Yana Grigoryeva, Intern at the Russian National Committee on BRICS Research - special for InfoBRICS
In modern world the main role for the economic security of BRICS members - Brazil, Russia, India, China and South Africa - is played by energy issues and energy cooperation as the tools of keeping energy security. Promoting and strengthening external contacts is one of the key areas for implementing the energy policy of each of the group's countries, which is directly reflected in their energy strategies. During almost the entire period of BRICS, cooperation in this area has been implemented mainly through the development of already formed bilateral trade and investment ties. The most striking and historically proven examples are the Russia - China energy dialogue or the large-scale Russian-Indian joint project to build the “Kudankulam” nuclear power plant.
From the practical multilateral energy cooperation point of view, the significant event was VII BRICS summit in Ufa, that led to the agreement to hold the first meeting of BRICS energy Ministers at the end of 2015. Countries were ready to implement joint developments in the field of energy-efficient technologies and equipment at the enterprise level, as well as to conduct a further analysis of the ways to establish cooperation in this area by the BRICS Business Council. Next year, the action plan for the implementation of the Goa Declaration already included a meeting of the BRICS Working group on energy saving and improving energy efficiency.
In 2017, at the BRICS Summit in Xiamen, the Russian side put forward an initiative to create an energy research Platform to carry out information, analytical and research work in the field of energy development and the subsequent development of a coordinated energy policy and strategy of the participating countries. A year later, during the meeting of BRICS Ministers of Energy in Johannesburg, there was made the official decision to launch this IT Platform.
The nature of BRICs multilateral energy cooperation remains ambiguous due to the number of existing internal differences. Common features include geographical location, such as the remoteness of Brazil and South Africa from other members of the Association; different socio-economic and legal development models; unresolved issues on the bilateral agenda; the risk of declining interest in cooperation and reorientation to other major regional projects.
The group of factors that impede multilateral energy cooperation of the BRICS countries can include:
1. Position in the global energy system. Understanding the strategic objectives of the country's energy security defines its approach to building domestic and foreign energy policy, but, above all, to determining the principles on which it is based. In this regard, energy exporters and importers have different interests. In the case of BRICS, this prevents building a multilateral system of interaction in the field of energy within the group.
2. Intra-group competition. Potential contradictions in the spheres of influence on the energy market within the BRICS framework exist with respect to major importing countries in the Asian region, such as India and China. For example, China, being the world's largest consumer of energy resources, has stable supplies of hydrocarbons from Central Asia, Central and South America. India, which ranks fourth in the world in terms of consumption of oil and petroleum products, as well as being a major importer of gas, pursues a policy of market diversification and implements its interests through participation in joint projects in South America, Africa and the Caspian Sea.
3. Established ties with third countries. Currently, the largest suppliers of energy resources to the BRICS countries and consumers of these countries' resources are geographically located outside of the Association.
4. Alternative integration processes. Before the formation of the BRICS, the group's countries were already participating in international formats whose activities affected the energy sector.
The road map for trade, economic and investment cooperation of the BRICS for the period up to 2020, which aims to intensify joint efforts and resources of the Association countries to minimize the impact of external negative factors on their socio-economic development, includes about 50 projects, also in the field of traditional and alternative energy, as well as mining. The proposals described in the draft are aimed at developing both bilateral and multilateral interaction between BRICS members, including establishing practical cooperation in the field of water resources and implementing various joint projects on product sharing in the oil and gas sector and in the field of renewable energy.
In addition, in practical terms, the New Development Bank of BRICS (NDB), as a mechanism for investment cooperation in this area, is already playing a special role in activating multilateral energy cooperation. Thus, the first approved projects involved joint investments in renewable energy in China, Brazil, South Africa and India for $ 811 million, as well as in the development of small-scale energy in Russia's Karelia. The national Bank for economic and social development of Brazil (Banco Nacional de Desenvolvimento Económico e Social, BNDES), operating under the Ministry of development, industry and foreign trade of Brazil, received a target loan of $ 300 million for the construction of environmentally friendly solar and wind power facilities that can generate up to 600 MW.
The Indian project included a loan of $ 250 million to one of the oldest Indian state-owned banks, Cañara Bank, for the subsequent financing of green energy projects. According to preliminary calculations, it will generate 500 MW of energy and prevent 800 thousand tons of hydrocarbon emissions into the atmosphere. Chinese company Shanghai Shenzhou New Energy Development Co Ltd., specializing in the production of solar panels, allocated $ 81 million to create solar generators with a total capacity of 100 MW. The African state-owned company Eskom will receive $ 180 million to implement a project to build power lines and to finance independent producers in the field of renewable energy. In order to develop the national alternative energy and energy system of the Republic of Karelia from "green" sources, Russia has also submitted a project to create small hydroelectric power stations in this region of the country. It is planned to finance the construction of “Beloporozhskaya HPP-1” and “Beloporozhskaya HPP-2” with a total capacity of 50 MW in two tranches of $ 50 million through the Eurasian Development Bank (EDB) and the International Investment Bank (IIB).
In February 2020, the Ministry of Energy in Russia, together with the scientific community, developed a concept for BRICS energy cooperation for the period of Russian presidency and asked the meeting participants to focus on the content of the concept when completing their activities on the energy line. In addition to the main energy track, energy as part of the program is discussed at the BRICS Academic forum, within the framework of the Council for scientific, technological and innovative development within the BRICS framework and included in THE BRICS economic cooperation concept.
It is necessary to ensure coordination of work on the entire energy track within the BRICS framework under the leadership of the Committee of senior officials on energy. This coordination will provide an opportunity to obtain additional synergistic effects, avoid duplication of tasks and allow to promote the priorities of the state energy policy. In addition, the Ministry of Energy in Russia has prepared a draft roadmap for energy cooperation until 2025, which will be discussed with partners during the year. It is planned to sign up for the Ministerial meeting to be held in October 2020.
Today, Russia plays a key role in the development of energy cooperation between the BRICS countries, which is due to its position as a world energy power and a leading exporter of resources to the world market. Defining as the main measure of energy partnership, Russia initiates the establishment of the main formats of interaction of the Association's participants in this area.
Taking into account Russia's priorities and the key tasks facing its BRICS countries, it is obvious that energy cooperation within the group will develop in two parallel directions: multilateral and bilateral. The first one includes issues of an international nature related to the interest of countries in increasing their weight on the world stage, creating stabilization mechanisms, increasing transparency, and ensuring international obligations, including environmental challenges. The second vector relates to the strengthening and expansion of existing bilateral trade and investment ties.
