Today is Energy Day and we are going to talk about Carbon politics, Saudi Arabia and Gazprom (the mega oil company in Russia). There are at least seven AMPers from the Energy Sector - mostly from the Oil and Gas Industry, with a few from renewable energy sector.
Any discussion on Carbon emissions and its impact on climate is bound to generate heat (and more Carbon), especially if it is an international group. And this was evident in our Living Group discussions as well as in the class. What was most surprising to me is that, there are still quite a lot of people who believe that this whole climate change is a hoax. Personally I think, more Americans think this way, as they don't see this impacting their daily lives and if they drive around the US given their large land mass, it is difficult to see the issue. Europeans, living in a more dense area are more likely to see some impacts and hence believe in this. The scientific community is also quite divided on the topic. The very fact that this class is being facilitated by a Professor of Political Science, shows how closely carbon trading is linked to politics.
Irrespective of politics, some facts are in disputable:
- 2010 is the hottest year ever recorded , with July 2010 being the hottest month ever recorded
- 20th century has witnessed an average temperature increase of 0.74 degrees centigrade
- 17 countries in the world are responsible for 80% of the green house gas (ghg) emissions
Now a little bit of science behind the climate issues: called a greenhouse effect, it has earned the name from the role of glass in conventional greenhouses. Glass allows short-wave radiation from the sin to pass into the greenhouse but is opaque to the longer wavelengths trying to radiate from the greenhouse interiors. This traps the heat within the greenhouse. A similar process occurs in the earth's atmosphere with a set of ghg's - notably water vapour, carbon dioxide, methane, nitrous oxide, ozone and chlorofluorocarbons. But for this natural greenhouse effect, the earth would have an average temperature of -18 degree centigrade. With economic activity increasing the concentration of carbon dioxide has increased; and new gases, which are not naturally produced, but displaying the greenhouse properties are now present in the atmosphere. Both put together enhance the greenhouse effect, thereby causing the earth's temperature to rise. Easy, isn't it ?
US response to climate change discussions have been varying - lukewarm to outright rejection of the theory itself. Why is this so ? Many reasons:
- Politics in the US is strongly linked to oil industry
- Public does not believe in this
- Abundant availability of high quality low cost coal
- Worried that any changes would affect their already-down-in-the-dumps manufacturing sector
- Many American scientists dispute the scientific data
- Religion - many believe that if God did not want this, it would not have happened; it is not in human hands
- Conservatism
- If the ozone hole was above the US (instead of over Australia), the Americans would have acted differently
- Pure capitalists believe that the market will adjust itself
- Not a priority for the politicians
- Large land mass make people believe that "all is well"
- Poor political leadership in educating people
The European response has bought the visibility at the Board level.
There are three methods of mitigating or adapting to the global climate change : source reduction, creation of sinks or adaptation. Each of these has its own costs and benefits.
The question is what incentives are available ? Countries are looking at three types of incentives: Direct Regulation of types of energy usage, Taxes/subsidies and Permit Trading.
The carbon trading system has become a political and coordination problem than anything else. And hence it would be very difficult to make progress at a global level.
The second case was on Saudi Arabia - which is in some ways similar to the case of Nigeria. It is a rentier state and suffers the "Dutch disease". Abundance oil is both a curse and a blessing. The King is trying a fine balance between making the social liberals happy with reform, along with carrying the extreme religious anti-American ulema's, with him. To put it in short words, they want to "Modernise but not necessarily Westernize". Here Westernize takes different meanings, the primary one being separating the state from the church.
The last case was about Gazprom - the Russian state natural gas giant. They supply gas to many European countries but a majority of the pipeline goes through Ukraine. And Ukraine is also a consumer. Due to non-payment of dues, Gazprom in 2006 cut off supplies to Ukraine, who in turn used what they needed and reduced the supply to Europe ! Critics have accused Gazprom of promoting government foreign policy instead of operating on market principles. It highlights how politics shaped the natural gas trade between Europe and Russia. After many incidents, new pipelines are being built to bypass Ukraine and reach European countries.
There was a panel discussion by folks from the Energy industry today.
It was an Oktoberfest Reception and dinner today. And the weekend is fast approaching. More later ....
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