and open trade and a secure framework for investment contribute to efficient energy markets and energy security. Distortions to energy trade and investment should be avoided.

Co-operation among all energy market participants helps to improve information and understanding, and encourages the development of efficient, environmentally acceptable and flexible energy systems and markets worldwide. These are needed to help promote the investment, trade and confidence necessary to achieve global energy security and environmental objectives.

The “Shared Goals” were eventually adopted by IEA Ministers at their June 4th, 1993 meeting in Paris.

Canada’s official energy policy is broadly grounded in these Shared Goals and above all the starting point of “free and open markets”.   Yes, these Goals are written in ‘international agency bafflegab’ but this is inevitable in representing a diversity of interests and jurisdictions.  And is ‘representing diversity’ not the perennial challenge for Canadian policy-makers?  There are lessons in these goals; not only in terms of what they say, but in how they were produced and in how they continue to be used by the IEA and its member countries.

– By Dr. Robert Skinner

Dr. Robert Skinner is an independent strategy advisor and consultant in Calgary. His career in Energy spans four decades in government, industry and academia.  He is currently advising the Canada School of Energy and Environment on its strategy and research programs.

He is formerly Senior Vice President Statoil Canada Ltd, former Director of the Oxford Institute of Energy Studies in Oxford, England, Administrator, Northern Pipeline Agency, Vice President, Total E&P Canada and Senior Advisor, gas and power, Total, Paris, Director of the Long Term Office of the International Energy Agency, Paris (where he led the agency’s work on Climate Change and the drafting and negotiation of its Shared Goals), Assistant Deputy Minister, Energy Commodities, Energy, Mines & Resources (now Natural Resources Canada), and before that, Director General of EMR’s Natural Gas Branch, Director General of Oil Prices and Compensation Branch, Senior Advisor Oil Import Strategy, the first Director of EMR’s Office of Environmental Affairs, Science Policy Advisor, Department of External Affairs and Research Scientist, Geological Survey of Canada (GSC) where he developed techniques for the exploration of base metals and diamonds. He did his doctoral research in the late sixties for the GSC on ancient climate change in the James Bay Lowlands.

Bob is the author of numerous papers, articles and lectures, contributor to books and studies on energy, geopolitics and policy.   He is a Senior Research Advisor to the Oxford Institute for Energy Studies, Associate Fellow of Chatham House, past Academic Advisor on Energy and Sustainable Development to the Club of Madrid, former external faculty of Vienna University’s Executive Academy Exec MBA in Energy Management, member of the Bertelsmann Foundation’s Global Policy Council, occasional external editor for Abu Dhabi’s Emirates Centre for Strategic Studies & Research,  member of Editorial Board ofGeopolitics of Energy, and has been a consultant and advisor to industry and governments in Europe, Asia and Latin America.

Dr Skinner has advanced degrees in geology from Queen’s University (BSc, 1968) and the University of Washington, Seattle (PhD, 1971).