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For 14 years, Mariano-Florentino Cuéllar has been a tireless Stanford professor who has strengthened the fabric of university’s interdisciplinary nature. Joining the faculty at Stanford Law School in 2001, Cuéllar soon found a second home for himself at the Freeman Spogli for International Studies. He held various leadership roles throughout the institute for several years – including serving as co-director of the Center for International Security and Cooperation. He took the helm of FSI as the institute’s director in 2013, and oversaw a tremendous expansion of faculty, research activity and student engagement. 

An expert in administrative law, criminal law, international law, and executive power and legislation, Cuéllar is now taking on a new role. He leaves Stanford this month to serve as justice of the California Supreme Court and will be succeeded at FSI by Michael McFaul on Jan. 5.

 As the academic quarter comes to a close, Cuéllar took some time to discuss his achievements at FSI and the institute’s role on campus. And his 2014 Annual Letter and Report can be read here.

You’ve had an active 20 months as FSI’s director. But what do you feel are your major accomplishments? 

We started with a superb faculty and made it even stronger. We hired six new faculty members in areas ranging from health and drug policy to nuclear security to governance. We also strengthened our capacity to generate rigorous research on key global issues, including nuclear security, global poverty, cybersecurity, and health policy. Second, we developed our focus on teaching and education. Our new International Policy Implementation Lab brings faculty and students together to work on applied projects, like reducing air pollution in Bangladesh, and improving opportunities for rural schoolchildren in China.  We renewed FSI's focus on the Ford Dorsey Program in International Policy Studies, adding faculty and fellowships, and launched a new Stanford Global Student Fellows program to give Stanford students global experiences through research opportunities.   Third, we bolstered FSI's core infrastructure to support research and education, by improving the Institute's financial position and moving forward with plans to enhance the Encina complex that houses FSI.

Finally, we forged strong partnerships with critical allies across campus. The Graduate School of Business is our partner on a campus-wide Global Development and Poverty Initiative supporting new research to mitigate global poverty.  We've also worked with the Law School and the School of Engineering to help launch the new Stanford Cyber Initiative with $15 million in funding from the Hewlett Foundation. We are engaging more faculty with new health policy working groups launched with the School of Medicine and an international and comparative education venture with the Graduate School of Education. 

Those partnerships speak very strongly to the interdisciplinary nature of Stanford and FSI. How do these relationships reflect FSI's goals?

The genius of Stanford has been its investment in interdisciplinary institutions. FSI is one of the largest. We should be judged not only by what we do within our four walls, but by what activity we catalyze and support across campus. With the business school, we've launched the initiative to support research on global poverty across the university. This is a part of the SEED initiative of the business school and it is very complementary to our priorities on researching and understanding global poverty and how to alleviate. It's brought together researchers from the business school, from FSI, from the medical school, and from the economics department.  

Another example would be our health policy working groups with the School of Medicine. Here, we're leveraging FSI’s Center for Health Policy, which is a great joint venture and allows us to convene people who are interested in the implementation of healthcare reforms and compare the perspective and on why lifesaving interventions are not implemented in developing countries and how we can better manage biosecurity risks. These working groups are a forum for people to understand each other's research agendas, to collaborate on seeking funding and to engage students. 

I could tell a similar story about our Mexico Initiative.  We organize these groups so that they cut across generations of scholars so that they engage people who are experienced researchers but also new fellows, who are developing their own agenda for their careers. Sometimes it takes resources, sometimes it takes the engagement of people, but often what we've found at FSI is that by working together with some of our partners across the university, we have a more lasting impact.

Looking at a growing spectrum of global challenges, where would you like to see FSI increase its attention? 

FSI's faculty, students, staff, and space represent a unique resource to engage Stanford in taking on challenges like global hunger, infectious disease, forced migration, and weak institutions.  The  key breakthrough for FSI has been growing from its roots in international relations, geopolitics, and security to focusing on shared global challenges, of which four are at the core of our work: security, governance, international development, and  health. 

These issues cross borders. They are not the concern of any one country. 

Geopolitics remain important to the institute, and some critical and important work is going on at the Center for International Security and Cooperation to help us manage the threat of nuclear proliferation, for example. But even nuclear proliferation is an example of how the transnational issues cut across the international divide. Norms about law, the capacity of transnational criminal networks, smuggling rings, the use of information technology, cybersecurity threats – all of these factors can affect even a traditional geopolitical issue like nuclear proliferation. 

So I can see a research and education agenda focused on evolving transnational pressures that will affect humanity in years to come. How a child fares when she is growing up in Africa will depend at least as much on these shared global challenges involving hunger and poverty, health, security, the role of information technology and humanity as they will on traditional relations between governments, for instance. 

What are some concrete achievements that demonstrate how FSI has helped create an environment for policy decisions to be better understood and implemented?

We forged a productive collaboration with the U.N. High Commissioner for Refugees through a project on refugee settlements that convened architects, Stanford researchers, students and experienced humanitarian responders to improve the design of settlements that house refugees and are supposed to meet their human needs. That is now an ongoing effort at the UN Refugee Agency, which has also benefited from collaboration with us on data visualization and internship for Stanford students. 

Our faculty and fellows continue the Institute's longstanding research to improve security and educate policymakers. We sometimes play a role in Track II diplomacy on sensitive issues involving global security – including in South Asia and Northeast Asia.  Together with Hoover, We convened a first-ever cyber bootcamp to help legislative staff understand the Internet and its vulnerabilities. We have researchers who are in regular contact with policymakers working on understanding how governance failures can affect the world's ability to meet pressing health challenges, including infectious diseases, such as Ebola.

On issues of economic policy and development, our faculty convened a summit of Japanese prefectural officials work with the private sector to understand strategies to develop the Japanese economy.  

And we continued educating the next generation of leaders on global issues through the Draper Hills summer fellows program and our honors programs in security and in democracy and the rule of law. 

How do you see FSI’s role as one of Stanford’s independent laboratories?

It's important to recognize that FSI's growth comes at particularly interesting time in the history of higher education – where universities are under pressure, where the question of how best to advance human knowledge is a very hotly debated question, where universities are diverging from each other in some ways and where we all have to ask ourselves how best to be faithful to our mission but to innovate. And in that respect, FSI is a laboratory. It is an experimental venture that can help us to understand how a university like Stanford can organize itself to advance the mission of many units, that's the partnership point, but to do so in a somewhat different way with a deep engagement to practicality and to the current challenges facing the world without abandoning a similarly deep commitment to theory, empirical investigation, and rigorous scholarship.

What have you learned from your time at Stanford and as director of FSI that will inform and influence how you approach your role on the state’s highest court?

Universities play an essential role in human wellbeing because they help us advance knowledge and prepare leaders for a difficult world. To do this, universities need to be islands of integrity, they need to be engaged enough with the outside world to understand it but removed enough from it to keep to the special rules that are necessary to advance the university's mission. 

Some of these challenges are also reflected in the role of courts. They also need to be islands of integrity in a tumultuous world, and they require fidelity to high standards to protect the rights of the public and to implement laws fairly and equally.  

This takes constant vigilance, commitment to principle, and a practical understanding of how the world works. It takes a combination of humility and determination. It requires listening carefully, it requires being decisive and it requires understanding that when it's part of a journey that allows for discovery but also requires deep understanding of the past.

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National oil companies (NOCs) produce most of the world’s oil and natural gas and bankroll governments across the globe. Although NOCs superficially resemble private-sector companies, they often behave in very different ways. To understand these pivotal state-owned enterprises and the long shadow they cast on world energy markets, the Program on Energy and Sustainable Development (PESD) at Stanford University commissioned Oil and Governance: State-owned Enterprises and the World Energy Supply. The 1000-page volume, edited by David Victor, David Hults, and Mark Thurber, explains the variation in the performance and strategy of NOCs, and provides fresh insights into the future of the oil industry as well as the politics of the oil-rich countries where NOCs dominate. It comprises fifteen case studies, each following a common research design, of NOCs based in the Middle East, Africa, Asia, Latin America, and Europe. The book also includes cross-cutting pieces on the industrial structure of the oil industry and the politics and administration of NOCs.

NOCs are distinguished from private companies by their need to respond to state goals beyond profit maximization. Governments seeking to retain their hold on power use NOCs to deliver benefits to influential elites (“private goods”) or to the broader population (“social goods”). Oil and Governance finds a strong correlation between such non-hydrocarbon burdens on the NOC—which include providing employment, subsidizing fuel, or handing out plum jobs to the politically connected—and deficiencies in oil and gas performance. The highest-performing NOCs, like Norway’s Statoil and Brazil’s Petrobras, face relatively circumscribed non-oil demands from their governments.

How governments administer their oil sectors also proves to be a crucial determinant of NOC performance. Democracies (e.g., Norway, Brazil) and autocracies (e.g., Saudi Arabia, Angola) alike are capable of grooming successful NOCs. What matters most for outcomes is not regime type per se but rather that governance systems provide unified signals to the NOC. (By contrast, regime type is observed to be an important driver of whether governments nationalize their oil sectors in the first place, or privatize existing NOCs.) Fragmented governance, in which multiple government actors assert their interests but no one assumes strategic responsibility, appears uniformly fatal to NOC performance. Nascent democracies like Mexico’s can be particularly vulnerable to oil sector dysfunction stemming from fragmentation. Governance systems must also be matched to a country’s institutional and political realities. Nigeria has arguably set back its progress in oil through attempts to slavishly imitate Norway’s forms of oil organization in the absence of Norway’s mature political and civil service institutions.

The close ties between the NOC and its government can have a detrimental effect on the ability of the NOC to manage the risks that are so characteristic of the oil and gas industry. Whereas private companies are forced to hone their geological knowledge and skills through global competition for capital and hydrocarbon licenses, NOCs for the most part are comfortably sheltered from competitive threats at home. They therefore fail to develop the global reach that helps private players (the international oil companies, or IOCs) manage risk by means of a diversified global portfolio and the ability to link resources to customers around the world. (Some NOCs have begun to internationalize in recent years, but it is striking that none of the NOCs studied in Oil and Governance went down this path until forced to by domestic resource scarcity, or at least of the perception of future scarcity.) The soft budget constraint faced by the NOC also discourages the cost efficiencies that help mitigate risk.

This gulf in risk management capabilities between IOCs and most NOCs suggests that the resource dominance of NOCs does not pose an existential threat to private oil companies. Private players will continue to play a key role in the frontiers of oil and gas development—frontiers like shale gas, oil sands, and the remote Arctic. NOCs will continue to control low-cost oil around the world, while a select few of the most focused and unencumbered among them start to build up their own risk management skills through partnerships with IOCs.

NOC control over resources has important implications for the world oil price. The NOCs studied in the book produce their reserves at half the rate of the major IOCs—whether due to lower performance or a deliberate attempt to preserve resources for the future. Moreover, governments tend to rely most heavily on the risk management skills of IOCs when prices are low and then swing back towards NOCs in high price periods when they can afford to focus on delivering benefits to favored constituencies. The result of this dynamic, which is observed in the case studies of Oil and Governance, can be “backward bending supply curves” that exaggerate price volatility in the world oil market.

This effect of NOCs on global oil supply and price appears to be much more important than any geopolitical fallout from NOC primacy around the world. Oil and Governance finds very little evidence that NOCs act as effective foreign policy weapons on behalf of their host states. Even where politicians may desire to employ NOCs in this way, the incentives of the NOC itself are usually strongly opposed to such an exercise of power. As one example, Europe’s Gazprom depends overwhelmingly on revenues from gas exports to Europe because gas is so heavily subsidized in Russia. When NOCs do venture abroad, as in the case of China’s CNPC, they are often motivated to do so precisely by the desire to achieve more autonomy from their political masters at home.

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Cambridge University Press
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David G. Victor
David G. Victor
David Hults
David Hults
Mark C. Thurber
Mark C. Thurber
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Richard Morse joined Michael Gibbs of the Cal EPA and Larry Goulder and Jim Sweeny of Stanford to discuss key issues in California’s carbon market and remaining challenges at the 2011 Silicon Valley Energy Summit.

 

The Silicon Valley Energy Summit is a signature event of the Silicon Valley Leadership Group and the Stanford University Precourt Energy Efficiency Center, attracting a broad range of executives and representatives from influential Silicon Valley companies and organizations. Practical and inspirational, this "action conference" serves as a manual for sustainable business by combining current best practices with a guide to upcoming technologies and government regulations.

Frances C. Arrillaga Alumni Center

Michael Gibbs Panelist Cal EPA
Larry Goulder Panelist Stanford University
Richard K. Morse Panelist
Jim Sweeney Moderator Precourt Energy Efficiency Center
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Oil companies owned by national governments (“NOCs”) and oil companies with extensive international operations owned by diverse private investors (“IOCs”) constitute some of the largest and most important economic organizations on the planet. Individually and collectively, they command vast amounts of capital and have large potential impacts on macroeconomic conditions and global-level environmental policies.  Security concerns, at the local, national and international levels, are tied more to their activities and assets than to those of other types of firms.

A number of authors have examined NOCs and IOCs as separate classes of entities and in individual case studies.  This paper considers how and why NOCs and IOCs deal with one another, given their respective capabilities, constraints and ambitions.  Written from the perspective of a contract lawyer with extensive experience working with both NOCs and IOCs, the paper concentrates on the possibility of structural and transactional alternatives to the current roles.  In particular, it focuses on the potential for partial integration between NOCs and IOCs in the form of strategic alliances, taking advantage of the strengths of both while coping with the limitations of each.  It then offers predictions of where the sweet spot for such alliances might be located.

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Program on Energy and Sustainable Development
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Robert A. James
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PESD director Frank A. Wolak accepted an invitation to participate in the first public hearing The Little Hoover Commission (a bipartisan independent state oversight agency) has scheduled to examine the coordination among the state’s related organizations and federal agencies with energy-related activities.

At the State Capitol on Tuesday, September 27, 2011, Frank shared before the Little Hoover Commission of the California State Legislature:

1) the regulatory changes implemented to address the California Energy Crisis,

2) the challenges to California’s energy regulatory policies associated with meeting its current energy and environmental goals, and

3) his suggestions on regulatory policy changes that could significantly increase the economic and environmental benefits for the citizens of California.

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Burning of biomass for cooking is associated with health problems and climate change impacts. Many previous efforts to disseminate improved stoves – primarily by governments and NGOs – have not been successful. Based on interviews with 12 organizations selling improved biomass stoves, we assess the results to date and future prospects of commercial stove operations in India.

Specifically, we consider how the ability of these businesses to achieve scale and become self-sustaining has been influenced by six elements of their respective business models: design, customers targeted, financing, marketing, channel strategy, and organizational characteristics.

The two companies with the most stoves in the field shared in common generous enterprise financing, a sophisticated approach to developing a sales channel, and many person-years of management experience in marketing and operations. And yet the financial sustainability of improved stove sales to households remains far from assured. The only company in our sample with demonstrated profitability is a family-owned business selling to commercial rather than household customers. The stove sales leader is itself now turning to the commercial segment to maintain flagging cash flow, casting doubt on the likelihood of large positive impacts on health from sales to households in the near term.

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Energy Policy
Authors
Gireesh Shrimali
Xander Slaski
Xander Slaski
Mark C. Thurber
Mark C. Thurber
Hisham Zerriffi
Hisham Zerriffi
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On Monday, June 13, 2011 at 4:15 p.m. in Panofsky Auditorium, Richard Morse of Stanford University will present a colloquium, "Addressing the 'Coal Renaissance' in a Post-Kyoto World."

Coal has been the world's fastest growing source of fossil fuel since 2000, contributing more to global primary energy supplies than any other source of energy.  Yet it is also the world's leading source of CO2 emissions.  As the Kyoto Protocol approaches its end in 2012 and global carbon policy is fragmented into regional efforts, efforts to mitigate global emissions will require taking a hard look at the realities of coal markets and developing pragmatic strategies that don't rely on carbon policy.

Richard Morse of Stanford's Program on Energy and Sustainable Development will discuss the outlook for global carbon policy, how international coal markets are evolving, and what strategies and technologies might realistically be used to reduce emissions from coal.   Discussion of carbon policy will include the latest developments in Europe, China, and the US, and analysis of international coal markets will highlight key issues for the future of Chinese energy consumption.  Arguing that renewable energy in its current state can only address the coal emissions problem at the margin, Morse will consider the portfolio of carbon mitigation options that can operate at scale, including carbon capture and storage (CCS).  Finally, in light of the recent nuclear tragedy in Japan, Morse will discuss with the SLAC community how to evaluate the relative risks of coal and climate change against the risk of nuclear catastrophe.

The talk is free and open to all.

Panofsky Auditorium
Stanford University

Richard Morse Speaker
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Norway has administered its petroleum resources using three distinct government bodies: a national oil company engaged in commercial hydrocarbon operations; a government ministry to direct policy; and a regulatory body to provide oversight and technical expertise. Norway's relative success in managing its hydrocarbons has prompted development institutions to consider whether this “Norwegian Model” of separated government functions should be recommended to other oil-producing countries.

By studying ten countries that have used widely different approaches in administering their hydrocarbon sectors, we conclude that separation of functions is not a prerequisite to successful oil sector development. Countries where separation of functions has worked are characterized by the combination of high institutional capacity and robust political competition. Unchallenged leaders often appear able to adequately discharge commercial and policy/regulatory functions using the same entity, although this approach may not be robust against political changes. Where institutional capacity is lacking, better outcomes may result from consolidating commercial, policy, and regulatory functions until such capacity has further developed. Countries with vibrant political competition but limited institutional capacity pose the most significant challenge for oil sector reform: Unitary control over the sector is impossible but separation of functions is often difficult to implement.

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Energy Policy
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Mark C. Thurber
Mark C. Thurber
David Hults
David Hults
Patrick R. P. Heller
Patrick R. P. Heller
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