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221. Building the Banking Sector’s Capacity for Green Infrastructure Investments for a Low-Carbon Economy

Author:
Takashi Hongo and Venkatachalam Anbumozhi
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The construction of green infrastructure, using advanced technology and retiring inefficient technology, is essential for the low-carbon transition. Various green infrastructure programs are being implemented, and banks play an important role in facilitating these programs. Many lessons have been learned in improving finance for green infrastructure: (i) measurement, reporting, and verification is a useful tool for identifying green infrastructure investment; but just reduction is not enough for Green Infrastructure and three requirements – carbon dioxide emission reductions, improving energy access, and contributions to sustainable economic growth – connected with the Sustainable Development Goals are necessary; (ii) banks can contribute to realising a positive cycle of cost reduction and diffusion of advanced technology for reducing costs by scaling up markets; and (iii) carbon pricing is essential for removing carbon externalities and making green infrastructure commercially viable. Banks are recommended to have long-term strategies, improve their capacity for scenario analysis, have more dialogue with industry, and develop innovative finance such as carbon markets. Governments are recommended to adopt carbon pricing to encourage finance for green infrastructure.
Topic:
Climate Change, Energy Policy, Environment, Infrastructure, Green Technology, Renewable Energy, and Banking
Political Geography:
Global Focus

222. Unlocking the Potential of Private Financing for Low-carbon Energy Transition: Ideas and Solutions from ASEAN Markets

Author:
Venkatachalam Anbumozhi
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Under the Paris Agreement in 2015, the opportunities for the ASEAN Member States (AMS) to maximise low-carbon energy sources to achieve the Nationally Determined Contributions (NDC) target in reducing carbon emission levels have expanded. In order to move towards a low-carbon energy transition, private sector actors must work together with governments to implement strategies to invest in the low-carbon economy. However, major barriers such as insufficient enabling policy environment, availability of technologies and access to funding somehow impede the implementation. It is believed that unlocking the potentials of private sector would accelerate the transition of low-carbon energy. This paper, based on a market survey, which aimed to identify barriers and risks that private sectors face in accelerating the low-carbon investments. The survey respondents are divided into two categories, Lenders and Borrowers. Analysing 110 total respondents helped to identify the perceived and actual barriers as well as risks underlying to the access to financing and generated potential solution for policymakers to overcome these barriers. The survey results indicate that the main obstacles faced by private sectors are incoherent policies that created a high-risk environment for investment, a lack of access to de-risking mechanisms, and insufficient capacity to communicate the opportunities amongst financial institutions and project developers. To bare these risks, this paper suggests four interdependent solutions – establishment of a low-carbon transition fund, government warranty programme, broadening of de-risking mechanisms, and capacity building programme to accelerate the low-carbon energy transition across ASEAN.
Topic:
Energy Policy, Finance, Renewable Energy, and Private Sector
Political Geography:
Asia and Southeast Asia

223. Saudi-Russia oil war is a game theory masterstroke

Author:
Antoine Halff
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
On the face of it, the idea of Saudi Arabia and Russia starting an oil price war in the middle of a global pandemic is as dumb as it gets. From a game theory perspective, it is a masterstroke. Analysts have called the breakdown of Opec+ and the lifting of the supply cuts that kept the oil market balanced in the last two years anything from a spectacular blunder to collective suicide. A new model of the oil market led by the inventors of mean-field game theory, Fields Medal laureate Pierre-Louis Lions and Jean Michel Lasry, suggests otherwise.
Topic:
Energy Policy, Oil, Natural Resources, and Strategic Competition
Political Geography:
Russia, Europe, Middle East, and Saudi Arabia

224. Reconsidering US Sanctions Policy Amid the Coronavirus Crisis and the Oil Market Crash

Author:
Richard Nephew
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
For energy markets, the profound economic disruptions caused by the coronavirus have broken the arrangements of the OPEC+ oil exporters to limit production, as Russia and Saudi Arabia failed to agree on production caps. Oil prices plunged as producers ramped up output, made worse by the demand shock created by the spread of Covid-19 and resulting plunging global economic activity as countries have sought to cope with the widespread infection and mortality. The global economic shocks and humanitarian crises have left US sanctions policy in a deeply uncomfortable spot. The United States has prioritized using sanctions as a means of creating leverage for resolving myriad foreign policy crises, arguing in part that using sanctions is a more humane option than the alternatives. The United States has long argued that without sanctions, some problems would either get far worse, with their own unpleasant consequences (such as human rights violations, regional aggression, and acts of terrorism), or would be met by US military force instead. Though some would disagree with the notion that sanctions are ever moral or just, it is on this basis—taken in combination with the presence of humanitarian exceptions to sanctions—that US policymakers across the political spectrum have asserted that their approach is appropriate and consistent with humanitarian values.
Topic:
Energy Policy, Oil, Natural Resources, Sanctions, and COVID-19
Political Geography:
North America and United States of America

225. A Saudi-U.S.-Russia Oil Deal Is Not a Good Idea

Author:
Christof Ruhl
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
Oil markets are sending confusing signals at a time when more confusion is the last thing anyone needs. When Russia walked out on OPEC+ rather than contribute to more output cuts, Saudi Arabia turned on the crude taps. Whatever Riyadh’s intention, this “price war” was quickly made meaningless by the impact of the new coronavirus on global oil demand. The price collapse has been beyond anything anyone could have imagined. Now, storage room for crude is becoming scarce. Analysts warn darkly that plunging prices may threaten global economic stability. Equities follow the oil price news. Everyone seems to agree that prices should stop falling; and yet no one seems to argue that a very low oil price is exactly what the world’s economy needs to recover. The combination of price war and pandemic is also creating strange bedfellows. Some American shale producers are advocating that their country blocks Saudi oil imports, others want to talk to OPEC. President Donald Trump’s government has expressed an interest in cooperating on global oil supplies with Saudi Arabia and Russia; it’s nudging OPEC+ to reconvene, or an even wider group of producers to meet. Could we be witnessing the emergence of an unholy alliance of Saudi Arabia, Russia and the U.S., to “manage volatility,” and incidentally shore up the price of oil?
Topic:
Energy Policy, International Trade and Finance, Oil, and Natural Resources
Political Geography:
Russia, Europe, Middle East, Saudi Arabia, North America, and United States of America

226. 5 Reasons Why a Global Agreement to Prop Up Oil Prices Won’t Work

Author:
Jason Bordoff
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
In April 1986, U.S. Vice President George H.W. Bush traveled to Saudi Arabia with a request for King Fahd, the country’s ruler at the time: Please raise the price of oil. After falling around 60 percent over the course of a few months, cheap oil was becoming a “two-edged sword for America,” Bush explained. Consumers might enjoy low prices at the gas pump, but evaporating revenues for U.S. oil producers undermined America’s own oil supply, and thus its national security. That was the last time the White House publicly sought more expensive oil—until now. U.S. President Donald Trump has been pushing Saudi Arabia and Russia to cut output in the hopes that less crude on the market will raise oil prices, which have fallen by two-thirds since the start of the year. A low oil price threatens an already teetering U.S. shale oil sector with a wave of bankruptcies and job losses. All eyes are therefore on OPEC and its allies, which will meet by videoconference on Thursday to discuss the way forward—followed by an emergency meeting of G-20 energy ministers on Friday, where the United States will be represented as well. It was at the last meeting of OPEC and key non-OPEC producers in Vienna on March 6 that Russia refused to go along with a Saudi proposal for deeper production cuts. The subsequent surge in Saudi supply set off a vicious price war that has seen the price of oil briefly fall below $20 a barrel.
Topic:
Energy Policy, Oil, Regional Cooperation, Natural Resources, and OPEC
Political Geography:
Middle East and Persian Gulf

227. Boosting ESG Finance for the Post-Covid-19 World

Author:
Mauricio Cardenas and Juan Jose Guzman
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
he novel coronavirus crisis has increased awareness about the need for sustainable and responsible investment. Once the spread of the virus is effectively contained, through testing and isolation, the world will focus on the recovery phase. But it should not be a return to business as usual. A successful recovery strategy should combine the need to restore income and economic activity while at the same time preventing another catastrophe resulting from the buildup of economic and financial vulnerabilities and policy mistakes (commonly known as white swans). As we enter what could likely be the worst recession since the Great Depression, the level of awareness about the costs of ignoring the physical limits to economic growth will likely increase. This crisis is revealing how unprepared and vulnerable our socio-economic system is to physical shocks. As opposed to financial shocks, like the ones that caused the global financial crisis over a decade ago, physical shocks originate from ecological and social constraints that, when violated, generate an economic collapse. Thanks to advancements in the natural and social sciences, we are now in a better position to understand their underlying causes, and in some cases assess their likelihood. Mitigating this class of tail-risks is not just possible, it has never been more relevant and urgent. One effective way to do that is to allocate capital intelligently. Although insufficient alone, the use of environmental, social, and governance (ESG) finance is one way to ensure that the post-Covid-19 period does not breed another such experience. Greater focus on sustainable investing, once some normalcy is restored, can reduce the chances that a new physical shock develops into another global crisis.
Topic:
Energy Policy, Public Health, Pandemic, and COVID-19
Political Geography:
Global Focus

228. Under a Cloud: The Future of Middle East Gas Demand

Author:
Robin Mills
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
During the early years of the 21st century, the Middle East emerged as a fast-growing center not just of natural gas production and exports but also of demand. Including Egypt, total growth in annual demand from 2000 to 2017 was greater than any region except Asia, a feat more surprising when considering the region’s relatively small population and economy. That’s about to change, however. After two decades of rapid expansion of natural gas consumption in the Middle East, growth should drop through 2035 due to four factors: improved efficiency, higher gas prices, slower economic growth, and alternative generation. Demand growth was driven by low, subsidized gas prices intended to spur economic growth, encourage energy-intensive industrialization, and share some benefits with the local population. But budget deficits and unsustainably rising domestic energy consumption have encouraged regional governments to cut subsidies and introduce efficiency policies, particularly since the fall in oil prices in late 2014. Industrial demand growth is also poised to fall as the Middle East’s key competitive advantage was its low energy and feedstock cost. The analysis undertaken in this paper to project future gas demand in the Middle East yields significantly lower estimates than forecasts by a number of international bodies (IEA, GECF, BP, ExxonMobil), especially post-2030.
Topic:
Energy Policy, Natural Resources, Gas, and Trade
Political Geography:
Middle East

229. Columbia Global Energy Dialogue: Natural Gas Flaring Workshop Summary

Author:
Marianne Kah
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
The rapid expansion in tight oil production with its associated natural gas has made the United States the fourth largest source of flared gas in the world. The waste, emissions, and pollution caused by this flaring threatens not only the environment and human health but, ultimately, the license to operate for oil and natural gas companies. Responding effectively to the challenge of flaring requires technically and economically sound solutions that also enjoy political credibility and support. To be most credible, solutions for flaring need to be developed through open and transparent processes that provide for candid and constructive engagement by a diverse group of stakeholders. In January 2020, Columbia University’s Center on Global Energy Policy and the Energy Institute of the University of Texas at Austin gathered senior executives from the US oil and natural gas industry; current and former state government regulators; technical, market, and academic experts; and non-governmental organization (NGO) representatives with expertise in this topic for a workshop under the Chatham House Rule to discuss challenges and potential solutions to gas flaring, primarily in the Permian Basin. The gas flaring workshop focused on trends in gas flaring and greenhouse gas emissions in the United States, flaring and public policy, the disconnect between production growth and midstream infrastructure capacity, best practices and technological solutions for minimizing flaring, and regulatory and other solutions. Participants identified challenges to tackling flaring in the Permian, including poor data quality, the disconnect between the start of associated gas production and the availability of pipelines and other takeaway capacity, and the competition gas faces in the important Texas and California markets from lower-emission energy sources, and from coal in Texas. Participants also discussed potential solutions to these and other Permian flaring challenges.
Topic:
Energy Policy, International Trade and Finance, Oil, Natural Resources, and Gas
Political Geography:
North America and United States of America

230. The 2020 Oil Crash’s Unlikely Winner: Saudi Arabia

Author:
Jason Bordoff
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
With 4 billion people around the world under lockdown as the coronavirus pandemic grows, demand for gasoline, jet fuel, and other petroleum products is in freefall, as are oil prices. The price of a barrel of crude has been so low in the United States that sellers recently had to pay people to take it off their hands. As a result, oil-dependent economies are reeling. In the United States, the largest oil producer in the world, the number of rigs drilling for oil has plummeted 50 percent in just two months, almost 40 percent of oil and gas producers could be insolvent within the year, and 220,000 oil workers are projected to lose their jobs. Around the world, petrostates from Nigeria to Iraq to Kazakhstan are struggling and their currencies tanking. Some, like Venezuela, face an economic and social abyss. While 2020 will be remembered as a year of carnage for oil nations, however, at least one will most likely emerge from the pandemic stronger, both economically and geopolitically: Saudi Arabia.
Topic:
Energy Policy, Oil, Natural Resources, and Gas
Political Geography:
Middle East, Saudi Arabia, and Gulf Nations