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21. The Global Stocktake at COP28: Ensuring a Successful Outcome

Author:
Masooma Rahmaty and Gabriela Bonina
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
International Peace Institute (IPI)
Abstract:
COP28 marks a pivotal point in the global response to the climate crisis, where countries will have the first opportunity to review and take stock of the Paris Agreement through the Global Stocktake (GST). This presents an opportunity to accelerate climate action and close the gaps needed to keep global warming below 1.5°C. To ensure a successful political outcome from the GST, the parties at COP28 could focus on the following: Keep 1.5°C alive through commitments in nationally determined contributions: Governments, especially major emitters and future major emitters, need to commit to ambitious measures to reduce greenhouse-gas emissions. The GST outcome should provide specific guidance and actionable suggestions to countries as they prepare to submit their new or updated NDCs in 2025. Phase out fossil-fuel production: Parties should agree to call for a sustained and widespread phase-out of fossil-fuel production, including the elimination of subsidies for domestic and foreign fossil-fuel extraction. The goal should be to achieve net-zero carbon emissions as close as possible to 2040 (for developed countries) and 2050 (for emerging economies). An ambitious GST outcome would also include individual and collective commitments to triple global capacity for renewable energy by 2030. Price emissions: Parties should go beyond making pledges and develop mechanisms and frameworks that incentivize action. Carbon pricing is one such mechanism. A global carbon-pricing floor should differentiate between developed and developing countries, and the price should be set based on the markets rather than on a distinction between high and low emitters. Implementing a global carbon-pricing strategy could foster cooperation between developed and developing countries to safeguard the planet’s climate. Improve the quality and quantity of climate finance: Getting countries out of debt, especially those vulnerable to climate impacts, should be a priority. Donor countries can also explore innovative strategies for utilizing the International Monetary Fund’s special drawing rights to provide grants instead of putting countries more in debt. Bridgetown 2.0 highlights a path toward reforming the global financial system to better serve developing countries through currency exchange guarantees, disaster clauses for debt deals, and reforms to multilateral development banks to increase lending. Capitalize the Loss and Damage Fund: Now that countries have agreed to establish the Loss and Damage Fund, they should make pledges and pursue innovative finance, including taxes and levies on shipping, air travel, financial transactions, and fossil fuel extraction.
Topic:
Climate Change, Climate Finance, Fossil Fuels, Carbon Emissions, Paris Agreement, and Conference of the Parties (COP)
Political Geography:
Global Focus

22. Misperceptions of OPEC Capability and Behavior: Unmasking OPEC Theater

Author:
David Kemp and Peter Van Doren
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In the view of the American public, media, and politicians, the Organization of Petroleum Exporting Countries (OPEC) sets oil prices by adjusting the amount of crude oil its members produce. However, the geological and engineering realities of oil extraction, the inconclusive academic evidence on the relationship between OPEC production and oil prices, and the cheating on oil production quotas by OPEC members and lack of enforcement all indicate that OPEC is more a political club than an effective oil cartel. In fact, three key members—Saudi Arabia, Kuwait, and the United Arab Emirates (UAE)—have oil production volatility similar to the United States over the past three decades. This implies that these three important and politically stable OPEC nations do not possess, or do not utilize, a unique short-term capability to alter their oil production to regulate oil prices. Altogether, the evidence suggests that the attention paid to OPEC is mostly about political benefits to both OPEC members and Western leaders, not an actual ability to control the oil market. The OPEC members use their oil production as an international bargaining chip and the perception of influence over the West to gain domestic legitimacy. Western leaders are happy to reciprocate by using OPEC as a scapegoat for unpleasant oil supply or demand shocks. Based on this picture of OPEC, U.S. concerns about OPEC behavior are unfounded and legislative proposals to punish OPEC are misguided.
Topic:
Economics, Oil, OPEC, and Fossil Fuels
Political Geography:
Middle East, Kuwait, Saudi Arabia, United Arab Emirates, and Gulf Nations

23. MENA and the Global Energy Conundrum

Author:
Rabah Arezki and Adnan Mazarei
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The Middle East and North Africa region (MENA) is addicted to fossil fuels, but so too is the rest of the world economy. Solutions to the energy transition have thus to be found in a coordinated global shift in both the supply and demand for fossil fuels and clean(er) energy, where multilateral institutions can play an important role. These institutions could help bolster international technology transfers to MENA, as well as scale up investment and trade in clean energy to facilitate the global energy transition. Given the potential in MENA for solar power, the region could remain a global hub, this time for clean energy.
Topic:
Climate Finance, Economy, Fossil Fuels, Energy, and Green Transition
Political Geography:
Middle East and North Africa

24. Methane Emissions from the Fossil Fuel Industries of the Russian Federation

Author:
Robert Kleinberg
Publication Date:
01-2023
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
Methane emissions are second only to carbon dioxide emissions as a driver of human-induced climate change. Moreover, reducing the rate of methane emissions is the fastest and least disruptive way to moderate global temperature rise over the next several decades. The production of fossil fuels—principally coal, oil, and natural gas—is among the main sources of anthropogenic methane. As one of the world’s largest producers of fossil fuels and one of the largest emitters of fossil fuel methane, the Russian Federation is central to methane-mitigation efforts. However, Russia’s own estimates of methane emissions vary greatly from year to year and are at variance with estimates of international data collection and research institutes. As a result of a recent series of large reductions, the self-reported methane emission intensity of the Russian Federation oil and gas industry is now less than that of the U.S. oil and gas industry. If taken at face value, this estimate would make Russia a preferred provider of oil, gas, and petroleum products to importers sensitive to the upstream greenhouse gas emissions of their suppliers. Satellite-based, national-level estimates of Russian methane emissions are available, but the error bars are large and attributions to specific economic sectors unreliable. Satellites are more reliable in characterizing plume events, but the measurements are insensitive and account for only a small fraction of total emissions. Coal mine methane emissions are easier to characterize but harder to remediate than emissions from oil and gas sources. If Russia seeks to play a constructive role in climate change mitigation, it will need to collect accurate, quantitative information about the state of its emissions and introduce monitoring systems. It will also need to implement prudent mitigation measures. This report starts with an introduction to the sources of natural and anthropogenic methane and an explanation of why the fossil fuel industries in general and the Russian fossil fuel industries in particular have received a disproportionate share of interest. It then describes the difference between bottom-up and top-down measurements; reviews the reports of methane emissions in Russia and the United States, pointing out similarities and contrasts in methodology and consistency; and explores the capabilities and limitations of satellite-based measurements. The report then discusses how methane emissions from the fossil fuel industries can be mitigated with a two-part program before finally addressing policy issues with respect to styles of regulation. Although the focus of this report is the Russian Federation, many practices described here are common internationally, including in the United States. Therefore, this report’s descriptions of the current practices, capabilities, and limitations of various methods of estimating and mitigating methane emissions have general applicability. Similarly, recommendations for improvement and discussions of policy have global applications.
Topic:
Fossil Fuels, Industry, Methane, and Energy
Political Geography:
Russia and Eurasia

25. Assessing ESG Risks in National Oil Companies: Transcending ESG Ratings with a Better Understanding of Governance

Author:
Luisa Palacios and Catarina Vidotto Caricati
Publication Date:
05-2023
Content Type:
Special Report
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
National oil companies (NOCs) produce about half of the world’s oil, hold more than half of its refining capacity, and own the bulk of oil and gas reserves. Most of these companies come from emerging markets and depend heavily on international capital to finance their operations. As financial institutions consider more carefully environmental, social, and governance (ESG) risks in their investment decisions, an accurate assessment of the ESG performance of NOCs will be vital. Assessment of ESG risks in NOCs is currently hobbled by both the considerable divergence in ESG ratings for any given company and the complex nature of NOCs’ state ownership structure, which isn’t always readily encapsulated in ESG scores. A clearer picture of these companies’ ESG performance could be useful to investors. This paper, part of the Financing the Energy Transition initiative at the Center on Global Energy Policy at Columbia University SIPA, aims to provide a better understanding of what impacts the ESG performance of NOCs in emerging markets. The authors survey ESG ratings of the largest national oil and gas companies in emerging markets for which such ratings are available, alongside the scores of some of the largest integrated oil and gas companies from advanced countries. The authors find a significant divergence in ESG scores for each single company, which raises questions about their individual stand-alone value in assessing the relative ESG performance of companies in the integrated oil and gas space. An analysis of average NOC ESG ratings—imperfect as they are—against those of international oil companies (IOCs), however, indicates much lower performance of NOCs on governance specifically (i.e., the G in ESG). Ownership by a state creates unique governance challenges—which, in turn, affect environmental and even social efforts—and deserves further exploration to determine which factors within state-owned companies can improve or impair ESG performance, to facilitate a more reliable understanding of NOCs’ ESG risks.
Topic:
Oil, Governance, Fossil Fuels, Energy Transition, and National Oil Companies
Political Geography:
Global Focus

26. Achieving the Promise of Hydrogen for India and the World

Author:
Amit Bhandari, Chaitanya Giri, and Saeeduddin Faridi
Publication Date:
03-2022
Content Type:
Research Paper
Institution:
Gateway House: Indian Council on Global Relations
Abstract:
On February 17, India launched the Green Hydrogen Policy which facilitates the production of hydrogen and ammonia to replace fossil fuels. Produced from water by electrolysis, green hydrogen offers a way to store renewable energy in bulk. This paper analyses the viability of green hydrogen in India as a vehicle fuel and industrial gas, and makes recommendations for the usage of this clean energy source by companies, entrepreneurs, and policy-makers.
Topic:
Entrepreneurship, Economy, Renewable Energy, Fossil Fuels, and Hydrogen
Political Geography:
South Asia and India

27. The European Union’s uneasy journey through the energy crisis

Author:
Alekos Kritikos
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
The European Union revealed rapid reflexes when it came to imposing sanctions on Russia and supporting Ukraine, but has been extremely slow when it comes to taking measures to relieve its own citizens and businesses. At three fruitless summits in the first two months of the crisis, numerous member states’ repeated requests for a joint fiscal response mirroring that adopted vis-à-vis the pandemic were not even informally tabled. In May, the Commission presented the REPowerEU programme, which aims to transition to clean energy and end the EU’s dependence on Russian fossil fuels. The two European Councils in May and June agreed on new sanctions against Russia, further assistance for Ukraine, and joint EU supplies of defence equipment. However, no decision was made to impose a cap on the price of natural gas and the issue of a joint fiscal response to the crisis was not even discussed. Despite repeated requests, the Commission continued to not submit proposals to this effect. But pressure was mounting for decisions to be made. Fifteen countries signed a joint letter in September 2022 calling for a cap on gas prices. In a joint article, Commissioners Thierry Breton and Paolo Gentiloni have also called for a joint fiscal response. The two Councils of Energy ministers in September 2022 resolved on a series of measures, but these are national responses rather than a joint European initiative. The price cap was absent once again from the decisions made. The informal Prague summit did not reach any conclusions either, though it did table all the outstanding issues in question. Europe’s successes in dealing with the pandemic came with “collateral damages”, institutional and otherwise, and the bloc has continued to sustain further collateral damages during the current energy crisis.
Topic:
European Union, Crisis Management, Fossil Fuels, Energy Crisis, and Russia-Ukraine War
Political Geography:
Europe

28. The impact of the Ukraine crisis on international trade

Author:
Zsolt Darvas and Catarina Martins
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
We study the economic implications of Russia’s invasion of Ukraine, by scrutinising global trade volumes and commodity prices, trade balances and bilateral trade flows between major economic powers and Russia. We find that energy prices increased more in 2021 than in 2022, suggesting that the war and the sanctions were not the most important drivers. Nevertheless, International Monetary Fund forecast revisions from October 2021 to October 2022 suggest that the volume of global trade in goods and services declined by 3.4 percent, energy prices increased by about 100 percent, and the prices of non-energy commodities by 8 percent. The war could be an important driver of these forecast revisions, though other factors were also at play. While forecasts for important industrial production input costs were not revised, soaring energy prices deteriorated the trade balance of countries importing energy. Only half of the increase in Russia’s trade surplus was related to soaring energy prices. The other half resulted from the collapse of Russian imports, which will likely undermine the Russian economy’s productive capacity over time. Falling Russian exports of goods other than mineral fuels suggest Russia’s productive capacity has already weakened. Russia’s trade has been reoriented from advanced economies to China, India and Turkey, but this has only partially compensated for the decline in trade with advanced countries. We find that sanctions had an impact on trade. There is no evidence of European and US companies circumventing sanctions by re-routing sanctioned goods to Russia via China and Turkey. The UK and the US have already stopped importing fossil fuels from Russia, and such imports by the EU have declined. With the EU’s Russian seaborne crude petroleum import ban taking effect in December 2022 and the refined petroleum ban coming to effect in February 2023, Russia’s revenues from fossil fuel exports to the EU are set to shrink significantly, with limited options for redirecting exports to other countries. The three main policy-relevant implications from our research are: The war and the sanctions are not the most important drivers of energy price; The direct aim of sanctions seems to have been achieved; The capacity of the Russian state to finance the war from fossil fuel revenues is bound to shrink. The dataset used for most charts of this working paper is regularly updated and is available in the Russian foreign trade tracker
Topic:
International Trade and Finance, Sanctions, Fossil Fuels, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

29. From the Russian Pact to the Green Deal?

Author:
Gilles Lepesant
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
Russia's invasion of Ukraine has, among other things, caused an energy crisis comparable to the oil crisis of the 1970s, one that goes beyond oil however since Russia is also a major supplier of gas and coal. By 2021, it was the EU's largest supplier of all three fossil fuels. The military hostilities started in a context dominated by price pressures induced by global economic recovery and by an abnormally low level of storage sites in Europe. In this context a policy of diversification as part of RepowerEU was launched in view - as put forward by the European Commission - to do away with the supply of fossil fuels from Russia by 2030. Beyond the quest for new short-term suppliers, the question of a radical acceleration of the energy transition in Europe in favour of low-carbon energy sources and sobriety is now being asked. This paper highlights the opportunity for Europeans to break not only with their dependence on Russia but also, and above all, with fossil fuels. It outlines the challenges to be met by underlining the extent to which the current stage of energy decoupling from Russia marks a turning point and closes several decades of close interdependence between Russian deposits and the European economies.
Topic:
European Union, Fossil Fuels, Green Deal, Energy Crisis, and Russia-Ukraine War
Political Geography:
Russia and Europe

30. The end of European dependence on Russian fossil fuels

Author:
Ramona Bloj
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Robert Schuman Foundation (RSF)
Abstract:
The Russian war in Ukraine is entering its eighth month. As winter approaches, the question of energy and Europe's dependence on Russian hydrocarbons, which has dominated European debate since the invasion began on 24 February, is turning into a major challenge for the 27 Member States. The latter must strike a delicate balance between reducing consumption, relieving pressure on consumers and making a genuine transition to deal with climate change
Topic:
Climate Change, European Union, Fossil Fuels, Energy Crisis, and Russia-Ukraine War
Political Geography:
Russia and Europe