1.2 FORMULACION DEL PROBLEMA
5.1.2. Equipos
Some thought was given over at this time to considering where oil and gas supplies would come from in future. In terms of oil, a high degree of faith was placed in the ability of international oil markets to underpin reliable trade at ‘market’ prices. In addition, some brief discussion was given over to UK support for IEA arrangements in the event of oil supply disruptions and to continuing to work to increase the transparency, diversity and liquidity in international oil market (DTI 2003: 81).
Where gas comes from was more important to consider from a pro-market perspective than oil as it was, and still is, largely traded on long-term contracts rather than ‘at spot’ in international markets. Norway is mentioned as the key provider of gas to the UK, given existing infrastructure in the North Sea, proximity to the UK and a new treaty which was, at the time of the 2003 White Paper, being put in place (DTI 2003: 79). Russia was also at this time mentioned as an important fossil fuel provider going
forward for Europe and the UK (PIU 2002: 64; DTI 2003: 80). The rate of production and export growth in Russian oil and gas had been significant over the course of the late 1990s and early 2000s and Russian fossil fuels had been filling the European supply ‘gap’ as the North Sea declined helping to keep prices stable. It was pointed out in the White Paper that
Russia has the largest gas reserves… and has been exporting gas to Western Europe for over 30 years without interruption (DTI 2003: 79).
In June of 2003 Vladimir Putin had paid an official visit to London and participated in a joint energy summit designed to progress the bi-lateral energy, and wider commercial, relationship. At the public press conference, which accompanied this event, President Putin and Prime Minister Blair announced that they had both signed the ‘memorandum of cooperation’ on the project to build the North European gas pipeline, otherwise known as Nordstream (Number 10 2003).76 The idea was that Russian gas would reach the UK via the new pipeline system and a new interconnector between Belgium and the UK (DTI 2003: 80).77Although some emphasis in the 2003 White Paper was placed on
supply diversity, the reality was that Norway would be providing the lion’s share of UK gas, with the intention that Russia would come second (JESS 2006).
In 2002 a House of Commons report on Russia raised the question of whether or not the EU should consider a more active role, on behalf of Member States, to “…lock in Russia as a major supplier of oil as well as gas over the next two decades, given uncertainties in the Middle East” (House of Commons 2002: 89). This excerpt gives us, perhaps, some insight into thinking about Russia’s potential role as supplier – as a more reliable alternative to the Middle East (Leaver 2005: 15; Allison 2006: 167). Russia’s progress, albeit slow, through a process of liberalisation and adoption of ‘best practice’ meant that they appeared to be a ‘more reliable’ supplier as much in terms of its previous track record as in terms of its adoption of a ‘better’ political system. In
76 It has been suggested that Prime Minister Blair had been very keen to be seen to be quickly
developing a relationship with the new Russian President, Putin. Blair was one of the first foreign dignitaries to visit Moscow and London had been one of Putin’s first official visits (Interview 19).
77 In 2003 it also appeared that Putin had given his personal endorsement of the TNK-‐BP Production
Sharing Agreement (PSA), which was by far the largest in Russia (Locatelli 2006; Brill Olcott 2004). The UK subsequently became the largest investor in Russia (Number 10 2003; Lee 2007).
addition, Russia was not a member of OPEC, and was signatory, as mentioned, to the ECT.
Further liberalisation of Russian gas markets was, however, understood as being necessary and should be actively encouraged by the UK, mainly via multilateral relations through the EU and IEA (DTI 2003: 5). This was important in terms of improving the investment climate for Russia and therefore the outlook for energy supplies:
…(t)he biggest single issue on gas pricing involves Russia and its very low prices for domestic (both household and industrial) supply. The danger is that low prices will deter investors from entering the market and new production capacity will not be developed, with negative effects on our security of supply (FCO et al 2004: 15)78 In such a way, ideas about what liberalisation, competition and free markets could achieve in terms of international energy security and important investment in fossil fuels firmly underpinned UK energy foreign policy and decisions about suppliers. Theoretically, of course, Government should not need to make specific decisions about suppliers but even at this stage, given Putin’s trip to London, it appears that some ‘top down’ involvement was understood to be required to secure supply deals. The decision to encourage direct supply relations with Russia, on the strength of their increased reliability given their ‘pro-market’ progression, seems highly ironic in hindsight and perhaps highlights the degree to which energy policymaking had been taken for granted and left with minimal dedicated capacity.
Conclusions
This chapter has emphasised an era, between 2000 and 2003, of consistency within the PEPP by painting a picture of a somewhat path dependent, conservative UK energy policy-making process. What is particularly notable, given Hall’s emphasis on the role of changing objectives in measuring paradigm shift, is that the objectives of UK energy policy appeared to change whilst the other four levels remained consistent. This consistency has been apparent within energy policy documents, in how international
78 Of course, by this stage, as already mentioned, the UK was already the largest investor in Russia due
to energy sector investments via, among others, BP. This idea that oil and gas investors would be put off investing in Russia if they did not adopt ‘better’ governance practices remained key to British thinking.
events were perceived, and in decisions made and not made. The consistency of policy instruments and physical structures of governance are notable in the light of some reasonably serious challenges in the early part of the 2000s from quasi-government institutions and other political protagonists. The new carbon dioxide emissions reduction target may well have been offered as a weak compromise, to quell political opposition emanating from a ‘climate’ perspective, and it appears to have been effective, at least for a few years.
On the evidence of this chapter, it appears that the PEPP, and the particular way in which it was constructed, served not only to address new problems with old policies, but also within old structures. The particular endurance of sets of ideas about energy and governance can be put forward as an explanation for why the objectives of energy policy changed while other levels remained constant, and this will be discussed in detail in chapter seven. It might also be possible to question, given the vague wording of new objectives, the degree to which policymakers were actually expected to meet these objectives.
The strategy adopted, whether it represented an attempt to ‘buy time’ or to compromise opposition, became increasingly higher risk. By acknowledging the new problems, and by including them, no matter how vaguely, within the objectives of energy policy, the DTI and Ofgem were leaving themselves open to yet more convincing critique should they fail to meet those targets.79 These types of critique would be harder to make were the environment, and energy poverty, not objectives of energy policy but problems for other departments, such as DEFRA, to solve. In this way the climate perspective, although it might seem to have been drowned out and effectively ‘compromised’ at this time, did leave a marker which could be returned to by critics of the PEPP at a later date.
79 See the 2005 Climate Change Programme Review which concluded that the UK would miss their
emission reduction targets (SDC 2005). The Sustainable Development Commission was, at the time, an ‘independent’ advisor to Government on sustainable development – funded by DEFRA.