Energy Policy and Climate Change

TOPIC 2: THE IMPACT OF ENERGY AND ENVIRONMENTAL POLICIES ON OIL DEMAND

Oil dependence has been a persistent concern among both OPEC and non-OPEC states for the past century, as increasing demand for petroleum threatens to deplete current oil reserves, while consumer nations remain concerned that an excessive dependence on other nations could diminish their own sovereignty and limit their capacity in international relations[1]. Oil has remained a decisive factor in the international arena, as nations struggle with balancing demand, supply, and national interests[2].

The oil shocks of 1973, precipitated by a declaration by the Organization of Arab Petroleum Exporting Countries (OAPEC) to cease shipping petroleum to any nation supporting Israel during the 1973 Arab-Israeli War, caused the world economy to come to an abrupt halt[3]. In addition, OAPEC, in an effort to supplement lost revenue due to this stoppage, would charge its remaining customers seven times the price of petroleum[4]. This abrupt shortage in valuable petroleum caused a global economic recession, accompanied by skyrocketing prices for commodities such as gasoline[5]. Consumer nations were politically and economically paralyzed, and unable to rejuvenate their economies without a significant breakthrough with OAPEC[6].

The aftermath of the 1973 oil shock, which would last until March 1974, inspired non-OPEC nations to reevaluate their oil policies and their continued dependence on Arab petroleum. Western European states, as well as the United States and Australia, refocused their policies to oil exploration and energy conservation[7]. OAPEC states were afforded greater diplomatic power as a result of this oil stoppage and its disastrous implications for the world economy[8]. However, OAPEC nations would also recognize that, in order to maintain their rentier economies, they could not afford to cut off vast markets of demand[9].

Despite the attempts of industrialized nations to substantially reduce the amount of petroleum imported from OAPEC nations, many still receive vast majorities of their oil supplies from these nations. However, 50% of the oil imported from the United States comes from the OAPEC region, while 75% of Japan’s oil imports come from the same region[10]. Because a full two-thirds of the world’s oil reserves are located in the Persian Gulf, a sharp decrease in dependency on OPEC states is unlikely[11].

Recent history has underlined the increased importance in discovering alternative sources of energy. Political unrest in the Middle East continues to jeopardize the security of oil reserves in the Persian Gulf, as epitomized by Saddam Hussein’s invasion of Kuwait in 1990[12]. Civil unrest in the new Iraqi nation has also distressed petroleum investors and IOCs alike[13].

Energy policies, while critically important in global oil dialogues, is not the only force leading to new objectives and perspectives regarding oil policy. Since the 1972 United Nations Conference on Human Environment (UNCHE) in Stockholm, both consumers and producers, represented by a North-South divide, have been aware of growing environmental problems throughout the world[14]. This landmark conference marked the first time member nations from a variety regions converged to discuss environmental issues. At this stage, the South, and oil-producing states, maintained that pollution occurred from industrialization, and therefore was a problem of the West, or consumer nations[15]. This position would not be challenged until twenty years later, at the UN Conference on Environment and Development held in Rio de Janeiro, where the concept of ‘sustainable development’ was first introduced[16]. The lasting contribution of the Rio summit occurred in the paradigm shift of many Southern states, which now shared responsibility with Western industrialized states to conserve energy and curtail pollution[17].

Delegates were also working towards a treaty to create a global solution to the ever-increasing issue of air pollution throughout the world. Due to the exhaustive use of nonrenewable energy in automobiles, factories, and the generation of electricity, carbon levels have been rising precipitously. Leading climatologists believe the increase in ozone and carbon in the atmosphere has led to the piecemeal deterioration of the ozone layer and increasing global temperatures, although this claim is sometimes disputed[18]. Petroleum products overwhelmingly contribute to these emission levels, and have been targeted by policy-makers in their effort to slow climate change.

The first substantive treaty negotiations to prevent radical climate change occurred in the Vienna Convention for the Protection of the Ozone Layer, in 1985[19]. After four years of diplomacy and consultation, the resulting treaty recognized the necessity to conduct extensive research on the causes and consequences of ozone depletion[20]. The convention emphasized the need for future protocols and scientific treatment of global warming concerns. As the first international effort to specifically address climate change, the Vienna Convention set an important precedent by acting on an issue that had not been yet scientifically proven. Although few nations ratified this convention, it served as a vital watershed in environmentalism, as it acknowledged a global responsibility to address climate change before it materialized in full form[21].

In 1987, two years after this convention concluded, the Montreal Protocol on Substances that Deplete the Ozone Layer initiated the first global collective action to prevent further damage to the ozone layer. Declaring that chlorofluorocarbons (CFCs) and brominated hydrocarbons (halons) were among the most destructive pollutants, participating countries agreed to eliminate the production of these products through gradual reductions over several years[22]. In addition, the protocol encouraged industry to create safer alternatives to CFCs. Since this protocol, there have been five revisions: London (1990), Copenhagen (1992), Vienna (1995), Montreal (1997), and Beijing (1999). These subsequent revisions have set formal dates by which CDCs and halons must be completely phased out. In London, the Multilateral Fund for the Implementation of the Montreal Protocol, a program to aide developing nations in meeting the requirements of the protocol by providing financial assistance, was founded[23]. The United States has mirrored the requirements of the Protocol by implementing the Clean Air Act (1990), while the European Union has imposed a strict ban on the production and sale of all CFCs. The Montreal Protocol has been enormously effective, as it has reduced the use of CFCs and halons by 75% over 10 years, and has demonstrated the success of North-South cooperation, as well as preventive measures, in protecting the environment[24].

The successes of the Vienna Convention and the Montreal Protocol signaled a change among global leaders in their perception of global warming. No longer willing to ignore the issue, both North and South recognize the necessity for urgent action to prevent radical climate change. It was amongst this spirit of cooperation and environmental awareness that proceedings for the Kyoto Protocol began its negotiations in 1997[25]. The Kyoto Agreement sought to expand the scope of the Montreal Protocol to curtail all greenhouse gases[26]. This protocol stipulates that developed countries must reduce all greenhouse gas emissions by 5% in 2008, while developing countries have no set reductions. The protocol enables emissions trading, where developed states, if they fail to meet the required reduction, may “purchase” lower emissions from developing states[27]. The protocol also created a program referred to as “Joint Implementation,” that allows countries that have exceeded their emissions limit to invest in environmental programs, such as emissions reduction or removals by sinks, in the developing world. By creating a multilateral emissions trading system, the Kyoto authors hoped to institutionalize mechanisms by which all nations would significantly decrease their carbon emissions, and dramatically improve ozone conditions[28].

As the tenth anniversary of the Kyoto Protocol nears, many difficulties have arisen in its implementation. The U.S., along with Australia, whose support is critical to the success of the protocol, still has not ratified the treaty[29]. Several economists assert that the costs incurred by following the protocol regulations outweigh the benefits of greenhouse gas reduction. The developing world protests that it has not had an adequate voice in the Kyoto negotiations, and therefore will be significantly disfavored by future climate change decisions[30]. Other critics argue that Kyoto measurements (per annum, instead of per emission) will be ineffective in curtailing greenhouse gas production in the long run. In this vein, Kyoto has been accused of focusing too much on short-term achievements, while ignoring longer-term consequences[31].

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[1] Choucri, N., & Ferraro, V. (1976). Introduction: Global Energy Transactions. In

     Internationational Politics of Energy Dependence (pp. 3-27)

     [Introduction]. Toronto: Lexington Books.

[2] Stanislaw, J., & Yergin, D. (1993, September/October). Oil: Reopening the Door.

     Foreign Affairs, 72(4), 81. Retrieved July 10, 2006, from ProQuest

     database. 

[3] Choucri, N., & Ferraro, V. (1976). Introduction: Global Energy Transactions. In
Internationational Politics of Energy Dependence (pp. 3-27)
[Introduction]. Toronto: Lexington Books.

[4] Ibid.

[5] Ibid.

[6] Worth, T. E., Gray, C. B., & Podesta, J. D. (2003, July/August). The Future of

     Energy Policy. Foreign Affairs, 82(4), 133. Retrieved July 10, 2006, from

     ProQuest database. 

[7] Choucri, N., & Ferraro, V. (1976). Introduction: Global Energy Transactions. In
Internationational Politics of Energy Dependence (pp. 3-27)
[Introduction]. Toronto: Lexington Books.

[8] Ibid.

[9] Stanislaw, J., & Yergin, D. (1993, September/October). Oil: Reopening the Door.
Foreign Affairs, 72(4), 81. Retrieved July 10, 2006, from ProQuest
database.

[10] Worth, T. E., Gray, C. B., & Podesta, J. D. (2003, July/August). The Future of
Energy Policy. Foreign Affairs, 82(4), 133. Retrieved July 10, 2006, from
ProQuest database.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Najam, A. (n.d.). Developing Countries and Global Environmental Governance: From

     Contestation to Participation to Engagement. International Environmental

     Agreements, 5, 310. Retrieved July 10, 2006, from ProQuest database. 

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Haas, P. (1991, June). Policy Responses to Stratospheric Energy Depletion.

     Global Environmental Change, 1, 224-234. Retrieved July 19, 2006, from

     ScienceDirect database. 

[19] Vienna Convention for the Protection of the Ozone Layer. (1985). Retrieved July

     18, 2006, from http://www.opcw.org/html/db/cwc/more/ozone_vienna.html 

[20] The Vienna Convention. (2004). United Nations Environment Programme: Ozone

     Secretariat. Retrieved July 19, 2006, from http://ozone.unep.org/

     Treaties_and_Ratification/2A_vienna_convention.asp 

[21] The Vienna Convention. (2004). United Nations Environment Programme: Ozone
Secretariat. Retrieved July 19, 2006, from http://ozone.unep.org/
Treaties_and_Ratification/2A_vienna_convention.asp

[22] Ko, M. K. W., Sze, N.-D., & Prather, M. J. (1994, February 10). Better

     Protection of the Ozone Layer. Nature, 367, 505-508. Retrieved July 19,

     2006, from ProQuest database. 

[23] Welcome to the Web Site of the Multilateral Fund for the Implementation of the

     Montreal Protocol. (2003). Multilateral Fund for the Implementation of the

     Montreal Protocol. Retrieved July 19, 2006, from

     http://www.multilateralfund.org/ 

[24] French, H. F. (1997, September/October). The lessons of Montreal. World Watch,

     10(5), 2. Retrieved July 19, 2006, from ProQuest database. 

[25] Stavins, R. N. (2004, December). Forging a More Effective Global Climate Treaty.

     Environment, 46(10), 22-31. Retrieved July 19, 2006, from ProQuest

     database. 

[26] Breidenich, C., Magraw, D., Rowley, A., & Rubin, J. W. (1998, April). The Kyoto

     Protocol to the United Nations framework convention on climate change.

     American Journal of International Law, 92(2), 315-332. Retrieved July

     19, 2006, from ProQuest database. 

[27] Ibid.

[28] Breidenich, C., Magraw, D., Rowley, A., & Rubin, J. W. (1998, April). The Kyoto

     Protocol to the United Nations framework convention on climate change.

     American Journal of International Law, 92(2), 315-332. Retrieved July

     19, 2006, from ProQuest database. 

[29] Stavins, R. N. (2004, December). Forging a More Effective Global Climate Treaty.
Environment, 46(10), 22-31. Retrieved July 19, 2006, from ProQuest
database.

[30] Ibid.

[31] Ibid.