The BP Foundation has awarded a five-year, $7.5 million grant to Stanford University's Program on Energy and Sustainable Development to support research on modern energy markets. The foundation is funded by BP, one of the world's largest energy companies.

The gift follows the BP Foundation's initial grant of $1.8 million over three years, which was pledged in 2004 in support of the program.

"BP's support has allowed our program to study the world's most pressing energy problems, such as global warming, energy poverty and the prospects for the world oil market," said program director and Stanford law Professor David G. Victor. "In addition to BP Foundation support, we learn from BP's experience as an energy company because they operate in all the markets where we do research--such as in China and India."

"BP Foundation believes the work undertaken at Stanford deals directly with global issues that are key to meeting the world's growing energy needs," said Steve Elbert, chairman of the BP Foundation. "The drive to research and implement strategies to further understand today's energy markets is important work, and we are proud to partner again with Stanford."

The Program on Energy and Sustainable Development, part of the Freeman Spogli Institute for International Studies, concentrates on the legal, political and institutional dimensions of how societies derive value from energy. The BP Foundation grant is part of a rapid expansion of Stanford's research and teaching on energy issues, much of which focuses on the technical aspects of energy systems.

All of the program's research is public and published openly, including on its website. The gift from the BP Foundation, as well as all similar gifts to support the program's research, includes special provisions that assure the research program's independence in setting its research agenda.

The agreement with Stanford is one in a series of BP partnerships with universities in the United Kingdom, the United States and China, representing a total commitment of more than $600 million. The program at Stanford complements work on similar topics at Princeton University, Tsinghua University and Imperial College, among others.

Founded in 2001, the Program on Energy and Sustainable Development focuses on the "political economy" of modern energy services--the interaction of political, institutional and economic forces that often dominate energy markets. It collaborates with the Stanford Law School and other university departments and schools, including economics, engineering and earth sciences. About half of the program's resources are devoted to research partnerships in key developing countries, including Brazil, China, India, Mexico and South Africa. Program researchers have examined the emergence of a global business in natural gas, reforms of electric power markets and the supply of modern energy services to low-income rural households in developing countries.

The program's other major sponsor is the Electric Power Research Institute in Palo Alto, Calif., a research consortium that includes most of the world's largest electric companies.

Every day, the United States burns through 20.7 million barrels of oil. China, the world's second largest consumer, uses about 6.9 million barrels a day. Although the United States is the third leading oil producer in the world (behind Saudi Arabia and Russia), its appetite is so enormous that it overwhelms the country's production capacity. Its known reserves, about 21 billion barrels, would supply only enough to keep the country running at full speed for about three years.

So when STANFORD gathered five faculty members to talk about the implications of U.S. dependency on foreign oil, we expected grave declarations of alarm. But their concern did not square with the growing chorus of citizens and elected officials about why reducing this dependency is so important.

On the next five pages, faculty from political science, economics, law and engineering explain why the debate about energy security is missing the point, and what they think needs to be done.

STANFORD: How would you frame the issue of dependency on foreign oil? What should we be concerned about?

David Victor: The problem is not dependence per se. In fact, dependence on a world market produces enormous benefits, such as lower prices. Nor is the problem that energy's essential role in the economy means that dependence must be avoided. The real problem is that energy - oil, especially - doesn't operate according to normal market principles. Something like 75 percent of the reserves of oil and gas are controlled by companies that are either wholly owned or in effect controlled by governments, and there's enormous variation in how those companies perform. Some of them are just a disaster, like [Mexico's state-owned oil company] Pemex, and others can work at world standards, like Saudi Aramco or Brazils Petrobrás. Some of these governments, such as Venezuela, use oil revenues for political purposes that undermine U.S. influence. High prices do not automatically generate new supply or conservation, partly because suppliers can drop prices to undercut commercial investment in alternatives. Second, we have what has become known as "the resource curse." There'sa lot of evidence that the presence of huge windfalls in poorly governed places makes governance even worse. Revenue that accrues to oil-exporting governments is particularly prone to being misspent, often in ways that work against U.S. interests.

Scott Sagan: I agree that calling the problem "energy dependence" and therefore seeking energy independence is the wrong way to think about this problem. Talking about energy independence feeds the xenophobic impulse that occurs all too easily in American politics. And it suggests to other countries that they should seek independence rather than a more cooperative approach. I see very negative consequences politically in the signal that attitude sends. Think about the current nuclear crisis with Iran. Iran claims that it needs independent uranium enrichment capabilities to have "energy sovereignty." Such uranium enrichment production could be used, however, for civilian nuclear power or for making a bomb, creating enormous nuclear weapons proliferation problems. We're feeding into that kind of thinking when we use the same language about independence when referring to oil. And it produces uncooperative effects elsewhere. The Chinese, for example, cut a deal with Sudan as a means of creating energy security for themselves. It inhibits efforts of the international community to encourage that government to behave responsibly.

John Weyant: There is a distinction between dependence, meaning how much of the oil the United States consumes is imported, and vulnerability, meaning how at risk our economy and our social order are to oil-supply disruptions. That vulnerability is defined by how much of the total supply of oil in the world market comes from unreliable sources. So you have to look at oil supply on a global scale, not just in the United States. It's the instability of the supply that affects price.

Victor: I like John's term "vulnerability," and it leads us to various kinds of actions to reduce our vulnerability to the market rather than trying to make us completely independent. One of them has been around since the '70s - building and coordinating strategic stockpiles so that they are supplied into a single world market. Traditionally that could be done by the major Western countries because they were the major oil consumers. One of the big challenges for policy makers today is how to get India and China to think about the operation of this world market in the same market-based way that we think about it, and to get them to build up those stockpiles and coordinate them with our own. There's some evidence that that kind of coordination can reduce our vulnerability.

Weyant: There's this fallacy among the public that if we don't import so much oil, other oil-exporting countries are going to be hurt and we will be unaffected if oil supplies are cut off. But these countries are sometimes major trading partners of allies, and asking those allies to take a hit on our behalf just leads to other economic problems. If the economies in China and Europe and Japan, who are all major trading partners, go down, it affects how much they can buy from us. It's another reason we can't be xenophobic and just look inward on an issue like this. You get these international trade flows outside the energy sector that could be pretty devastating.

STANFORD: Last summer we saw crude oil prices hit $70 a barrel and gas prices went well above $3 per gallon nationwide. That momentarily changed consumer behavior, and reduced demand. Are high prices a good thing?

Michael May: The key factor in normalizing market conditions is assuring the market that high prices are here to stay. Major oil companies like Exxon and bp have been putting their money to other uses than exploration. They have been buying back shares and increasing returns to stockholders because that's the way Wall Street drives them. That might change if prices stayed high. It probably won't be $70 a barrel, but even $50 a barrel as a base price is almost twice the historic average. The extent to which investors become convinced that that's going to be the future average will have some bearing as to how much money they spend on exploration. Toyota and General Motors and others can make hybrids or much more efficient cars, but it takes billons of dollars of investment, and if the price of gasoline goes down, they have less incentive. When gas is cheap, driving an SUV is not such a big deal.

Victor: The reason some of these companies are buying back the shares is not just because of Wall Street but because they don't have a lot of truly attractive opportunities for investing in new production. Most of the oil reserves are either legally off limits for the Western oil companies or international oil companies generally, or they're de facto off limits because they're in places where it's so hard to do business. Although the public is seized by the high price of energy, the major energy companies are seized by concerns that prices are going to decline sharply. If there is a recession, which would dampen demand for energy, or the capacity to produce oil around the world improves, then prices will decline. It has happened in the past. That fear really retards a lot of investment because these investments have a very long capital lifetime, and you need to protect them against low prices over an incredibly long time horizon.

Michael McFaul: It's very important to understand that oil companies owned and operated by governments are not necessarily profit-maximization entities. Take Gazprom, the gas company of Russia. It is closely aligned with state interests, so profit isn't its only motivation. It will use its money for strategic purposes as defined by Vladimir Putin, not as defined by the shareholders of Gazprom. For instance, early in 2006, Gazprom cut off gas supplies to Ukraine, mostly for geopolitical reasons. Why is Hezbollah so well armed? Because of Iran, which uses oil revenue for strategic purposes; it is not used for investing in a company or investing in the market per se. This is part of the problem of the "resource curse" David referred to. If oil is discovered in a country before democratic institutions are in place, the probability of that country becoming democratic is very low. In countries where the state does not rely on the taxation of its citizens for its revenues, it doesn't have to listen to what its citizens want to do with that money. So instead of building roads or schools or doing things that taxpayers would demand of them, they use their money in ways that threaten the security of other countries, and, ultimately, their own.

Victor: It's important that we not overstate the extent to which users of energy are going to respond automatically to high prices, and the personal vehicle is a great example. Fuel accounts for about 20 percent of the total cost of operating a vehicle. Traditionally it's only been 10 or 15 percent, but we are much wealthier today than we were three decades ago when we had the [first OPEC oil embargo]. I think that helps explain a lot of the sluggishness in response in the marketplace. People are buying smaller, more fuel-efficient cars, but that trend will only go so far because there are other factors that determine what kinds of vehicles people purchase. In the United States and most advanced industrialized countries, most oil is used for transportation, where oil products have no rival. It is hard to switch. In most of the rest of the world, oil gets used for a variety of other purposes, including generating electricity. Those markets are probably going to be more responsive to the high price of oil because they're going to have opportunities to switch to other fuels. The United States used a lot of oil to generate electricity in the early 1970s and when that first oil shock came along, essentially all of that disappeared from our market. That's part of the reason why the U.S. energy system responded fairly quickly to the first oil shock, and why changes in behavior are harder to discern in the current crisis. There is no easy substitute for gasoline.

May: If we generally agree that high oil prices, on the whole, are a good thing because they cause investment in more production and more efficient uses of oil, then it would follow that the rapid growth in consumption in China is also a good thing and we should welcome it, right?

Victor: I disagree with that. In effect what we have right now is a "tax" that's been applied to the oil market due to the various dysfunctions of the way it operates and to unexpectedly high demand in the United States and China. The revenue from that tax is accruing to the producers, and if we think about how to get out of the mess here, then what we want to do is in effect apply a tax to the oil products. If we raise the price of these products to reflect the real total cost of our vulnerability to the world oil market, those companies have an incentive to go off and look for alternatives.

May: So you're saying the same thing: that high oil prices, whether from this tax or otherwise, are a good thing.

Weyant: It depends significantly on who is collecting the tax.

McFaul: Yes, the fundamental question is how the money is being spent. If I had high confidence that the money was going to reinvestment, then I could agree that high prices are good, but that's not what is happening. The Soviet Union's most dangerous adventures in the Third World correlated with the high oil prices in the 1970s. You can see the direct effect. And when the prices came down, the Soviet Union collapsed. The same is true with Iran today. They are being very aggressive in the region - in Iraq, in Lebanon, in Afghanistan - trying to become the Middle East hegemon. This would not be happening if they didn't have all these clients - Hezbollah, Hamas, their friends in Iraq - that they can support with millions of dollars. Going back a few decades, where did Osama bin Laden come from? Where did support for the Taliban come from? It came from this tax that David is talking about. If we're talking about security issues and oil, this is much more serious than supply disruption to the United States.

Victor: I agree with Mike 100 percent. If you look at where the revenues are going from Iran, Venezuela and so on, there's a long list of folks who are doing things that are contrary to our interests with the money that ultimately is coming out of the pockets of American consumers. Dealing with that is job one.

STANFORD: So how would you counsel American policy makers? What needs to happen to reduce our vulnerability over the long term?

Sagan: The vulnerabilities we have today should provide an incentive to make some critical investments and to change our thinking, but we're not really doing that. I was quite surprised at how much I agreed with one aspect of the second Bush inaugural address. [He said] let's start talking about our addiction to oil and all the problems associated with that, but I've been completely disappointed with the lack of follow-through. And part of the problem is this notion of energy independence. We need diversity in our research and development spending across the board, on a variety of technologies. We're going to produce energy security to a large degree by finding cooperative solutions that are efficient and secure for many countries working together. We need to see our national security as being very dependent on others and that's not entirely a bad thing.

Victor: There is one cluster of technology that's going to be exceptionally important - electric vehicles. The all-electric vehicle has been kind of a disaster. We tried to do that in California without much success at all. The new set of pluggable hybrid vehicles, which you plug in at night and charge up, are more promising. If such technologies make it feasible to reduce some of the transportation dependence on oil, then markets will be forced to become more "normal" and more responsive. Electric cars and other technologies can help to keep prices lower and ultimately help make the transition completely away from oil over a period of 30 or 50 years.

Weyant: We only think about energy as a nation when prices are high, and so there's a short attention span on the issue. That makes it really hard to sustain a policy that would be rational over the long term. If we're going to have a big R&D program, for example, you need to invest in technologies and sustain the investment over a long time horizon. If you couple this short attention span with our aversion to taxes, at least historically, you end up with policies that are almost designed from the outset to fail. The political tide is turning a little bit so a well-designed tax might be possible. Maybe you don't raise taxes now but you assure that the price of a [hybrid] car won't go below a certain level and that'll help create a little more confidence with the marketplace. If you just focus on research and development without getting the economic incentives right, you come up with all kinds of great gizmos that no one will actually make or use.

McFaul: We've been talking mostly about how to manipulate the market to change people's behavior and I think that's quite right. I can't tell you how many people I saw come out of a Palo Alto theater after seeing Al Gore's movie [An Inconvenient Truth] and jump into their gas-guzzling machines. I would like to tax those machines; use economic tools to change people's behavior in a way the movie didn't. This has to become a public policy issue. It's not right now. Think about the way the market for cigarettes worked in this country 50 years ago, and think of how it is structured now. We have not just taxes but regulation - they can't be advertised on television - and a national campaign trying to educate people about the health concerns. We need a similar effort on this issue.

Sagan: When you watch the Super Bowl you don't see advertisements for cigarettes, but you do for Hummers. There's no attempt at all to educate people about the relationship between these longer-term problems and what you do individually. And that takes decades.

Victor: One of the acid tests for whether the nation is pursuing a coherent energy policy is our policy on ethanol. Ethanol is important because it is a partial substitute for oil-based gasoline. In this country, almost all of the ethanol that is delivered to the marketplace is made from corn, which is economically inefficient. But we do that because the corn grows in the heartland, such as Iowa - an important state electorally. There have been lots of proposals to, for example, erase the tariff on imported ethanol. Brazil produces ethanol from sugar cane and it's much cheaper and more efficient. But the farm lobby always intervenes and these proposals languish, with the result that the U.S. ethanol industry never faces the rigors of world competition. So long as energy is bouncing around lower on the list of priorities, it will be difficult to have a coherent policy.

Weyant: It would be far better if people were willing to bite the bullet and say this is a problem and it's not going to be painless to solve it, but if we play our cards right it's not going to reduce our standard of living much. Convincing the public is really one thing that might be worth some more effort. It's a cacophony to them.

STANFORD: What is your greatest hope and your worst fear with regard to demand for oil?

Victor: My greatest hope is that inside the Chinese government and inside the Indian government people know that this independence view of the world energy market is completely wrongheaded. Maybe that will create an opportunity for the United States and India and China along with other major oil consumers to collectively manage this issue, and the consequences of doing that will spill over onto other areas of cooperation. My greatest fear, in addition to the things we've already discussed, is that the United States will use the oil issue to beat up on the Chinese and the Indians, and that our relationship with those countries, which is already fragile, will make it harder to work together on other things that also matter.

May: My greatest hope is that the United States, China, India and other major countries work together towards a more hopeful future, including improving the global environment, providing a counterbalance to mischief in the Middle East, and promoting a transition to modernization and away from extremism. My greatest fear is that the little termites who are nibbling at what is currently a somewhat sensible Chinese policy will have their way, either because the country's economy slows down - which it will inevitably - or for some other reason, and we'll wind up fighting each other or destroying each other's capabilities.

McFaul: My greatest sense of optimism comes from this discussion, and about what my colleagues in this discussion said about China, because from the surface it looks like there's a much more pernicious policy of China going its own way. I've learned today that in fact there are very reasonable voices within the Chinese government, and I hope that there will be in my own government. My greatest fear is that there will continue to be politicians who control oil revenues who do things that do not serve international security, and I'm speaking not only of Iran. My nightmarish scenario is that 10 years from now Iran, Iraq and, God forbid, Saudi Arabia are controlled by hostile governments that want to use the revenues that we pay them for their oil to harm us. I give that a low probability, but in terms of things that worry me about our security, it's the instability of those oil-exporting regimes.

Sagan: The hope is that this current crisis will provide the right set of incentives to encourage investment in a diverse set of energy R&D programs across the board, and will encourage cooperation between countries in energy research and development. That would help educate and change the culture of the United States away from a gas-guzzling, governor-in-the-Hummer culture. The fear is that this will become yet one more excuse to move to a more xenophobic policy that discourages cooperative international policies.

Weyant: Remember David Stockman, the erstwhile head of the Office of Management and Budget? I ran into him in Washington and he literally said to me, "Don't worry about oil security and disruptions or any of that stuff. We've got battleships to take care of this problem." That shocked me to no end, and my response was "Do you really want to be in that position, where that's your only option?" Your whole response is "We're best in the battleship field and you shouldn't mess with us?" This type of attitude is what worries me the most.

Sagan: We were earlier talking about the resource curse, and this strikes me as an example of the hegemon's curse. To not take the necessary steps on economic policies or energy policies because you think you've got a military backup solution. If our military strength causes us to be passive or uncooperative on the economic or energy front, it will have a boomerang effect that will really hurt us.

South Africa's current policy of providing 50kWh of free electricity has increased peak power usage and increased pressures on the country's already strained grid. This article in Energy Policy conducts an analysis of the economics of providing subsidized power to the poor and concludes providing liquified petroleum gas (LPG) or energy vouchers in place of free electricity would be more economically sound policies.

A FASHIONABLE NOTION

The concept of sustainable development first emerged from academic seminar rooms two decades ago, thanks to a best-selling report called Our Common Future. Put together by the World Commission on Environment and Development, the report argued that boosting the economy, protecting natural resources, and ensuring social justice are not conflicting but interwoven and complementary goals.

A healthful environment, the theory goes, provides the economy with essential natural resources. A thriving economy, in turn, allows society to invest in environmental protection and avoid injustices such as extreme poverty. And maintaining justice, by promoting freedom of opportunity and political participation, for example, ensures that natural resources are well managed and economic gains allocated fairly. Civilizations that have ignored these connections have suffered: consider the Easter Islanders, who by denuding their forests triggered a spiral of economic difficulties and strife that eventually led to their civilization's collapse.

Yet even as sustainable development has become conventional wisdom over the past two decades, something has gone horribly wrong. Because the concept stresses the interconnection of everything, it has been vulnerable to distortion by woolly thinking and has become a magnet for special interest groups. Human rights watchdogs, large chemical companies, small island nations, green architects, and nuclear power plant operators have attached themselves to the fashionable notion only to subvert it for their own ends. Instead of bringing together nature, the economy, and social justice, sustainable development has spawned overspecialized and largely meaningless checklists and targets. Particularly harmful has been a series of consensus-driven UN summits that have yielded broad and incoherent documents and policies. Sustainable development, the compass that was designed to show the way to just and viable economics, now swings in all directions.

This deterioration was probably unavoidable. But the slide matters, and not only because sustainable development has become a cover for inaction and a black hole for resources; it is also a wasted opportunity. The concept has gained such a powerful following over the past two decades that if it recovered its original meaning, it could become a guiding force for governments, firms, and nongovernmental organizations (NGOs). fixing this mess requires understanding how it came to be and recalibrating the compass so that it can reliably point in a single direction again.

THE PRICE OF FAME

One way to trace the slide of sustainable development is to follow the idea's degradation through the UN. After all, its earliest high-profile proponent, the World Commission on Environment and Development, headed by then Norwegian Prime Minister Gro Brundtland, operated under a UN mandate. The UN General Assembly and the UN Secretariat were always at the forefront in championing Brundtland's vision. And today, the conferences, commissions, and task forces that constitute the sustainable development apparatus all find their focus within the UN system. What happens there is worth observing -- not because the UN is solely responsible for what has gone wrong, but because the organization reflects the aspirations and flaws of the players that are.

The trouble began at the 1992 Earth Summit in Rio de Janeiro, which involved more than 100 heads of state, 170 governments, 2,400 representatives from NGOs, and nearly 10,000 journalists. The attention generated by the meeting kindled demand for more conferences. The result was a decade of summits, with one held almost every year, that covered a range of topics, including demographics (in 1994), the rights and roles of women (in 1995), social development (in 1995), and the expansion of urban habitats (in 1996). Most of these gatherings, the culminations of arduous negotiations, produced two documents: a detailed action plan for insiders and a crisper statement of principles for outsiders. At Rio, these were called, respectively, Agenda 21 and the Rio Declaration.

Action plans tend to be sprawling documents that offer something for everyone. They are crafted through a consensus process in which the easiest way for special interests to get what they want is to agree with everyone else. The result is often an incoherent and costly wish list. The secretariat of the Rio summit estimated that implementing Agenda 21 might cost $600 billion a year in new spending, of which $125 billion would have to come as foreign assistance from the industrialized countries. Since then, summit negotiators have not even bothered to tally the costs of their plans. And in the meantime, the international community has continued to behave like a child crafting his dream order of Christmas presents out of the Bible-size FAO Schwarz catalog.

Statements of principles have not had much effect either. The documents are usually drafted in lawyers' false poetry: they are meant to inspire without offending any specific interest group. Principle 2 of the Rio Declaration, for example, purported to offer a fresh interpretation of the conflict between a nation's sovereignty and its international responsibilities: "States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction." Nobody really knows what the sentence means. Advocates for sovereignty (especially in developing countries) claim that it endorses sovereign freedom of action, whereas advocates for environmental responsibility (notably ngos from rich industrialized nations) claim that it establishes international duties.

The Rio process, moreover, bred a set of new institutions. Two new secretariats were created to oversee the implementation of two new treaties, one on climate change, the other on biological diversity. Summit participants also set up the Commission on Sustainable Development (CSD), which holds an elaborately prepared meeting every year and is charged with the impossible task of monitoring the implementation of the Agenda 21 commitments. The CSD, in particular, has accomplished very little.

DELUSIONS OF GRANDEUR

Governments and the UN system have also marginalized sustainable development by failing to articulate serious objectives and coherent strategies for its implementation. Agenda 21 embraced every goal offered up in anticipation of the Rio summit, but it set no specific priorities or targets, making it impossible to mobilize support for any strategy or to measure progress. At the 2002 World Summit on Sustainable Development, the process reached its lowest point with a sprawling and incoherent plan. Participants endorsed eight broad Millennium Development Goals (MDGS) -- including the eradication of extreme poverty, the provision of universal primary education, and the assurance of equality for women -- that had been crafted at the UN's Millennium Summit two years earlier. Since then, the UN Secretariat has parsed these broad objectives into 18 specific targets and 48 indicators. But the MDGS are already losing traction because governments have limited power to directly affect these outcomes. Most of the world is closer to meeting the MDGS now than it was a decade ago, but that is largely because human welfare has generally been improving. (The most striking exceptions are found in the many African countries that score worse today on most measures of human welfare.)

The MDGS, targets, and indicators do not constitute a strategy that informs the actions of governments, companies, and NGOS. Most of what the MDGS envision is beyond the power of any enterprise to deliver. Consider, for instance, the efforts that would be needed to meet the mdg to "develop a global partnership for development." The indicators designed to measure compliance with this goal include some activities that governments do control, such as the amount of untied official development assistance (ODA) they offer, which, in the right settings, can help alleviate poverty. But they also include special targets for ODA to small island nations and landlocked states that serve no strategic purpose -- reflecting these nations' special ability to manipulate UN commitments to their narrow advantage. And regarding the indicators on which progress has been most remarkable -- access to phone services, computers, and the Internet -- advances have been the fortuitous byproduct of technological development and have often reflected the accidental wisdom of governments' decisions to let the market work on its own.

The trouble with sustainable development and the MDGS is that they reflect a diplomatic process that has devoted too much effort to lengthening the international community's wish list and not enough to articulating and ranking the types of practical measures that are the hallmark of serious policymaking. Governments might have wondered whether any given dollar in aid would be best invested in water treatment, poverty alleviation, or structural adjustment, or if it would be better to treat the causes of underdevelopment, such as corruption, or its symptoms, such as inadequate health care. Yet these crucial questions were left unanswered -- and often even unasked.

THE POVERTY PRIORITY

The only way to fix the mess with sustainable development is to return to Brundtland's fundamentals. Sustainable development must be viewed afresh, as a framework for every aspect of governance rather than as a special interest. It can be revived by following four courses of action: making a priority of alleviating poverty, dropping the environmental bias that has hijacked the entire movement, favoring local decisions over global ambitions, and tapping into new technologies to spur sustainable growth.

First, and most fundamental, progress on sustainable development requires more success with economic development, in particular poverty alleviation; the other two prongs of sustainability, environmental protection and social justice, will lack force until basic living standards are improved. Development experts do not know exactly which policies best boost development, and without a well-accepted theory, many have tended to embrace grand schemes, such as the MDGS, that are politically unrealistic and unlikely to deliver results. But these uncertainties should not mask a growing canon of good sense about the policies that offer the best chances for eradicating poverty. One place to start is with some of the careful studies conducted over the last decade, especially those done by the World Bank. They show that a few key institutional factors -- such as fiscal discipline, openness to market competition, strong investment in education, political freedom, and low levels of corruption -- largely explain why some countries flourish while others wither. The breadth of consensus on these points is reflected in the comprehensive 2005 Human Development Report by the UN Development Program (UNDP), which endorses a similar institutional focus for alleviating poverty.

Yet very few of these factors, such as openness to competition or investment in primary education, appear among the MDG indicators. Equally vital levers for development -- including anticorruption measures, the protection of private property, and the containment of civic strife -- do not appear, because the soft-spined corps of believers in sustainable development has been unwilling to advocate policies that some view as intrusions into national sovereignty. Getting serious about sustainable development requires redrawing the lines of sovereignty; if sustainable development is a universal concept, then governments have a universal responsibility to promote it.

In the United States, some of this advice is already being put into practice through the Millennium Challenge Corporation (mcc), a governmental organization whose origins lie in President George W. Bush's promise to provide new development assistance to the countries that can best use the money. The plan was to offer a $5 billion annual increase in development assistance by fy2006. Unfortunately, as with so many of this administration's bold projects, progress on the idea is being hobbled by halfhearted implementation and perennial underfunding -- the partial result of a budget crunch brought on by unsound tax policies and the ballooning cost of the Iraq war. The mcc has run into trouble implementing its funding strategy. Countries with the best conditions for making effective use of mcc money are those best able to attract private investment on their own. On the other hand, countries with conditions that are least conducive to development -- and thus the least eligible for mcc aid -- are also likely to be the poorest and those in the greatest need of a hand. This Catch-22 most affects Africa, which includes, according to the UNDP's most recent tally, 14 of the 18 countries in the world whose human development has regressed since 1990. The United States has voluntarily increased foreign aid by $8 billion since 2000 and is the largest single supplier of aid to Africa. Other donors have also redoubled their efforts in Africa. But on most of the continent, governments have no viable plan to ensure economic growth, and sustainable development remains far from reach.

GREEN WITH ENVY

It is also necessary to challenge the environmental bias that has dominated the sustainable development agenda. From the outset of the Brundtland commission's work, developing countries have rightly feared that the developed world's concern about the environment would overshadow their interest in development. They insisted that the Rio summit be called the UN Conference on Environment and Development, but diplomats from the industrialized countries (even the conference's secretary-general, Canadian Maurice Strong) nonetheless referred to it informally as the Earth Summit. The two treaties signed in Rio, the UN Framework Convention on Climate Change and the UN Convention on Biological Diversity, mostly reflected the environmental priorities of the industrialized world. A treaty on protecting the world's forests was also considered. The developing countries, rich in forests and wary of intrusion, organized to kill it, but because nothing really dies in the diplomatic world, the stillborn convention has been resurrected as a set of new principles and institutions known as the UN Forum on Forests. So far, the forum has had little effect on forests -- except to further deplete them by generating a prodigious number of documents.

The tactical success of environmentalists, especially well-organized multinational NGOs based in industrialized countries, in moving their issues to the top of the sustainable development agenda is unhealthy -- even for environmentalism. Easy pickings in the UN have distracted environmentalists from the more urgent need to articulate ways in which they can contribute to the other pillars of sustainability: development and social justice. And this lapse has alienated them from an important base of potential partners in the developing world. Notably, the 2004 report of the high-level UN panel (which included Brundtland) convened by UN Secretary-General Kofi Annan to articulate new visions for world security was strikingly thin on environmental matters -- evidence that such issues have not sufficiently permeated mainstream policymaking in much of the world.

After being hoodwinked at Rio, the developing countries made sure that the 2002 World Summit on Sustainable Development did not include the word "environment" in its title. Nonetheless, the multinational environmental lobby has continued to score tactical victories in many areas that the industrialized states control, especially funding. The Global Environment Facility (GEF), which was created in 1991 to provide funds for the then nascent sustainable development apparatus, now finances projects in six areas: climate change, biodiversity, pollution in international waters, land degradation, ozone depletion, and persistent organic pollutants. These areas largely match the leading environmental priorities of diplomats from the industrialized nations, not the most pressing concerns of the states that GEF funds were intended to address. Climate change and biodiversity are top priorities for most industrialized countries and also, therefore, for the GEF: the two issues alone consume two-thirds of the GEF's resources. However, these concerns are disconnected from the real developmental priorities of the poorest populations in developing countries. In the area of climate change, for example, the GEF's funding strategy is to push for the development of technologies such as solar and wind-generated energy, which emit no carbon dioxide, a leading cause of climate change. These are darlings of environmentalists in the North, who claim that these exotic technologies, although currently expensive, will become cheaper with time. That argument is of dubious relevance to the 1.6 billion people who lack electricity today. For them, real progress usually comes in the form of less sexy but more cost-effective options, such as diesel generators and grid extensions.

THINK LOCAL

The third step toward recovering sustainable development is remembering that the theory works only if it is approached as a hardheaded calculation about tradeoffs, rather than as an amalgam of sacrosanct principles. The cocktail-party version of sustainable development gleams with promises of harmony and globalism: economic growth, environmental protection, and social justice can be achieved fully and simultaneously; because the ecosystems and economies of nations are interdependent, the problems they face require global solutions. In fact, however, the concept has practical relevance only if it can accommodate local preferences and capabilities. Cocktail-party visions of sustainability properly laud the benefits of electricity, for example, as a cure for darkness and a substitute for costly candles. Yet the diesel generators that bring electric lighting to the most remote areas are, in some respects, a paragon of unsustainability: diesel, which is derived from oil, is an exhaustible and polluting resource. Poor communities love diesel-generated electricity nonetheless: it has brought them television, high-quality lighting, and refrigeration, which were unavailable before. Similarly, whenever multinational environmentalists have sought to ban DDT worldwide, developing countries have resisted, wisely pointing out that the pesticide is crucial to controlling mosquitoes and other disease carriers in poor regions such as West Africa.

The last decade of UN summits propagated the myth that sustainable development can promote international harmony through "global action plans" and "universal principles." In fact, providing sustainability is a highly political activity governed by interests and resources that vary widely from one place to another. Advocating MDGS that apply equally to Latin America (where reaching them is fortuitously at hand) and Africa (where development is largely stagnant) makes little sense. The only way to craft serious goals is from the bottom up, focusing on responsible systems of government rather than disconnected global processes to do most of the work. But this approach, although pragmatic, is less satisfying ideologically and more demanding -- and therefore ignored by cocktail-party globalists.

The current disconnect between global ambitions and local realities helps explain why efforts to curb climate change, for example, have achieved so little. Although the problem's effects are inherently global, its causes are resolutely local. In most of the world, including many developing countries, domestic authorities choose what energy system to use, and because they decide how much fossil fuel to consume, they effectively control emissions of carbon dioxide. Globalists in industrialized countries are clamoring for "engaging" the governments of developing countries by pressing them to accept caps on emissions. But every major developing country has rejected the demand as an unfair limit on their development, leaving reform at an impasse.

So how can countries be compelled to enforce policies that deviate from their immediate interests in order to pursue the global good? Partly by allowing them to interpret the mandates of international agreements according to their local priorities. Take, for instance, Beijing, Shanghai, and Guangzhou -- three of China's most rapidly growing cities -- which are all struggling with local air pollution. To cut down on noxious emissions, they have (at least) two options. They can either move power plants and heavy industry outside their borders and import the goods and electricity they need, or they can change their primary fuel from coal to natural gas or nuclear energy, both of which are much cleaner. Although either solution would provide China's cities with the energy they need, each one has its drawbacks. Whereas the first would do little to curb China's total effluent of carbon dioxide -- the country as a whole would still burn prodigious amounts of coal -- the second would force Chinese officials to rely more heavily on a less carbon-intensive fuel (gas) that they have little experience using and would have to import in large quantities. To convince Chinese officials to adopt the second strategy even though it seems less favorable to them, the international community could offer a package of measures, including assurances to secure China's gas supplies and agreements to share related technology. In other words, industrialized Western countries could align their objective to slow global warming with China's domestic interests.

The primacy of local interests applies to highly industrialized countries as well. In Europe, governments are implementing the Kyoto Protocol on climate change by customizing it to local and regional needs: they are creating an emissions-trading system that lets individual companies trade credits for their carbon dioxide emissions, thus allowing greater flexibility in meeting the treaty's targets. Meanwhile, governments elsewhere are also developing their own locally tailored trading systems. The authors of the Kyoto Protocol envisioned a single global trading system with a single global price. But such a uniform system is not being implemented because the institutions that allocate credits, monitor compliance, and enforce agreements operate mainly at the local and national levels. Instead, a host of emissions-trading systems are emerging from the bottom up. (The United States, meanwhile, has refused to ratify the agreement for the compelling reason that it cannot satisfy the treaty's core commitment to bring down U.S. emissions of greenhouse gases to an average of seven percent below 1990 levels between 2008 and 2012. Although abandoning the protocol was a wise decision, Washington has not offered any credible plan to manage emissions in the United States.)

TECH SAVVY

Any serious effort at sustainable development will also need to harness the technologies that most affect economic growth and mediate the consequences of growth for the environment. Unfortunately, the sustainable development apparatus has been strikingly ineffective on technological matters. The only technological area in which governments have set specific goals is "technology transfer," the handing over of hardware to developing countries -- a gesture often espoused in UN talks but rarely witnessed in the field. Such goals are largely pointless anyway because most technologies spread through markets rather than thanks to transfers between governments.

Some efforts to harness technological progress for the benefit of sustainable development are under way. They include a long-overdue attempt to promote innovation in areas that matter to very poor countries -- such as developing a vaccine for malaria -- but that have been overlooked by private firms that normally focus their efforts on creating products to combat the diseases of wealthier consumers.

Governments have found it particularly difficult to set credible policies for the development and application of technologies that have long commercial lives. The problem is especially acute for investors in energy infrastructures who are contemplating new technologies that might help address the problem of climate change. In Europe, where the rules on emissions trading are in flux, utility companies have been wary of building new power plants in the absence of greater fiscal certainty, increasing the risk of severe electricity shortages. And in the United States, where there is no meaningful federal policy on greenhouse gas emissions, investors in long-term energy assets such as power plants (the single greatest emitters of carbon dioxide) must make multibillion-dollar commitments without knowing what regulatory regime may exist in the future. A few years ago, this problem was not particularly serious because nearly all new power plants in the United States were fired with natural gas. But today, natural gas costs five times what it did in the 1990s, there are no new gas plants under construction, existing plants are running at only 30 percent of capacity, and dozens of new coal plants are being designed. Unless the U.S. government soon announces a credible plan for the future regulation of emissions, utilities will invest in conventional coal-fired power plants. Within a few years, the country could be saddled with far more carbon dioxide emissions as a result of these plants than if the government had given investors a reason to fund less carbon-intensive sources of energy.

Governments and companies must find ways to keep sometimes tyrannical public opinions from blocking the development and use of certain essential new technologies. Today, there is latent public discomfort regarding carbon sequestration, a technology that entails injecting deep underground large volumes of carbon dioxide that would otherwise go into the atmosphere. Elements of the technology are already widely used in oil and gas operations, but carbon dioxide injection projects are under way at only two facilities in the world. This fix holds the promise of an elegant engineering feat, but the technology is not without danger. There are risks of leaks, some potentially catastrophic, and some countries (notably the United States) still lack adequate regulatory regimes for controlling underground disposal. The industry would do well to keep early demonstration projects at remote and especially safe sites in order to quiet public alarmism.

Worries that even ill-advised public resistance could stymie such worthy projects are not far-fetched: other promising technologies have run afoul of misguided opinions and poor regulatory policies. Across Europe, for example, public opposition to genetically engineered foods has prompted regulations to keep some of those foods off the market despite growing evidence that they are good for both consumers and the environment. Some of the key technologies for controlling carbon dioxide pollution may face a similar fate. Nuclear power, for example, is probably favored as a low-carbon means of generating electricity. Yet in many countries, it remains politically untenable.

BACK TO THE FUTURE

Despite its beginnings as a powerful animating concept, over the last two decades sustainable development has become meaningless. It has fallen prey to a collection of special interest groups that have both hollowed out the concept and lost track of what they can best do to implement it. When it has been applied, the theory has often distorted the real priorities of development.

Fixing the concept will require going back to its origins, and especially stressing the integration of economic and ecological systems while leaving it up to competent local institutions to decide how to set and pursue their own priorities. Advocates for sustainable development should not promote false universal goals. Because local needs and interests will necessarily vary, sustainable development must be redefined repeatedly, from the bottom up, wherever it is to be put into practice. Sustainable development can have worldwide relevance and appeal, but only if its original purpose of helping the poor live better, healthier, and fairer lives on their own terms is restored.

Energy Policy, one of the world's leading journals on issues related to energy economics and politics, has published an article by PESD researchers Chi Zhang, Michael May, and Thomas Heller this March documenting how changing incentives for power producers in three provinces have affected the types of plants built and operated, and the implications of those changes for emissions of carbon dioxide and other pollutants.