Transcript Soft Law and Power in International Governance

Timothy Meyer
University of Georgia School of Law
[email protected]
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Climate governance has as one of its chief
objectives changing energy consumption
patterns
Roughly 65% of greenhouse gas emissions
are from the energy sector
Climate regimes try to put a price on carbon
Pricing carbon incentivizes switching to
lower-carbon fuels
No!
 There are a wealth of energy institutions that
attempt to influence the price of various fuels
◦ OPEC, IEP & IEA, IAEA, IRENA, GECF, ECT, WTO
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Often institutions are single fuel-specific
Climate regime is a late arriver
Fragmentation: the proliferation of
overlapping and non-hierarchical institutions
How does the climate regime interact with
incumbent energy regimes?
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The ability to influence the short and medium
term price of oil turns on spare production
capacity
Investments in fossil fuels require a long lead
time to bring new capacity online
Price increases thus cannot be addressed in
the short term by building new capacity
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In the middle of the 20th century the U.S.
state of Texas, acting through the Texas
Railroad Commission, effectively regulated
the price of oil by holding up to 25% of
production capacity in reserve
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In conjunction with a U.S. inter-state agency,
the Interstate Oil Compact Commission, and
the major oil companies, the so-called Seven
Sisters, the Texas Railroad Commission was
an early example of public-private regulation
of an international market
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OPEC was formed in 1960 in response to a
collapse in global oil prices
Early on, OPEC was focused less on
production issues and more on renegotiating
concession agreements with the Seven Sisters
Part of a larger effort by the developing world
to assert sovereignty over natural resources
By early 1970s, OPEC nations had effectively
nationalized int’l oil companies
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By 1972, Texas was producing at full capacity
When the Arab-Israeli War resulted in the
Arab oil embargo, Texas was unable to
increase production and global prices soared
Regulatory power had shifted to OPEC
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OECD nations responded by signing the
Agreement on an International Energy
Program
◦ Aimed to coordinate emergency response measures
among oil-consuming states
◦ Imposed reserve requirements (60, then 90, days)
◦ Created the International Energy Agency
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The Agreement)
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Three types of linkages
◦ Institutional linkages
 OPEC & IEA have observer status in the UNFCCC
 Montreal Protocol contains trade sanctions for nonparties
◦ Bargaining linkages
 OPEC countries link demands for financial assistance
to support for climate change measures
◦ Functional linkages
 Regulation in one area affects, e.g., consumption or
production patterns in another area
 A carbon tax might induce fuel switching and change
investment patterns
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Largely within the control of the parties
Can create value by creating mutuallysupporting cooperative regimes
◦ Using trade mechanisms to enforce environmental
obligations
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Individual states may be able to create
linkages to the disadvantage of other states
◦ OPEC’s insistence on financial assistance in
exchange for support for climate change objectives
◦ The creation of the WTO and the TRIPs Agreement
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Functional linkages are not within the control
of the parties
The effect of functional linkages between
issue areas is that cooperation in one area
can either support or undermine cooperation
in another area
Climate change institutions basically seek to
raise the cost of carbon
Energy institutions have more complicated
objectives
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Oil prices rose to US$127/barrel of Brent
crude during Libyan civil war
IEA members released oil from strategic
reserves, triggering a 7.4% drop in the price
of oil
What does this sort of incident mean for
climate change?
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Energy initiatives can interfere with each
other
◦ OPEC and the GECF could increase production or
reduce prices to defend market share & crowd out
investment in renewables
◦ National fuel efficiency measures can cause the
collapse of prices in carbon markets
◦ Emergence of the GECF and supplier dynamics
could deter switching to natural gas
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How do we manage functional linkages
between energy and climate?
Issues of jurisdictional scope
◦ Single organization allows coordination of policies
◦ But increases transaction costs to setting policy
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Issues of organizational detail
◦ Climate change is a pluralistic organization
◦ Energy institutions tend to be more technocratic
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Incentives to comply?