The Program on Energy and Sustainable Development is part of the Freeman Spogli Institute for International Studies.
FSI researchers strive to understand how countries relate to one another, and what policies are needed to achieve global stability and prosperity. International relations experts focus on the challenging U.S.-Russian relationship, the alliance between the U.S. and Japan and the limitations of America’s counterinsurgency strategy in Afghanistan.
Foreign aid is also examined by scholars trying to understand whether money earmarked for health improvements reaches those who need it most. And FSI’s Walter H. Shorenstein Asia-Pacific Research Center has published on the need for strong South Korean leadership in dealing with its northern neighbor.
FSI researchers also look at the citizens who drive international relations, studying the effects of migration and how borders shape people’s lives. Meanwhile FSI students are very much involved in this area, working with the United Nations in Ethiopia to rethink refugee communities.
Trade is also a key component of international relations, with FSI approaching the topic from a slew of angles and states. The economy of trade is rife for study, with an APARC event on the implications of more open trade policies in Japan, and FSI researchers making sense of who would benefit from a free trade zone between the European Union and the United States.
Uncertainty can hamper the stringency of commitments under cap and trade schemes. We assess how well intensity targets, where countries' permit allocations are indexed to future realised GDP, can cope with uncertainties in a post-Kyoto international greenhouse emissions trading scheme. We present some empirical foundations for intensity targets and derive a simple rule for the optimal degree of indexation to GDP. Using an 18-region simulation model of a 2020 global capand-trade treaty under multiple uncertainties and endogenous commitments, we estimate that optimal intensity targets could achieve global abatement as much as 20 per cent higher than under absolute targets, and even greater increases in welfare measures.
The optimal degree of indexation to GDP would vary greatly between countries, including super-indexation in some advanced countries, and partial indexation for most developing countries. Standard intensity targets (with one-to-one indexation) would also improve the overall outcome, but to a lesser degree and not in all cases. Although target indexation is no magic wand for a future global climate treaty, gains from reduced cost uncertainty might justify increased complexity, framing issues and other potential downsides of intensity targets.
The stellar performance of BP's emission control program has led many observers, inside and outside BP, to ascribe success to the firm's emissions trading system. As countries and other firms have considered the adoption of trading systems they often point to BP's pioneering experience as a guiding star. Yet no study has ever explained the operation and impact of BP's trading system. Which factors truly drove the leaders of BP's business units to cut emissions? What lessons should be learned from BP's experience to guide other trading systems? We focus on these questions, drawing heavily on interviews with key corporate policymakers at BP as well as managers in key business units (BUs) that were actually involved in trading.
This working paper first develops a Reference Case that allows required rates of return on investments in energy infrastructure to vary geographically. Those rates of return reflect an assessment of the risks associated with energy business investments in various countries. By comparison, the Base Case, which was presented in the working paper, The Baker Institute World Gas Trade Model, assumes the required rates of return on investments match those sought on similar projects in the United States. The working paper then contrasts selected scenarios with the Reference Case. The selected scenarios are meant to reflect a range of political actions and economic outcomes that could affect the world market for natural gas. The political scenarios selected for study were suggested by the kinds of events discussed in the historical case studies.
This working paper describes a spatial and intertemporal equilibrium model of the world market for natural gas. Specifically, the model calculates a pattern of production, transportation routes and prices to equate demands and supplies while maximizing the present value of producer rents within a competitive framework. Data incorporated into the specifications of supplies and demands in each location are taken from a variety of sources including the United States Geological Survey, the Energy Information Administration, the International Energy Agency, the World Bank and various industry sources. A subsequent working paper uses the model to investigate the possible effects of a number of scenarios including possible political developments.
This paper is part of the joint PESD - James A. Baker III Institute for Public Policy study on the Geopolitics of Natural Gas.
When addressing an externality such as air pollution, regulators can control policy inputs (e.g., pollution taxes and technology standards) or outputs (e.g., emission caps). Economists are familiar with this debate, known broadly as "prices vs. quantities," but analysts of international environmental agreements have rarely focused sustained attention to such questions. Using an inventory of all international air pollution agreements, we document the historical patterns in instrument choice. Those agreements that require little effort beyond the status quo are usually codified in terms of effort, but agreements that require substantial actions by the parties nearly always deploy a cap on emission quantities as the central regulatory instrument.
We suggest that this concentration of experience with emission caps and paucity of serious efforts to coordinate policy inputs may explain why the architects of international environmental agreements appear to believe that emission caps work best. We illustrate what's at stake with the example of international efforts to control the emissions that cause global climate change. We also show that the conventional history of the agreement that is most symbolic of the superiority of emission caps - the Montreal Protocol on Substances that Deplete the Ozone Layer - has wrongly overlooked a little-known provision that operates akin to a "price" instrument.
This meeting will focus on the intersection of two crucial challenges for the organization of energy infrastructures in the developing world. First, for nearly two decades most major developing countries have struggled to introduce market forces in their electric power systems. In every case, that effort has proceeded more slowly than reformers originally hoped; the outcomes have been hybrids that are far from the efficiency and organization of the "ideal" textbook model for a market-based power system. Second, growing concern about global climate change has put the spotlight on the need to build an international regulatory regime that includes strong incentives for key developing countries to control their emissions of greenhouse gases. In most of those countries, the power sector is the largest single source of emissions. The United Nations Framework Convention on Climate Change and the Kyoto Protocol included mechanisms that would reward developing nations that cut emissions, but so far those systems have functioned far short of their imagined potential. A growing chorus of analysts and policy makers are expressing dissatisfaction with those existing mechanisms and clamoring for alternatives.
This meeting will offer diagnoses of what has gone wrong and what opportunities have nonetheless emerged. It will focus on practical solutions and look at the prospects for different technologies to meet growing demand for power while minimizing the ecological footprint of power generation. It will engage scholars who are studying the industrial organization of the electric power sector (and other infrastructures) in developing countries as well as those who study the effectiveness of international legal regimes. It will engage practitioners, including regulators and energy policy makers. Our aims are not only to focus on new theories that are emerging to explain the organization of the power sector and the design of meaningful international institutions, but also to identify practical implications for investors, regulators, and policy makers.
Presentations will include recent results from the research of Stanford Program on Energy and Sustainable Development. We will present the main findings from a comprehensive study of power market reform in five developing countries (Brazil, China, India, Mexico and South Africa). We will also show the results from a detailed analysis of the greenhouse gas emissions from two key states in India and three provinces in China--a study conducted jointly with the Indian Institute of Management in Ahmedabad. In addition, we will present new conclusions from ongoing work that focuses on strategies for engaging developing countries in the global climate regime. Among the topics considered will be the prospects for accelerating the introduction of natural gas into electric power systems--especially those in China and India where the present domination of coal leads to relatively high emissions.
Oksenberg Conference Room
Climate change is one of the most complex issues facing policy-makers today. Controlling the emissions that cause global warming will require societies to incur costs now while uncertain benefits accrue in the distant future. These conditions make it difficult to create succesful policy, yet the longer we wait the more greenhouse gases accumulate in the atmosphere. Even as a consensus grows that something must be done, there is no agreement on the best course of action.
This book takes a fresh look at the issue. It offers three contrasting perspectives, each cast as a presidential speech. One emphasizes the ability of modern, wealthy societies to adapt to the changing climate. A second speech urges reengagement with the Kyoto Protocol while demanding reforms that would make Kyoto more effective. A third speech urges unilateral action that would create a market for low-carbon emission technologies from the "bottom up," in contrast with top-down international treaties such as Kyoto.
A memorandum to the president explains the multidimensional nature of this critical issue and an extensive appendix includes scientific reports, government speeches, legislative proposals, and further readings.
This paper is part of a larger study on the historical experience of Independent Power Producers (IPPs) in countries undergoing transition in their institutions of governance. The study seeks to explain the patterns of investment in IPPs and project outcomes with the aim of using this information to plot alternative future models for IPP investment. This paper follows the research methods and guidelines laid out in the research protocol, "The Experience with Independent Power Projects in Developing Countries: Introduction and Case Study Methods".