by David Steven | Jan 21, 2009 | Climate and resource scarcity, Economics and development, Global Dashboard, Global system, London Summit
I’ve been in Japan today, speaking at ‘Reforming International Institutions – Meeting the Challenges of the 21st Century’, a seminar organized by the United Nations University and the British Embassy in Japan.
You can download my talk here (with pictures, references etc) – or the text only is available below the jump. There’s a webcast too.
Headlines:
- It’s going to be a tough year. The financial meltdown has a long way to go, and the downturn is risking turning into a global depression.
- Trade is a bell wether. Protectionist pressures are already on the rise. If they gain traction, take that as a warning of a wider loss of confidence in global institutions.
- The unravelling of global economic imbalances could prove corrosive to the international order. If countries start to devalue to protect exports, expect a tit-for-tat dynamic to kick in.
- Scarcity issues (energy, water, land, food, atmospheric space for emissions) remain the key medium term driver of global change. Commodity prices will spike again as soon as there’s recovery.
- The downturn has stemmed the uncontrolled growth of emissions, but also lessened the chance of a robust global deal on climate.
- Economic bad times could well drive increased conflict. A major new security threat might be the fabled black swan – hitting just when the global immune system is already overloaded.
- If we experience a long crisis (or a chain of interlinked crises), we are likely to see either a significant loss of trust in the system (globalization retreats), or a significant increase in trust (interdependence increases).
- You need to stretch time horizons to get the latter – shared awareness (joint analysis of risks and challenges), as a basis for shared platforms (loose coalitions of leaders), which can lobby for a shared operating system (a new international institutional architecture).
- 2009 sets a challenging agenda for the G20 (financial reform and economic recovery – but framed by a broader vision on climate, resources, security etc.)…
- …the G8 (caucus of rich countries able to tee up Copenhagen and kick start development assistance if developing countries begin to teeter)…
- …the UN (especially Ban Ki-Moon’s proposed high level ‘friend’s group’ on climate, but also as a fora for getting to grips with scarcity issues)…
- and the Bretton Woods institutions and the WTO (first of all ensuring they keep their heads above water, then looking to ‘save globalization from itself’).
- Oh and be ready for the backlash – people are angry and rightfully so, but that may well lead us down some populist blind alleys.
(more…)
by Alex Evans | Dec 17, 2008 | Climate and resource scarcity, Global Dashboard
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.””
by Alex Evans | Dec 5, 2008 | Climate and resource scarcity
Relatively little media coverage so far on the UN climate talks currently underway in Poznan – but that’s not to say that nothing interesting is happening there.
Item 1 is that China and India have come out arguing that Obama’s proposed 2020 emissions reduction (namely, to get US emissions back to 1990 levels by that date – more details here) is insufficient. He Jiankun, a Chinese delegate, was quoted in Reuters as saying that “It’s more ambitious than President Bush but it is not enough to achieve the urgent, long-term goal of greenhouse gas reductions”.
Given that the IPCC says that stabilising at 450 parts per million of CO2 equivalent (the maximum level on which we still have a better than even chance of limiting warming to 2 degrees C) probably requires developed countries to reduce their emissions by 25-40% below 1990 levels by 2020, you can see where the Chinese and the Indians are coming from.
But as David pointed out when he and I were debating this a couple of weeks ago, the US’s emissions have gone through the roof under Bush: even the very modest target proposed by Obama is going to be a massive stretch for them. Expect this one to run and run.
Item 2: Brazil is reportedly sidling up to per capita convergence as the formula for sharing out a global emissions budget, at least if you believe this report in Business Green yesterday, which says:
Brazil reportedly put the finishing touches to proposals apparently based on the contraction and convergence principle that would see countries agree to per-capita emission reduction targets. Under the proposals, emission targets would be set on a per-head-of population basis, meaning that developing economies with low-carbon emissions per capita such as China would face less-demanding targets, while those countries with the highest level of emissions per person would have to deliver the deepest cuts.
Fascinating if true, but they don’t cite their source, so I’m regarding as tentative until I hear it from another source or two.
Item 3, meanwhile, is that in a workshop on “shared visions” for the future on Tuesday, China made some tentative steps towards setting out its stall on how it would want an emissions budget to be shared out. This is very interesting, as China’s the most important of the handful of developing countries for whom straight per capita convergence wouldn’t be advantageous – as its per capita emissions have (just in the last few months) gone over the global average per capita level, meaning that even immediate convergence at equal per capita shares to the atmosphere would leave them with no surplus permits to sell. What then is China proposing? The Worldwatch Institute wrote it up like this:
China, citing the equity language of Article 3, mentioned the need for eventual “global per-capita emissions convergence” – the idea that, at some point in the future, all countries in the world should have similar per-capita emissions as a matter of climate equity. But this concept did not pick up momentum, at least not in the workshop.
That had me sitting bolt upright in my chair and reaching for the phone to ask people in Poznan if it was really true. The answer back: not quite. In fact, what China seems to have been proposing is a system of per capita convergence in cumulative emissions – i.e. taking into account historical responsibility for past emissions, as well as current emissions – which would clearly be much more advantageous to it, given how much later China industrialised than (say) Britain (for whom historical responsibility based allocations of emissions permits would be rather, ahem, challenging).
But the real significance here is less the specific formula that China proposed (more details needed – if you were in the workshop, please drop me an email), and more the fact that China may now be starting to engage in a conversation about the formula that might be used to share out a global emissions budget. Up to now, discussion of stabilisation targets for greenhouse gas levels in the air has been off the table – in large part due to Chinese unwillingness to talk about how the emission budget implied would then be shared out. If that’s changing, then the future just got a little more hopeful.
by Charlie Edwards | Nov 26, 2008 | Conflict and security, South Asia
If you need emergency information, try the Mumbai Help blog – it has a consolidated list of contact numbers. British nationals in Mumbai should call +91 11 2419 2288. In the UK, call +44 207 008 0000.
Mumbai has been rocked by a series of shootings and explosions. The violence has the hallmarks of a coordinated attack. For the breaking news go to Twitter, then go to the BBC or CNN.
Below is an example of the feed from Twitter user @BreakingNewsOn, as news of the crisis initially emerged.
BreakingNewsOn
A car bomb, reportedly a taxi, has exploded at a “domestic airport” in Mumbai, Al Jazeera reports while quoting local media. 1 minute ago from web
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CAR BOMB EXPLODES AT MUMBAI AIRPORT – TV. (BULLETIN) 3 minutes ago from web
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Some gunmen are still holed up in buildings, police chief tells Reuters; reports of “confrontation” between police and gunmen at a hospital. 6 minutes ago from web
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Police say gunmen attacked at least 7 locations with K-47 weapons, explosives; new attacks reported at cinema, hotels, hospitals; 27 dead. 11 minutes ago from web
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An explosion is being reported at the Taj hotel in Mumbai where gunman had earlier opened fire – NDTV. 21 minutes ago from web
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Update – Alex adds: See this Wikipedia page on the bombings, which is being updated in real time. (Same happened on 7/7 – see Charlie’s post on this a few months back.) Also a Google Map of locations under attack here, and a Flickr photostream here. But the #Mumbai feed on Twitter remains the key place to look for news (plus @mumbaiattack for a more filtered version).
Update, 7:43 am (David): The news keeps getting worse. Indian TV reports a fresh explosion at the Trident just a few minutes ago. It was deeply shocking this morning to hear the BBC interview a man who was barricaded inside the hotel. A few minutes later the presenters had moved onto a joke item about Christmas carols. Pathetic.
Update, 8:28 am (Alex): Summary of how mobile and social networking channels are covering the crisis – together with discussion of some of the dilemmas this throws up – here. The biggest dilemma of all: widespread concern that the attackers themselves are making use of media and social network coverage in order to anticipate what the authorities are up to. In such circumstances, much can hang on individual users’ sense of personal responsibility on what to report – and what not to. No such thing as a DA Notice on Twitter…
Update, 8:44 am (Alex): Coverage is starting to converge on agreement that the attackers came to Mumbai by sea, leading to much speculation and rumour about where they may have come from. Plenty of people on Twitter, the blogosphere and (more gradually) the mainstream media (e.g. Indian Express here) are speculating that the attackers came from Karachi (in Pakistan). This is not confirmed, though; other reports suggest that they came from Gujurat (in India). As Gideon Rachman notes, the answer to this question will be highly significant:
The development of a terror campaign with truly domestic roots would be a really ominous development. On the other hand, if the terror attacks originated on Pakistani soil, then regional tensions would spiral. How unpleasantly ironic that all this should happen, just days after the Pakistani prime minister, issued a bold appeal for peace between his country and India. One might almost believe that these attacks were designed to scupper the Zardari peace initiative – were it not for the fact that it must take longer than a couple of days to put something like this into action.
Update, 11:32 am (David): The siege of Mumbai is now into its twentieth hour. Terrorists are reported to be being interviewed live on Indian TV. IBN is claiming we’re into the endgame. Let’s hope so before night falls. The live IBN stream is here…
Update, 11:54 am (Alex): The BBC is reporting that the Indian government has asked for all live Twitter updates from the scene to cease immediately. A tweet reading as follows is proliferating on Twitter as users re-post it on their feeds: “ALL LIVE UPDATES – PLEASE STOP TWEETING about #Mumbai police and military operations”. Various twitterers reply indignantly that if they’re to stop posting the details, the broadcast media should do the same. As I write, the IBN video stream that David links to above is issuing real-time updates on which floors of the Oberoi Hotel have been cleared by security forces.
Update, 14:38, (David): Switch from the Twitter feed to Al Jazeera’s comments thread and you’ll find that sympathy for those caught up in the attacks is not universal, while some suspect that the culprit will not turn out to be an Islamist group:
Maria Costa, Governador Valadares, Brazil: “While few enjoy the sight of “innocent” victims being caught up in the struggle against the imperialists and their collaborators, nobody should ever forget that these desperate acts of martyrdom are the direct result of the actions of the imperialists and their lackeys. If India wants to avoid future tragic incidents, they need to re-think their actions in Occupied Kashmir and their nuclear alliance with the Yankees.
mewrite, Banglore, India: the killing of Hemant Karkare(chief of Mumbai’s anti-terrorism squad) gives a clue who might be behind this heinous crime. Karkare was spearheading the investigations into Malegaon blasts and was instrumental in unveiling the Hindu terror network. Initially, as usual, Muslims were blamed for those blasts, & many were punished on false charges. But the recent investigations done by Mr Karkare revealed that it was actually the handiwork of Hindu terrorists belonging to Shiv Sena who with the help of some army persons conducted blasts in many Indian cities during the last few years.
proudpathan, Batley, United Kingdom: The US, Uk, Israel and laterally the Indians all lie in the same bed. These countries are upto something. What it is I don’t know. I hope the Indians don’t associate themselves too closely with these countries, otherwise the rest of the world will see them as they see the US, the UK, and Israel as being imperialistic, oppressors and occupiers and the murderers of innocent Muslims.
by Charlie Edwards | Nov 25, 2008 | Global Dashboard, Off topic
Do we need to call ‘time out’ on global risk analysis? The NIC report on global trends 2025 is one of a plethora of recent publications on global risks and security challenges from think tanks, Government departments, the defence community, NGOs, business, academia, and the media. Do we really need any more?
3 questions spring to mind:
1. Are we suffocating under the weight of all this analysis?
2. Should we consider having a period of consolidation and reflection?
3. Do we need a transformational shift from analysis to action?
How many times do we need to be told that:
- Since the end of the Cold War, the international landscape has been transformed.
- During the next 30 years, every aspect of human life will change at an unprecedented rate, throwing up new features, challenges and opportunities.
- The unprecedented transfer of wealth roughly from West to East now under way will continue for the foreseeable future.
- The formidable acceleration of information exchanges, the increased trade in goods and as well as the rapid circulation of individuals, have transformed our economic, social and political environment
- New players—Brazil, Russia, India and China will bring new stakes and rules of the game to the international high table.
- Increase in global population will put pressure on resources—particularly land, energy, food, and water—raising the spectre of scarcities emerging as demand outstrips supply.
- There are a set of interconnected set of threats and risks, including international terrorism, weapons of mass destruction, conflicts and failed states, pandemics, and trans-national crime.
Surely it is time to complement existing analytical work with some ideas for action or even, as someone suggested earlier, divert our focus to analysing potential ‘solutions’ rather than identifying the same ‘problems’ time and again. Given the vast number of reports and papers in the system, surely now is the time to consider what improvements and upgrades can and need to be made to the global system in response to the myriad of issues the international community faces.
In order to do this we need to move away from the comfortable exercise of scene setting, describing the world around us and instead take a different approach. One simple way would be to look East and see what Indian & Chinese thinkers and academics are developing. Analysis obviously plays a crucial role in thinking through issues and in policy-making but the very process of analysis can be seductive; providing us with breathing space when we actually need to be pushing on and debilitating by creating ever greater complexity which can often lead to inaction.
In the words of the King:
A little less conversation, a little more action please
All this aggravation ain’t satisfactioning me
A little more bite and a little less bark
A little less fight and a little more spark
