by Alex Evans | Nov 16, 2007 | Climate and resource scarcity, Global system
I was about to pull together some of the main threads in the IEA’s 2007 World Energy Outlook (executive summary here), but Martin Wolf beat me to it in yesterday’s FT, so here are a few of his highlights from the new report:
If governments stick with current policies (which the IEA calls the “reference scenario”), the world’s energy needs will be more than 50 per cent higher in 2030 than today, with developing countries accounting for 74 per cent, and China and India alone for 45 per cent, of the growth in demand.
Fossil fuels are forecast to account for 84 per cent of the increase in global energy consumption between 2005 and 2030.
Some $22,000bn (a little under half of 2006 world gross product) will need to be invested in supply infrastructure, to meet demand over the next quarter century.
In the IEA’s own words, “a supply-side crunch in the period to 2015, involving an abrupt escalation in oil prices cannot be ruled out”.
Sitting straight yet?
For me, two big themes stand out in this year’s outlook. The first is the oil markets, which remain extremely tight. The overall figures for global production are not keeping pace with the increase in demand; Lester Brown at the Earth Policy Institute argues that they show “a pronounced loss of momentum in the growth of oil production” over the last few years. In 2004, the total was 82.90 million barrels of oil a day (mb/d). This rose to 84.15 mb/d in 2005, and then 84.80 mb/d in in 2006. In the first ten months of this year, output has fallen back slightly to 84.62 mb/d.
Naturally, none of this has been lost on analysts who support the peak oil argument – an increasing number of whom now claim that the peak was passed some time between late 2005 and early 2007. Their attention has in particular focused on a report from the Energy Watch Group, commissioned by the German government, which concluded that:
world oil production … peaked in 2006. Production will start to decline at a rate of several percent per year. By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame.
Not being a geologist, I won’t attempt to pass judgement on that claim. Many in the oil industry vehemently deny that a peak is anywhere close, and since peak oilers themselves tend to argue that the production peak will only be definitively discernable in retrospect, a few more years of falling production would presumably be needed before a peak could be called for sure.
But what the IEA’s new energy outlook really tells us is that you don’t have to be a peak oiler to be worried about the energy outlook. Although some investment in new supply is happening, it’s a long way short of the astronomical levels called for by the IEA. Take, for instance, Javier Blas’s excellent FT analysis piece today, which quotes the Secretary General of OPEC – which according to the IEA will account for a rapidly increasing proportion of global oil supply – as saying that its members have committed close to $120 billion in supply expansion projects.
$120 billion? Well, great. Only another $21,880 billion to go, then.
The second stand-out part of the report for me is the climate change part of the piece. Among the highlights that Martin Wolf picks out from the report:
Under the reference scenario, emissions of carbon dioxide will jump by 57 per cent between 2005 and 2030. The US, China, Russia and India alone contribute two-thirds of this increase. China becomes the world’s biggest emitter this year and India the third largest by 2015.
Even under the IEA’s more radical “alternative policy scenario” CO2 emissions stabilise only by 2025 and remain almost 30 per cent above 2005 levels.
Look at these figures in the light of the IPCC figures on emissions levels and stabilisation scenarios (here‘s the relevant section of the latest assessment report – you want table 3.5 on page 198). According to the IPCC, the ‘alternative scenario’ – with emissions peaking in 2025 – puts the world on course for a stabilisation level of around 590 parts per million carbon dioxide equivalent, and warming of around 4 degrees Celsius (though caveat recent data in Science about the risks of predicting temperature increase from concentration data). And that’s assuming a rapid decline in emissions after they peak in 2025. It doesn’t look good.
Wolf is refreshingly blunt – and right on the mark – when he says that on global warming, “despite the blather, nothing effective has been done or yet seems likely to be done”. And this is perhaps the most challenging element of the world’s energy outlook – not just the need to meet exploding demand for energy while slashing carbon dioxide emissions, but the fact that in order to pull off this extraordinary feat, the real heavy lifting is on the demand rather than the supply side of the equation. According to the IEA’s own projections, it’s energy efficiency, more than renewables, nuclear, clean coal and so on, that make the difference between the reference scenario and the alternative policy scenario.
The problem is, tackling the demand side is the hard part of climate mitigation – and domestic energy efficiency and road transport (as opposed to business energy use) are the really hard part. Changes of this kind are all about influencing the behaviour, values, assumptions and narratives of a very large number of people; technical policy fixes don’t go that far here. David and I will be publishing a paper next month, commissioned by the London Accord, on public perceptions of climate change, which has a lot to say on this area. There’s a lot of work to do…
by Alex Evans | Nov 15, 2007 | Conflict and security, Cooperation and coherence, UK
Gordon Brown’s first foreign policy speech, delivered on Monday evening at Mansion House, was nicely drafted, well argued and competently delivered. Its central argument: that “international institutions built [in 1945] for just 50 sheltered economies in what became a bipolar world … are not fit for purpose in an interdependent world of 200 states where global flows of commerce, people and ideas defy borders”.
Although virtually all media coverage of the speech – Times, BBC, PA, Independent, Telegraph, New York Times, Melanie Phillips in predictable form in the Spectator, Jonathan Freedland in the Guardian – led exclusively either on Iran or on the relative weight accorded to the UK’s relationship with US and EU, this was really a speech about multilateral reform. In particular, it was about reforming international institutions to equip them to deal with six new trends: “failed states and rogue states”; terrorism; global flows of capital, goods and services; the emergence of China and India; climate change; and “a new global competition for natural resources”, especially energy.
(It’s interesting, by the way, that he emphasised natural resource scarcity, rather than just energy security on its own. To give credit where it’s due, Brown spotted that agenda well before most of his peers: the Treasury’s December 2004 paper on long term economic challenges for the UK, for instance, made the same point. It’s also very interesting that Brown has instructed the Prime Minister’s Strategy Unit to undertake a review of the UK’s food security, as reported in the Observer last weekend. I’m doing a presentation for the Strategy Unit team in a couple of weeks’ time, which I’ll post here once I’ve written it.)
But as the New Statesman put it pithily in their leader this week, the real question for Gordon Brown’s multilateral reform agenda is “how will he succeed when others have failed?”.
Take, for instance, what he had to say on conflict in fragile states, where there was a strong call for moving from a reactive to a preventive stance on conflict, and for “the first internationally agreed procedures to prevent breakdowns of states and societies”. Fine in principle – but hard to see how Brown will make much headway on this given that moves in 2005 and 2006 to arm the new UN Peacebuilding Commission with a prevention mandate quickly foundered in the face of ferocious developing country opposition.
Similarly, there was a proposal for “Security Council peacekeeping resolutions and UN Envoys [to] make stablisation, reconstruction and development an equal priority”. Again, this was a little unclear: no mention of the Peacebuilding Commission here either, or of the fact that one area where the UN has actually got much better is in integrated mission planning.
But the really key section was the last one, on renewing multilateralism at the global level, where Brown argued the need to “judge success not by the number of initiatives in conference halls but by practical action for change”, and that “we need fewer rather than more international bureaucracies”. So, he went on, we need:
- A less introspective EU – “outward looking, open, internationalist, able to effectively respond both through internal reform and external action to the economic, security and environmental imperatives of globalisation”;
- Security Council reform – where Brown noted that “permanent members do not include Japan, India, Brazil, Germany, or any African country”;
- A broader G8 “to encompass the influential emerging economies now outside but that account for more than a third of the world’s economic output”;
- A “new coalition of democracies and civic societies joining together as allies for progress, with leaders in politics, economics and civil society all pushing forward reform”;
- A transformed IMF “with a renewed mandate that goes far beyond crisis management to crisis prevention”, with particular focus on early warning;
- On environmental protection, a “strengthened role” for the UN and the World Bank becoming “a bank for the environment” as well as for poverty reduction.
It’s hard to argue against any of these ambitions. But it’s also hard to avoid the impression that a lot of them were lifted directly from the 2004 High Level Panel report, as if the 2005 World Summit had not yet taken place (coincidentally, David Miliband chose this week to deliver a speech which revolved around a multilateral institution – this time the EU – being at a “fork in the road”. Sound familiar?)
Nonetheless, what Brown has achieved here is to set out a pretty good framework – a ‘scaffolding’, if you will – on which he can hang fresher and more detailed foreign policy ideas in due course. To my mind, there was just one key trick that he missed. For all that Brown correctly identifies the emergence to global prominence of China and India as a game-changing development, what he doesn’t do in this speech is take the next step and ask: given that effective multilateralism will increasingly depend on Chinese and Indian buy-in, what do they want from it?
Update: Daniel Korski at ECFR is annoyed that Brown didn’t mention enlargement.
by Alex Evans | Nov 6, 2007 | Climate and resource scarcity, North America
Hillary Clinton made a big speech in Iowa yesterday on clean energy and climate change. Here’s the FT coverage, here’s the speech, and here’s the 16 page plan. A few highlights and observations:
First, check out the reframing of climate change as an issue. “For this generation of Americans, climate change is our Space Race. It is our home-front mobilization during World War II and it is our response to the Great Depression.” This kind of language marks a clear break with the more usual discourse of ‘small actions’ as the solution to climate change – energy efficient light bulbs, TVs off rather than on standby and so on – and comes across as more commensurate with the more alarmist narrative about the scale of the problem. (Some obvious influence here from the ‘new Apollo Project’ language that Michael Shellenberger and Ted Nordhaus talk about in their seminal essay The Death of Environmentalism.)
Second, look at the headline emissions target: the US would cut greenhouse gas emissions 80 per cent below 1990 levels by 2050, “the amount necessary to avoid the most dangerous and destructive consequences of climate change”. No bones about it, that is an impressive pledge; for comparison, the UK has pledged a 60 per cent cut in CO2 emissions by 2050 (n.b. that a CO2 target is more demanding than would be the same number for all greenhouse gases; and that Gordon Brown has said he’ll review that figure to see if it needs to be tougher).
Third: an economy-wide cap and trade scheme, with one hundred per cent of permits auctioned (instead of being ‘grandfathered’, i.e. allocated in proportion to existing emissions). And there’s a veritable smorgasbord of other domestic measures as well: an energy efficiency programme to reduce electricity consumption by 20% below projected (and n.b. that word ‘projected’) levels by 2020, a 25% renenwables target for 2030, and Al Gore’s proposed new ‘Connie Mae’ program to “make it easier for low and middle income Americans to buy green homes and invest in green home improvements”.
But here’s the really interesting bit: what she says about the international end of climate policy.
Other countries like China and India, they see we’ve done nothing. They feel free, therefore, to do very little. That is not the way we can lead. We have to prove that moving away from a carbon economy is good for growth and lead the world to a new binding agreement to reduce emissions dramatically.
The President’s failed unilateral energy policy is a part of our failed unilateral foreign policy. It’s deprived us of the credibility and the leverage we need to solve the climate crisis. I’ll change that by leading the process to develop a new treaty to replace the Kyoto Protocol, which is set to expire in 2012.
One of the worst messages the President sent was when he took office and rejected completely Kyoto. He could have said we don’t like Kyoto but we’re immediately starting a new process. But that didn’t happen.
Well, come January 2009, I’m sending a different message. I want to act quickly to help develop a new treaty. I will engage in high level meetings with leaders around the world every three months, if that’s what it takes to hammer out a new agreement. My goal will be to secure a deal by 2010. We can’t wait for two more years.
I will establish an E8 that’s modeled on the G8 which is where the big industrial economies come together. We need the world’s major carbon-emitting nations to come together to tackle these challenges.
The plan document provides a little more detail, hinting (or so it looks) at the possibility of an overall stabilisation target, though probably not a binding one:
Hillary would act quickly in 2009 to restore U.S. leadership in the global warming arena by playing an active role in developing the post-Kyoto treaty. As a guide to the treaty, Hillary would propose a science-based goal to limit global warming to levels needed to avoid the most catastrophic consequences of climate change. She would re-engage in negotiations, work to bring rapidly developing nations like China and India along, and convene high-level meetings every three months with the goal of getting a new deal in place by 2010, two years ahead of Kyoto’s expiration.
Although Edward Luce reports in the FT that “Ms Clinton said she would negotiate mandatory targets that would bind all the world’s polluters – including China and India”, I can’t see an explicit reference to that in the speech or the plan – so it must be derived either by inference from her reference to a “new binding agreement”, or from briefing by her campaign team. (It’d be interesting to know which.) I remain of the view, set out in my recent paper on what happens after Kyoto, that it’s unlikely that any Democrat President could accept a binding target for the US without China and India following suit – but presumably there are limits to how explicit Hillary wants to be about that at this stage.
Usual disclaimers apply, of course, not least that a lot more work will be needed to show how the measures here get the US on track for the very demanding 80 per cent headline target. But the overall impression is that Clinton is serious about the agenda – there’s a lot more here than rhetoric. And it will be interesting to see whether Clinton’s detailed policy platform and wide spread of ‘big ideas’ opens up some political space in Europe for some of the policy interventions that have remained just out of reach for the last decade – especially on energy efficiency.
by Alex Evans | Nov 1, 2007 | Climate and resource scarcity, Global system, Middle East and North Africa
At last, enough time to blog about Jim Holt’s terrific article on Iraq’s oil in the 18 October edition of the London Review of Books. Here’s how he begins:
Iraq is ‘unwinnable’, a ‘quagmire’, a ‘fiasco’: so goes the received opinion. But there is good reason to think that, from the Bush-Cheney perspective, it is none of these things. Indeed, the US may be ‘stuck’ precisely where Bush et al want it to be, which is why there is no ‘exit strategy’.
Holt goes on to observe that as much as a quarter of the world’s remaining oil reserves may be in Iraq – and that Iraq’s new oil law (drafted by the US) would work strongly to American advantage. Under the draft law, the Iraq National Oil Company would retain control of just 17 out of 80 oilfields, while the rest – including all yet-to-be-discovered oil – would remain under the control of foreign companies for the next thirty years.
US hegemony in country, Holt goes on, would be maintained by five ‘super-bases’, which are all already currently under construction. That these “enduring” bases are being built is not news – the Independent on Sunday broke the story in the UK back in April last year, when Andrew Buncombe wrote that:
Major Joseph Breasseale, a senior spokesman for the coalition forces’ headquarters in Iraq, told The Independent on Sunday: “The current plan is to reduce the coalition footprint into six consolidation bases – four of which are US. As we move in that direction, some other bases will have to grow to facilitate the closure [or] transfer of smaller bases.”
As Buncombe’s article observed back then, some of the largest bases under construction were in the middle of the desert, away from large urban centres. I remember thinking at the time that pulling out of urban centres only made sense as part of a statebuilding strategy if the US was extremely confident of an improving security situation and of being able to hand control over to Iraqi security forces sooner rather than later – which clearly wasn’t the case. But as garrisons for defending criticial oil infrastructure, on the other hand… on that count, the superbases would make much more sense.
Holt’s LRB article came only a month after Alan Greenspan’s comment in his newly published memoirs that the Iraq war was “largely about oil”. (Greenspan subsequently clarified his comments in an interview with Bob Woodward for the Washington Post, when he said that “I was not saying that that’s the administration’s motive. I’m just saying that if somebody asked me, ‘Are we fortunate in taking out Saddam?’ I would say it was essential.”)
It’s remarkable that the debate over why the US went to war in Iraq is only now getting underway, four years after the conflict began. As Holt quotes in his article,
Many people are still perplexed by exactly what moved Bush-Cheney to invade and occupy Iraq. In the 27 September issue of the New York Review of Books, Thomas Powers, one of the most astute watchers of the intelligence world, admitted to a degree of bafflement. ‘What’s particularly odd,’ he wrote, ‘is that there seems to be no sophisticated, professional, insiders’ version of the thinking that drove events.’
That’s exactly right. For all that books like Woodward’s State of Denial give us a valuable insight into the extent of Administration incompetence and turf warfare in planning the war and its aftermath, what they don’t give us is a really surgical dissection of the path to war and the various possible motives. What began with the charge that Saddam Hussein already had WMD then became the weaker charge that he could not be allowed to flout previous Security Council Resolutions on the issue; when it became apparent that there weren’t even live WMD programmes, the basis for intervention shifted again ex post to a humanitarian intervention.
The role of oil, on the other hand, never really got discussed seriously in the media. When, back in January 2003, Colin Powell said: “The oil of Iraq belongs to the Iraqi people. Whatever form of custodianship there is … it will be held for and used for the people of Iraq”, I was surprised by how little debate ensued. I remember arguing at an IPPR seminar in early 2003 that his words seemed evasive. The question of who owns the oil was of secondary importance; the real question – as the race between China and the US for access to energy supplies in Africa showed very clearly – was who gets to buy it, and on what terms.
There’s much more to discuss here, and here’s hoping that the apparent initial stirrings of a proper discussion of the role of oil in the path ro war in Iraq proves to be just that. But for now, here’s Holt’s conclusion:
The occupation may seem horribly botched on the face of it, but the Bush administration’s cavalier attitude towards ‘nation-building’ has all but ensured that Iraq will end up as an American protectorate for the next few decades – a necessary condition for the extraction of its oil wealth.
If the US had managed to create a strong, democratic government in an Iraq effectively secured by its own army and police force, and had then departed, what would have stopped that government from taking control of its own oil, like every other regime in the Middle East? On the assumption that the Bush-Cheney strategy is oil-centred, the tactics – dissolving the army, de-Baathification, a final ‘surge’ that has hastened internal migration – could scarcely have been more effective.
The costs – a few billion dollars a month plus a few dozen American fatalities (a figure which will probably diminish, and which is in any case comparable to the number of US motorcyclists killed because of repealed helmet laws) – are negligible compared to $30 trillion in oil wealth, assured American geopolitical supremacy and cheap gas for voters. In terms of realpolitik, the invasion of Iraq is not a fiasco; it is a resounding success.
Still, there is reason to be sceptical of the picture I have drawn: it implies that a secret and highly ambitious plan turned out just the way its devisers foresaw, and that almost never happens.
by Alex Evans | Oct 30, 2007 | Climate and resource scarcity
Regular readers will know that we’ve been watching food prices rise steadily over the last few months with increasing concern – see the Scarcity category of posts for the backstory, and also this excellent in-depth analysis piece that the FT published last week. Today, the Food and Agriculture Organisation’s head, Jacques Diouf, had some blunt words in an interview with the FT:
“Many [countries] will have to take hard decisions because of the impact of food prices. In some countries there will be price controls, some will scrap import tariffs on food to minimise the impact of rising costs and others will increase food subsidies … If prices continue to rise, I would not be surprised if we began to see food riots,” Mr Diouf said, noting that in the past year, Mexico, Yemen and Burkina Faso had all witnessed social unrest over high food prices.”
Concern at FAO is clearly rising steadily; last week, the FT quoted the head of its grain trading division as saying that “the world is gradually losing the buffer that it used to have to protect against big swings [in the market]. There is a sense of panic.” But Diouf has a plan:
At the FAO’s annual meeting in Rome next month, Mr Diouf will propose a “high-level conference on world food security” that would aim to agree on measures to cool down rising food prices.
Interesting idea – and welcome to see Diouf seeking to raise the political temperature on food prices. But it still leaves the question: how much can an FAO summit on its own really achieve? Step back for a moment and consider what’s actually driving the increase in food prices. Here are Jenny Wiggins and Javier Blas last week in the big FT analysis piece mentioned earlier:
Some of the price rises are the result of temporary problems, such as drought in Australia, and diseases, such as blue-ear in Chinese pigs. But there is a more permanent increase in demand from Asia, as richer populations in China and India demand more protein, and from the biofuel industry, which is on course to consume about 30 per cent of the US corn crop in 2010 – developments that will underpin prices for the medium term. The FAO estimates that those structural new trends will help to push the cost of agricultural commodities in the next decade between 20 and 50 per cent above their last 10-year average.
Problem is, these challenges – droughts, affluence in China and India, demand for biofuels driven by high energy prices – lie well beyond FAO’s sphere of influence. Even if ministers attending the forthcoming FAO summit agreed to cap food costs, it’s highly unlikely they’d be able to deliver it, given the sprawl of drivers at play – just as environment ministers have a bad habit of signing glitzy treaty declarations that then (with a few exceptions like the Montreal Protocol on ozone depleting substances) comprehensively fall down during the implementation phase.
But none of this is to deny that there genuinely is a problem – and one that we can expect to get a lot worse once long term scarcity trends like climate change and water depletion get stirred into the mix. So what should Mr Diouf do?
Here’s a starter for ten. Instead of going all out for a meaningless summit declaration full of warm words, big targets, no new funds and no compliance mechanism, Diouf should start the slow, painstaking process of building shared awareness of the fact that we have a major geopolitical scarcity problem in the post. While the first stirrings of the problem are already clear, he should recognise that building consensus on the nature of the problem could take a decade or more; just consider the fact that eighteen years elapsed between the IPCC’s establishment in 1988 and 2006 when consensus on the reality of climate change really coalesced.
The first step, then, is simply to get the key agencies talking to each other. Anyone who’s spent any time working in international bureaucracies knows that the most fundamental fact about them is that they are organised in silos that don’t talk to each other. The problem is bad enough within individual agencies or government departments; it’s even more serious when two rival agencies work on the same area. But even that is still simple compared to trying to build a relationship between agencies that barely know each other exists.
That’s where we are today with the international agencies who will have to manage the geopolitics of scarce oil, scarce water, scarce food and scarce atmospheric space. Lots of staff at IEA won’t even know what FAO stands for; and vice versa.
So Diouf should go ahead and organise his summit. But he should also organise a retreat for 50 key staff from 50 key agencies relevant to the management of scarcity, and start building the shared awareness that they’ll need in the next few years: mapping the most vulnerable countries, how food scarcity could exacerbate conflict flashpoints, figuring out how currency fluctuations could affect the situation, running scenarios for $150 a barrel oil, reading William Cline’s CGD research on how climate change will affect developing country agricultural productivity, working out what kind of developing country governance frameworks have proved effective at managing local scarcity, devising ways of building scarcity awareness into peacekeeping operations (as DPKO are doing with Darfur)… the list is endless.
Building the barest bones of a common language that all the relevant players can speak may seem a modest first step, especially as the clamour for kneejerk responses builds. But it is an indispensable one too.
