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Assume a robust global deal on climate and the world’s cities will have to transform their infrastructure, economies and societies in little more than a generation.

Assume uncontrolled emissions growth and they face growing impact from a less hospitable and more volatile climate.

Either way – big changes are on the way. Few cities’ leaders grasp the scale of the challenge, especially in developing countries, where towns and cities will have an additional 1.5bn residents to cope with by 2030.

This new think piece has been prepared as part of the British Council’s Climate and Cities programme. Download the pdf (which has full references) or read the full text below the jump.

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Nick Stern isn’t going to like this, but there’s a new Stern on the climate block: Todd Stern , who is set to be announced as the US’s new climate envoy.

(Todd) Stern has set out a fairly clear road map for US engagement in the climate process (nb. these are his personal pre-appointment views, not those of Obama or Clinton). He thinks the US should:

• Start with domestic policy - get the National Academcy of Sciences to recommend (and review on regular basis) a stablization target; legislate cap and trade, not a carbon tax; supplement with regulation on energy efficiency and tex incentives for R&D.
• Use domestic policy as a lever in the international arena – negotiating first with a core group of countries (the ‘E8′ – Brazil, China, EU, India, Japan, Russia, South Africa and the US); then building a post-Kyoto framework on the back of their agreement, with binding long-term targets for all developed and ‘as many advanced developing countries as possible,’ and a built-in mechanism to ratchet those targets up over time (and as scientific findings dictate).

Stern is fairly tough on China. The country needs to accept targets (calculated on what basis is a question he does not address), but he makes lots of positive noises. Joint action on a climate can form the basis of a new strategic partnership between the 800-pound gorillas, but only if it is elevated from “traditional place in the second tier of mutual concerns.”

Throughout, of course, he has an eye on the US Senate and ratification. Bottom up targets and sectoral agreements should be deployed if they can suck more countries into a climate deal, as this will shut up antsy Senators. Access to carbon markets should be used as another tool that creates an incentive for developing country participation.

But there needs to be a stick too, Stern believes – and that stick is trade. Unilateral tarrifs on carbon-intensive goods would be ‘profoundly alienating’ and ‘a prescription for mutual recrimination, not progress’, especially after the US has spent so many years in the climate wilderness. But:

Considered in a mutilateral context…the idea…is more interesting. Today, the carbon content of goods is not captured in their price…If the premise of a climate regime were that countries must capture those social costs by putting a price on carbon, whether by means of a cap-and-trade program, a carbon tax, or equivalent policies to cut emissions, tarrifs could then be imposed on the exported products of any country that lacked such policies.

The Europeans will welcome Stern’s appointment with open arms – the Brits in particular.  John Ashton, the UK’s climate envoy, gets name checked by his new US counterpart – and it wouldn’t surprise me to see the two working hand in hand…

As oil continues its crazy gyrations (yesterday’s price – $48), news is proliferating that investment in new exploration and production is falling off a cliff.  Monday’s NYT, for example, had this:

From the plains of North Dakota to the deep waters of Brazil, dozens of major oil and gas projects have been suspended or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets.

Oil markets have had their sharpest-ever spikes and their steepest drops this year, all within a few months. Now, with a global recession at hand and oil consumption falling, the market’s extreme volatility is making it harder for energy executives to plan ahead. As a result, exploration spending, which had risen to a record this year, is being slashed.

The precipitous drop in oil prices since the summer, coming on the heels of a dizzying seven-year rise, was a reminder that the oil business, like those of most commodities, is cyclical. When demand drops and prices fall, companies curb their investments, leading to lower supplies. When demand recovers, prices rise again and companies start to invest in new production, starting another cycle.

Now for Dan Drezner, all this poses a question:

So, let me see if I have this right:

If oil prices are sky-high, the energy sector explains that it will be slow to develop new fields, because exploration requires massive fixed investments and no one knows what the price of energy will be 5-10 years from now;

If oil prices are low, the energy sector explains that it is unprofitable to develop new fields because… energy prices are low.

Well, actually that is more or less the long and the short of it; as I argued back in July, the oil price is set to continue its recent yo-yoing for as long as we continue without a clear ’signal from the future’ about the long term demand outlook for oil. After all, if you were an investor considering ploughing money into oil fields that were only profitable above $60 or $70 a barrel, and which would take many years to recoup the capital cost, wouldn’t you apply a pretty big risk premium if you saw prices collapsing to below $50 from a high of $147 less than six months earlier, with the potential in the background for future climate policy to cause demand to plummet?

Problem is, though, that without that new investment, we’re on track for a serious price crunch at some stage, as both the IEA and Chatham House have argued.  So how to square the circle?  Well, Nick Butler – who was John Browne’s chief of staff at BP and now heads the chairman of the Centre for Energy Studies at Cambridge’s Judge Business School -has a proposal in the FT yesterday. He writes:

If the energy ministers want to stabilise the market they should begin by commissioning a detailed, independent analysis of what went wrong. They should then develop the stabilising mechanisms that would limit the possibility of any repetition of 2008.

The most effective mechanism would be agreement on a broad target range for prices – say, between $50 and $75 a barrel – backed by a strategic stock holding to be augmented or deployed when prices diverged from the range. To support such an agreement trading would be limited to those with a direct physical interest in the market.

From a new base of relative stability ministers could consider the longer-term issues that will shape the energy market: the huge need for infrastructure investment ($350bn a year according to the International Energy Agency) and climate change.

This idea of a price band is clearly starting to gain ground in the energy think tank world – I heard a very similar idea mooted by an attendee at a Shell / Economist energy breakfast in London last month. But I’m not so sure.  While Nick Butler’s clearly right to refer to the need to integrate energy security with climate change, why not go one step further – and use a comprehensive climate framework to provide the long term oil price stability that’s needed to bring the right amount of new investment on stream?

Think about it.  Imagine a climate regime in which the emission targets are sufficiently long term (i.e. multi-decade rather than in 5-yearly increments as under Kyoto), and which is based on a quantified stabilisation target, which therefore means that all major emitters have binding caps. (You can argue about political feasibility in the current political climate, but the fact remains that a global deal on climate that actually solves the problem will have to satisfy these conditions anyway – and sooner rather than later if we’re to limit warming to two degrees C.)

What such a regime would also achieve, with no extra work needed, is to provide long term predictability on how much fossil fuel will be being consumed – for decades ahead.  True, it wouldn’t tell you exactly which fossil fuels – coal versus oil, for instance – but since they’re used in different markets (oil mainly for transport, coal and gas mainly for power generation and heat), you could make a pretty good guess.

And now imagine again that you’re the potential energy investor we met earlier.  All of a sudden, you can invest with much more confidence – and what’s more, knowing the level of demand will enable you to watch what other investors are doing too, so that more or less the right amount of new oil is brought on stream to meet projected demand, within the context of a global deal for climate.

Oh, and there’s one other advantage: given that a global deal on emissions is primarily an agreement between energy consumers, you can worry just a little bit less about OPEC’s congenital inability to stop itself from cheating…

Update: meanwhile, “OPEC oil ministers meet on Wednesday to remove a record 2 million barrels per day from oil markets as they race to balance supply with the world’s collapsing demand for fuel … Saudi Arabia, the world’s biggest oil exporter, has led by example — reducing supplies to customers even before a cut has been agreed to help push prices back toward the $75 level Saudi King Abdullah has identified as “fair.”"

The climate talks in Poznan were never going to be a dazzling success – but, away from the nitty gritty of text, three big things need to happen for a reasonable result to be achieved.

First, the Europeans have to set out their stall (again) – but this time show that they can match aspirational targets with domestic delivery. Second, the Americans need to be begin the process of re-engaging: some sense has to emerge of what the post-Bush era should look like. And finally, we desperately need the emerging economies to begin to talk openly about where they think they fit into climate control. What does a good deal look like for them – not just between now and 2020, but over the next generation or two?

Unfortunately, the news doesn’t look good on any of these fronts. The Europeans – staggeringly, unbelievably – have allowed squabbles over their own climate package to spill over into the broader international negotiation. How’s this for showing united leadership to the rest of the world?

French President Nicolas Sarkozy failed to end deadlock with ex-communist European Union states on an EU climate package on Saturday but predicted a deal would be reached by a December 11-12 summit.

“Things are moving in a good way … I am convinced we will arrive at a positive conclusion,” Sarkozy, whose country holds the rotating EU presidency, said after meeting Polish Prime Minister Donald Tusk and eight other east European leaders.

Poland, which relies on high-polluting coal for more than 90 percent of its electricity, has threatened to veto an EU plan to cut greenhouse gas emissions by 20 percent below 1990 levels by 2020 unless Warsaw wins fossil fuel concessions.

“There is still a lot of work ahead of us” before the summit, Tusk said after the talks in the Polish port of Gdansk.

Poland argues it needs until 2020 to curb carbon emissions, for example by using more efficient boilers and carbon-scrubbing equipment and possibly building its first nuclear plant.

Tusk said Sarkozy and the EU Commission agreed to extend a period limiting mandatory purchases of greenhouse gas emissions permits for east European coal plants, in an offer which would need the backing of all EU leaders.

And Tusk hinted at a willingness to compromise at the summit. “At the very end, maybe at the very last minute, we may decide this is a solution we may accept,” Tusk said.

Meanwhile, the American negotiating team appear not to have even talked to the Obama transition team (h/t Andrew Kneale). If true, this is worse than stupid:

As I’m sure the Obama Administration transition team is aware, Poznan, Poland is currently hosting a very important UN-sponsored climate change conference. At stake is nothing less than the next round of emissions reduction commitments (a Kyoto successor) — which Barack Obama has said he wants the U.S. to participate in.

If they haven’t already, the Obama folks need to make contact with the U.S. delegation in Poznan immediately. One would think that the U.S. Del. would take the initiative itself, but I’m getting word that they feel that the ball is in Obama’s court.

Apparently, current U.S. delegation members — mostly career people with honorable intentions and a willingness to continue to serve (with some notable exceptions) — are waiting for the call. This is no time to fight about protocol, or who is supposed to call who. It’s time to start turning the ship around.

Things are going to slow down for the weekend and then pick up again on Tuesday. The framework that comes out of this week can still be quite ambitious and, at the same time, workable in the U.S. and in the Senate. The Obama people have from now until Tuesday to make their goals for Poznan clear, but the sooner, the better.

Finally, as I posted a few days ago, developing countries seem resistant to even talking about the long-term – even though they have the most to lose through lots of itsy bitsy short term deals…

Happy days.

(For more, see all GD’s Poznan posts, our broader coverage on climate, follow the #poznan feed on Twitter or check out benkamorvan’s list of Poznan related blogs and other sites.)

What’s striking about the climate talks in Poznan is that (some) developed countries want a long-term goal, while (most) developing countries are only prepared to talk about the next few years. Here’s Xinhua:

The developed countries are seeking to set up a shared vision on long-term goal for emission cuts, saying that such a goal will set the direction for future actions.

Some industrialized countries believe that a 50-percent cut of emissions against the 1990 level by 2050 is necessary for the goal of preventing rising temperatures.

The developing nations, however, rejected such a global goal at this stage, arguing that such a vision is not feasible since there are no concrete plans for providing finance and technology required by the developing countries.

But really, it should be the other way round. Given that:

• A limited emissions ‘cake’ is available between now and, say, 2050 (assuming an eventual attempt to stablize atmospheric GHG concentrations).
• And that rich countries are consuming disportionate shares of that cake on every year.
• Then poor countries are likely to receive a smaller slice the longer it takes to start negotiating a comprehensive allocation.

Short term deals (Kyoto, Kyoto 2, Kyoto 3 etc) suit developed countries. A full-term deal would allow developing countries to understand then try and protect their long-term interests…

Next week sees the publication of the International Energy Agency’s latest flagship World Energy Outlook, which has been heavily leaked to the Financial Times.  The report makes the same point that I’ve been arguing since prices started to slide from their peak of $147 over the summer (to around $60 today): oil prices are going to go back up. A lot.  As Javier Blas and Carola Hoyos summarise in the FT,

The world economy will witness a $2,000bn shift in wealth and power from oil-consuming countries to members of the Organisation of the Petroleum Exporting Countries as oil prices rise to $200 a barrel by 2030. 

The IEA says that Opec oil reserves are big and cheap enough to increase production and cap oil prices, but it warns: “Investment by these countries is assumed to be constrained by several factors, including conservative depletion policies and geopolitics. “There remains a real risk that underinvestment [bet-ween now and 2015] will cause an oil supply crunch” the report states…

In its report, the IEA sees oil prices reaching $200 by 2030, almost doubling last year’s forecast of $108 by the same year. The report suggests that current oil prices – below $70 a barrel and less than half their peak summer level – are a temporary effect of the economic crisis.

The $200 a barrel figure is the same one mooted by a Chatham House report on oil published in August, which shared the IEA’s concern that the investment needed to bring new production on stream just wasn’t happening fast enough.  The IEA was already worried about that point when it published last year’s Outlook, remember – the fact that prices have crashes to less than half their peak level since then will hardly have helped to bring new investment on stream.

Exactly as with food prices, then, it’s the recent fall in prices that represents the blip – and the recent highs that represent the start of a long term trend.  The IEA’s report is just the latest in a series of very good reasons why policymakers need to get their act together quickly on agreeing collective approaches to resource scarcity issues while the political heat on them is – for a little while – off.

But to repeat what I said in July, massive investment in new oil production just can’t be squared with what needs to happen on climate change.  The global deal that we really need for managing energy security and competition for oil resources is a global framework for climate policy that manages the problem over the full term of its lifecycle – not just the next few years, as with Kyoto, as this is far too short term to give real investment certainty – and that has targets for all countries, not just developed ones.

That, of course, takes us straight back to David’s recent question on developing country participation.  More on that in another post shortly…

In the summer, I gave a talk at the United Nations University G8 symposium on climate change, where I explored the threshold between conflict and cooperation on carbon control.

Belatedly, the talk is online – either as a pdf, or you can read the full text after the jump.

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With a global recession looming, international efforts to curb greenhouse gas emissions may be in jeopardy, as concerns are voiced in the US, Canada and Europe about the wisdom of adopting measures that would impose an additional cost burden on already fragile economies. Such thinking is misguided, and it is dangerous. A recession may in fact ease the introduction of carbon emissions trading schemes.

At the recent EU summit in Brussels there was widespread reluctance to meet pledges all EU governments made last year to cut CO2 emissions by 20% by 2020. Eight Eastern European countries – including Poland, Hungary, Romania, Bulgaria, Slovakia, Latvia, Lithuania and Estonia — released a joint statement urging the EU to balance the wish for cleaner air against “the need for sustainable economic growth” at a time of “serious economic and financial uncertainties.” Italy threw its weight behind these countries, threatening to veto the proposed EU plans.

Likewise in the US, top power industry executives seized the opportunity to lobby for delaying carbon emissions legislation, at the recent New York Utility Conference. More dramatically in Canada, the Liberals were dealt an electoral defeat on Wednesday largely on the basis of their strong advocacy in favour of a carbon tax (see story here).

All this backtracking is akin to forfeiting the forest for the tree. Financial crises are short-term phenomena, global warming on the other hand is with us for the long haul, and the window of opportunity for addressing it is fast narrowing. The prospect of economic recession does not in any way reduce the magnitude or the urgency of the climate problem, nor does it provide any compelling reason for delaying action. Or as EU President Barroso put it:

“Saving the planet is not an after-dinner drink, a digestif that you take or leave. Climate change does not disappear because of the financial crisis.

Moreover, as David Wheeler of the Center for Global Development argues, smart carbon regulation will be easiest, not hardest, to introduce during a recession, since a slowing economy emits less, and smart cap-and-trade regulation can “lock in” this head start on emissions reduction at almost no cost during the recession. His proposal for the US is to:

• Immediately pass a cap-and-trade bill that sets the initial total limit at the pre-recession emissions level, and schedule a progressive decline in the overall limit that will achieve the needed long-run goal.
• Establish an annual auction for 100% of the emissions permits.
• Set aside a healthy share of the auction proceeds to provide a compensating rebate for every American

In this way the consumer is shielded from cost increases, and the power provider incentivised to develop less carbon-intensive energy options for the future.

It is amply clear that big emitting developing countries such as China and India will not make significant commitments to curb their greenhouse gas emissions unless the US and EU lead by example. With only about a year to go before the new global deal to replace the Kyoto Protocol is due to be reached in Copenhagen conference, the US and EU have no room to falter. More than ever, political courage and leadership is needed to ensure global efforts to address climate change are not jeopardized.

Listening to Gordon Brown’s speech today, Philip Stephens notes that “Mr Brown kept his audience in its comfort zone”:

Though he set out the challenges Britain faces in a period of tumultuous global upheaval, Mr Brown did little to challenge his audience’s preconception that the present mess was all the fault of greedy capitalists.

Reading that brought to mind another Labour Conference speech in times of global upheaval: Tony Blair’s back in 2001.  Remember this?

This is a moment to seize. The kaleidoscope has been shaken. The pieces are in flux. Soon they will settle again. Before they do, let us re-order this world around us.

I re-read the whole thing this afternoon, and was struck by a) its brilliance, b) its insight, c) how it soars compared to Brown’s speech today and d) the extent to which - in retrospect, with all that’s happened since – it shines with an eerie messianic fervour.  It’s well worth another look: full text below the jump.

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Herewith an attempt to marshal my thoughts about what’s happening on the oil price (which has fallen sharply over the last few weeks), what’s likely to happen next, and what policymakers need to do to move forward. Brief summary as follows:

- The oil price has fallen sharply over the last couple of weeks, from a peak of $147 to a 7 week low of $123 at close yesterday. So is this the start of a long decline, or just a brief pause to draw breath before a resumption of the relentless upward march of recent years?

- In a nutshell, probably more like the latter – but with the potential for a big drop in the near term for as long as the credit crunch lasts, as emerging economies slow down sharply in line with falling US demand for their exports.

- However, once we’re through the crunch, we may be back to a game of cat and mouse between oil supply and economic growth. Demand falls, oil price falls; demand picks up, oil price goes back up too – but never for long enough to give investors a clear signal to pump cash into new oil supply infrastructure.

- What we need is a game changing intervention that breaks us out of this stop-start cycle. Massive investment in new oil supply would provide it, but can’t be squared with what needs to happen on emissions reductions.

- It looks like the only way through is for policymakers to agree a global climate policy framework that’s both global in scope and sufficiently long term to provide investors with an unequivocal signal of where to put their cash: this is the only way of squaring energy security with climate change.

Full version after the jump.

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Although plenty of people see the Guardian’s George Monbiot as an irritating gadfly (see also Gideon Rachman’s amusing account of what it’s like to work with him), I’ve long taken him seriously on climate and scarcity issues; his book The Age of Consent, in particular, contains a really excellent attempt to think through what will happen to world trade in conditions of resource scarcity.

So it was with interest that I saw on his blog that he’s officially Changed His Mind on post-Kyoto climate policy.  Like me, George has for a long time been an advocate of C&C – under which countries agree a global ceiling on greenhouse gas concentrations (e.g. 350 parts per million of CO2), figure out the level of global emissions each year that will keep us below it, and then share out the tradable permits to that ‘emissions budget’ on the basis of convergence to equal per capita rights by an agreed date, like 2050.  But no longer. Here he is in the Guardian on 1 July:

After reading the proofs of a book by the independent thinker Oliver Tickell, to be published this month, I have changed my view. In Kyoto2: how to manage the global greenhouse, Tickell slaughters my favourite ideas(8). He shows that there is no logical basis for dividing up the right to pollute among nation states. It gives them too much power over this commodity, and there is no guarantee that they would pass the pollution rights on to their citizens, or use the money they raised to green the economy…

Instead Tickell proposes setting a global limit for carbon pollution then selling permits to pollute to companies extracting or refining fossil fuels. This has the advantage of regulating a few thousand corporations – running oil refineries, coal washeries, gas pipelines and cement and fertiliser works for example – rather than a few billion citizens. These firms would buy their permits in a global auction, run by a coalition of the world’s central banks. There’s a reserve price, to ensure that the cost of carbon doesn’t fall too low, and a ceiling price, at which the banks promise to sell permits, to ensure that the cost doesn’t cripple the global economy. In this case companies would be borrowing permits from the future. But because the money raised would be invested in renewables, the demand for fossil fuels would fall, so fewer permits would need to be issued in later years.

Tickell calculates that if the cap were set low enough to ensure that the world became carbon neutral by 2050, the total cost of permits would be about $1 trillion a year, or roughly 1.5% of the global economy. The money would be spent on helping the poor to adapt to climate change, paying countries to protect forests and other ecosystems, developing low-carbon farming, promoting energy efficiency and building renewable power plants.

In some ways, I can see the attraction too.  For one thing, Oliver Tickell’s proposed approach (which you can read more about here) retains C&C’s most important attribute: it starts from where we’re trying to get to, through a quantified, binding ceiling on GHG concentrations.  None of the usual crap about “aspirational long-term goals” here, then.

I suspect it’s also true that it would be methodologically far easier to cap the emissions of a few thousand refineries, cement works, coal mines or power stations – the ‘upstream’ end of the production life cycle, in other words – than it would be to cap national emissions, given that totalling an entire country’s emissions involves tracking hundreds of millions of different activities (e.g. the gas I’ve just used to cook my lunch). 

But while the methodological / policy end of things does look easier under Oliver’s Kyoto 2 proposal, the politics look very much more difficult.  For one thing, think of the developing country equity dimensions, which China and India showed so clearly at the G8.  Oliver’s proposal effectively tells Chinese steel companies that they’ll have to compete against Japanese steel companies for emission permits in an open auction - a process that in effect takes no account of their developing status, and hence does away with the principle of common but differentiated responsibilities.  Good luck with securing agreement to that.

Secondly, allocating emission rights to states may indeed entail no guarantees that these states will then pass emission rights on to their citizens, it’s true.  But the fact of the matter is that it’s those states that must negotiate any global deal – and those states that must enforce domestic level compliance with the global deal, even if the deal is done as Oliver wants it to be.

All in all, Oliver’s is a smart idea – especially its focus on a relatively small number of sites – but it’s hard to see it as feasible…

Like Alex, I spoke at the United Nations University symposium on climate change and innovation on Friday – and one notable theme was the ferocious kicking that Kyoto received from some of the speakers.

Leading the onslaught were Ted Nordhaus, author of The Death of Environmentalism, and Gwyn Prins, who runs the LSE Mackinder Centre for the Study of Long Wave Events.

Nordhaus, writing with Michael Shellenberger, has called for Kyoto to be scrapped in the current issue of Democracy. “Kyoto is dead,” they write, “and that’s a good thing. In its place, we need massive global investment in new clean energy technology.”

Gwyn Prins takes a similar line, an argument he set out in a pamphlet written with Steve Rayner, and subsequent op-ed for Nature (which he says received a bigger response than anything the journal has previously published).

On Friday, both attempted to bang a few nails into Kyoto’s coffin. Gwyn, in particular, was adamant that the protocol had long been dead. Only a few diehards – emotionally incapable of accepting they are wrong – had failed to admit its passing:

We have to find a way, diplomatically, for the Europeans to join in [to a new approach to climate control] without losing face. You don’t get progress if you tell people that they must admit they made a mistake. Most of us don’t like to admit that we have made mistakes.

Prins and Nordhaus agree on a great deal. On Kyoto, they argue that:

• Its targets have had no impact on those countries that adopted them – not even slowing the rate of increase in their emissions.
• In Europe, any emissions reductions that have occurred are due to factors that precede the implementation of the Kyoto protocol.
• European emissions are rising faster than American ones (a ‘hard fact’ that embarrasses European politicians who relish looking down on ‘ugly Americans’ as Gwyn put it).

On a future climate regime, they contend that:

• Kyoto’s failure means that the Copenhagen agreement should exclude binding targets.
• Instead, a ‘bottom-up’ approach should be adopted, with investment in technology at its heart. This will reduce emissions more effectively than binding targets.
• Leadership on climate is shifting away from Europe and towards the United States.

I am going to leave future frameworks to another post. In this one – and below the jump – I look at Kyoto’s impact on Europe. There’s a lot of detail in the main post, so here are the key conclusions:

• It’s too early to say whether Kyoto has worked as advertised in Europe – but the evidence suggests that Europe as a whole will meet, or even exceed its targets.
• Later reductions in emissions seem likely to be due to policy responses to Kyoto. Governments are reacting to the pressure that a binding target applies.
• It’s likely that Europe would be emitting more if Kyoto had never been ratified – and it’s a real stretch to argue that the US is doing better than the EU on emissions.

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No sooner do I finish my post this morning on high oil prices than I discover Gordon Brown in the Guardian, sharing our pain on energy prices (“…and I know that families up and down the country…” [cont. page 94]). 

But his article is worth a read, for two reasons. First, while it doesn’t actually use the words “oil” and “peak”, it goes pretty close.  Here’s a sample:

The cause of rising prices is clear: growing demand and too little supply to meet it both now and – perhaps of even greater significance – in the future…

Overall, by 2020, global demand for energy will rise by 50% [actually the IEA's projection is a 50 per cent rise by 2030, not 2020, as Brown knows; but let's not quibble]. It is the market’s belief that ever-growing demand will continue to outstrip supply that has pushed up the oil price.

And we are becoming increasingly aware of the technical, financial and political barriers to the production of more oil. Every country must find ways of being more efficient and diversifying supply. And as continuing high oil prices present us all with an immense challenge, the way we confront these issues will define our era.

Second, the article’s interesting because of the way it falls into a classic trap: confusing “oil” with “energy”. The article’s problem definition is about oil; the very first sentence says that “the global economy is facing the third great oil shock of recent decades”. So what needs to be done?

…we need to accelerate the development and deployment of alternative sources of energy, reducing global dependence on oil. Britain will increase its investment in renewables, including decentralised generation. We will build one of the world’s first commercial-scale carbon capture and storage coal plants and we have committed to a nuclear building programme to ensure that the UK’s emissions and dependence on fossil fuels do not rise as existing nuclear stations close.

So although the crisis is in oil – a liquid fuel for transport, in other words - the answer, we are told, lies with renewables, decentralised generation, carbon capture and storage and nuclear new build: with the power generation sector, in short.

This shows a pretty big lack of energy literacy. The only way these changes in the power sector will help British voters out on high oil prices would be if there was a massive roll-out of electric cars that could be recharged from the mains; or using electric power to electrolyse hydrogen on a massive scale to power cars.  Not only is neither of these technologies anywhere close to commercial deployment in the UK, they’re also not even mentioned in the article.

Update: see also this post on electric cars.

The FT has a long analysis piece this morning on how the political salience of environmental issues is faring in Britain as the economy nosedives. The news ain’t good:

At a time of falling house prices and rising household costs, people are telling pollsters that they are no longer quite so interested in saving the planet. Ipsos Mori has found that environmental concerns reached a pinnacle in January 2007, when 19 per cent of people, unprompted, named the environment as one of the biggest issues facing Britain today, compared with just a few per cent several years earlier. But by January 2008, that figure had fallen to 8 per cent, while the economy was rated a top concern by one in five. One very senior member of the shadow cabinet put it more strongly: “People hate this green stuff.”

But on the other hand, CNN has this:

At a time when gas prices are at an all-time high, Americans have curtailed their driving at a historic rate. The Department of Transportation said figures from March show the steepest decrease in driving ever recorded.

Compared with March a year earlier, Americans drove an estimated 4.3 percent less — that’s 11 billion fewer miles, the DOT’s Federal Highway Administration said Monday, calling it “the sharpest yearly drop for any month in FHWA history.”

The question, then: as far as climate change is concerned, does a drop in public concern for the environment actually matter, as long as the oil price keeps on rising?  Answer: yes, because there’s absolutely no law to say that pursuing enery independence is necessarily green. 

Exhibit A: corn-based ethanol.  Pointless as a climate mitigation measure (and seriously harmful on the food security front).  As an energy security measure, unfortunately, rather effective.

Exhibit B: liquid fuels from coal.  The US National Association of Mining is already out there making the arguments.  Also rather effective from an energy security point of view, but not good at all for the climate.

All this adds up to a pretty good case for policymakers to focus heavy fire on unlocking electric cars, it seems to me, given how far away hydrogen still looks.

I am at the New America Foundation this morning, where David Miliband is due to ‘discuss the challenge of promoting Western style liberalism, democracy, civil society development in a world that in some corners views the word “democracy” suspiciously.’ The event will be streamed live here.

This is Miliband’s opportunity to connect with a younger audience in Washington. The meeting has been set up by the British Council, as part of its TN2020 network. I moderated the network’s first event in Berlin just before Easter, while Alex and I wrote an essay on climate for the TN2020 book. The intro:

The climate problem is now urgent enough to be a major determinant of the transatlantic relationship. In the wake of Bali, we are promised summits and shindigs galore as the world struggles to agree a global deal to replace Kyoto. This will keep climate at the top of the political and news agenda.

But if a global deal is signed in 2009, the fun will only just have started. Greenhouse gas emissions will need to be slashed by at least half, and probably much more, by 2050. Rich countries will be expected to make deep cuts almost immediately. A colossal and unprecedented economic realignment will therefore be needed. It’s a huge task. So how will Europe and the US fare on this shifting terrain?

The warm-up act is Andrew Sullivan, über-blogger and hawk turned hardcore Obamafan, and absolutely charming in person. He’s talking about the way that – in the new media age – the British and American media audience are merging, with southern England a centre left or centre right ‘blue state’. “I often feel my blog is better understood in London than it is in certain parts of the United States,” he says.

But then Miliband arrives and Sullivan is shuffled off the stage. Introduced by the Washington Note’s Steve Clemons (and our host) as ‘primarily a blogger’, Miliband sits on the table and talks without notes.

He starts with the much-stated, but seldom practised, point that the new diplomacy needs to meld state-to-state relations, economic integration, and the ‘new public diplomacy’ – the mobilisation of non-state audiences.

The great causes in international relations are far from dead, he says, focusing on four challenges. Can we build strong communities across race and religion? Can we take on the conflicts that blight people’s lives? Can we stabilise the global climate? And can we build stronger and more effective international institutions?

Miliband argues that the problems of globalization will be solved by extending globalization. The world needs to tackle its problems through more internationalism not less.

I suggest that the major challenge for globalisation is the combination of rising expectations with limits to strategic resources (food, energy, emissions etc – it’s now a familiar list). What impact will the politics of scarcity have on the international system?

Miliband’s response (with apologies for the paraphrase – hard to type while nodding attentively):

We are living through an unprecedented triple crunch of credit, food and fuel. The common denominator is between food and fuel is carbon dependence. Climate change closes the circle. The key question is whether we can get on a lower carbon trajectory or not. If we don’t, the conflicts that people fear are a real danger.

So, yes, we share an analysis – but I suspect that, collectively, the world is far from having the answers…