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39 the national bureau of asian research nbr special report #46 | september 2014 TOM CUTLER is President of Cutler International, LLC, and was previously Director of the Office for European and Asia Pacific Affairs at the U.S. Department of Energy. He can be reached at . The Architecture of Asian Energy Security Tom Cutler EXECUTIVE SUMMARY This essay traces the history of regional cooperation in Asia on energy security, compares various multilateral forums’ emergency planning arrangements for an oil disruption, and suggests that new and politically bold steps will be needed to strengthen Asia’s architecture for energy security. MAIN ARGUMENT The energy picture of Asia as a region is being reshaped, exposing it to new vulnerabilities but also opening up new opportunities. The unrelenting growth in Asian energy demand, which was initially led by Japan and South Korea and subsequently by China and India, is now also being driven by the ten member countries of the Association of Southeast Asian Nations (ASEAN). Southeast Asia’s increasing vulnerability to oil import disruptions and North America’s growing energy self-sufficiency have altered some of the premises of Asian energy security and raise questions about the adequacy of the existing network of overlapping institutional structures. Existing regional forums such as the Asia-Pacific Economic Cooperation (APEC) process, ASEAN, and the East Asia Summit (EAS), in conjunction with the International Energy Agency (IEA), have become progressively active in their technical collaboration in regard to emergency planning and oil stocks. As a result, Asian leaders now need only make a collective political commitment to a concrete plan of action if the region is to be adequately prepared for when, not if, there is an energy market disruption that causes major economic damage. POLICY IMPLICATIONS • BuildingaregionaloilstockpileseemstobethemostfeasiblenextstepAsiangovernments can take to enhance their energy security. • The EAS is a potential vehicle for an ASEAN-centric, pan-Asian umbrella arrangement, although the first steps might need to be taken by a smaller group of nations. The summit’s Energy Cooperation Task Force should establish a new work initiative on oil stocks and contingency planning. Its work should build upon the efforts of the ASEAN +3 oil stockpiling process and be conducted in collaboration with the IEA. • The U.S. should be fully engaged in this process, both because it will still play a role in protecting key sea lanes for energy transport and because the country’s emergence as a potentially key energy exporter will help Asia diversify its supplies and mitigate risk. 41 THE ARCHITECTURE OF ASIAN ENERGY SECURITY u CUTLER P olicymakers have a fundamental responsibility to ensure that their nations are prepared in the event of a severe energy disruption where governments have no choice but to intervene in the marketplace or face economic catastrophe. As a matter of national security and energy policy, diversifying supply sources and fuel types, promoting energy efficiency, improving investment climates, and other actions are all important long-term strategies to ensure energy security. However, such long-term programs do not obviate the need to have contingency plans already in place for when the spigot is suddenly turned off. It is simply not enough for countries to rely solely on market forces or go-it-alone policies. Because oil supply disruptions affect consumers without regard to national borders, a coordinated, region-wide response is the most effective approach to mitigate the economic damage and political havoc such disruptions can cause. In the case of Asia, however, there is no single overarching collective energy-security arrangement that covers the entire region. The world’s most comprehensive international energy-security arrangement has been the emergency-response mechanisms of the International Energy Agency (IEA), which was established in the aftermath of the October 1973 oil embargo. These mechanisms include a requirement that member countries possess oil stocks equal to 90 days of net oil imports and an oil-sharing scheme.1 While the IEA serves as a model for jointly coordinated emergency responses, it falls short in the context of Asian energy security because it does not include China, India, or the member countries of the Association of Southeast Asian Nations (ASEAN). Given the interconnection of markets and the growing demand for energy by these non-IEA countries, this represents a critical gap in national, regional, and even global energy security. If oil-supply vulnerability is indeed Asia’s Achilles heel, then it is timely to consider whether policymakers should revisit the issues of collective oil stocks and oil-sharing arrangements as...


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