1. Energy Charter Secretariat NEEDS Forum 2 Krakow, 5-6 July 2007 Tim Gould Senior Advisor to the Secretary General Energy Charter Secretariat An Energy Charter Perspective on Energy Security

2. Energy Charter Secretariat 2 Source: BP Statistical Review 2007 Energy Prices

3. Energy Charter Secretariat 3 Source: BP Statistical Review 2007 World Fuel Shares

4. Energy Charter Secretariat 4 Source: BP Statistical Review 2007 Shares of World Energy Consumption

5. Energy Charter Secretariat 5 Production capacity limit Hotelling rent Ricardian rent Volume Price Demand curve Supply curve (cost of supply) Energy efficiencyEconomic growthE&P Technology Under influence of consumers Under influence of producers Cost-oriented price Replacement value-oriented price Elements of Interdependence

6. Energy Charter Secretariat 6 The Energy Charter Treaty

7. Energy Charter Secretariat 7 Energy Charter Principles National sovereignty over energy resources Respect for contract and property Stable and open frameworks for flows of energy, capital, technology and investment An orientation towards market solutions Non-discrimination Transparency Energy efficiency and sustainable development

8. Energy Charter Secretariat 8 ECT and Investment Security Energy Charter Treaty is the only broad multilateral investment protection treaty (equivalent to 1000+ BITs) Reduction in non-commercial risk for private investors from other participating states Promotes respect for contract and for property Enforceable through state-state and investor-state arbitration Functioning instrument of international law: currently 15 cases brought to arbitration (2 awards, 2 settlements, 11 pending)

9. Energy Charter Secretariat 9 Oil and Gas Project Investment Source: IEA WEO 2006 Total Investment Needs (2006-2010): $ 306 Billion

10. Energy Charter Secretariat 10 Energy Trade Source: BP Statistical Review 2007

11. Energy Charter Secretariat 11 Reliable Cross-Border Flows Provisions based on WTO Particular focus on specific challenges associated with transit of energy through fixed infrastructure (pipelines, grids) Obligation on participating states to facilitate transit and to ensure the reliability of existing flows Unique conciliation procedure in case of transit disputes

12. Energy Charter Secretariat 12 GDP, Energy and Carbon Emissions Source: BP Statistical Review 2007

13. Energy Charter Secretariat 13 Efficiency and Security With limited direct leverage over resource- owners, energy efficiency is a major instrument for net energy importers to improve security (together with fostering renewables, diversification and improving energy production technology) Resource-owners also have interest to improve efficiency: low domestic prices come with a technological cost, and limit available export volumes International cooperation to improve energy efficiency likely to be major element of post- 2012 framework for combating climate change

14. Energy Charter Secretariat 14 Priorities Ratification and implementation of the Treaty by all signatory states Ensuring that the Charter responds to new challenges and developments on international energy markets Substance: possibility of additional Protocols, Declarations, non-binding instruments (Model Agreements, Best Practice Documents) Geographical expansion: East and Southern Asia, the Middle East and Mediterranean regions

15. Energy Charter Secretariat 15 More information Energy Charter web site www.encharter.org tim.gould@encharter.org