Foreign Policy Blogs

Two Big Players Enter the Fray

Photo credit: John Pasden via Flickr

Photo credit: John Pasden via Flickr

During President Obama’s recent trip spanning China, Myanmar and Australia, he along with Chinese President Xi Jingping announced what amounts to a historic agreement between the nations to reduce greenhouse emissions (amongst agreements to extend visas and trade deals to eliminate tariffs on IT products). As the United States and China are the two largest greenhouse gas emitters on the planet, joint action between the two demonstrates they are committed and can provide a wake-up call to other nations to seriously come to the table to take real action as well on greenhouse emissions (Europe does need to be recognized as a leader after further agreeing recently to more ambitious targets to a cut emission at least 40 percent from 1990 levels by 2030).

At a joint news conference President Obama said of the agreement, “As the world’s two largest economies, energy consumers and emitters of greenhouse gases, we have a special responsibility to lead the global effort against climate change.”

A Significant Step

The agreement states the United States intends to reduce greenhouse emissions up to 28 percent from 2005 measures by 2025. These are compared to current goals, which the U.S. is making progress on, of reducing emissions 17 percent below 2005 measures by 2020.

In China, which has seen staggering increases in emissions in the past few decades, has committed to increase its energy consumption from non-fossil fuel sources to 20 percent by 2030 to begin to counterbalance the hold coal has taken. It is worth noting that this is China’s first commitment to stop its emissions. For some perspective on the numbers, China will need to unleash nearly 1,000 gigawatts (GW) of non-fossil energy – about the total energy generation in the U.S. in 2011, according to the U.S. Energy Information Agency.

To further amplify the significance, in the past China has consistently stated it needed all energy sources in order to meet its burgeoning demand as other developed nations were able to do so in the past.

Last year U.S. Secretary of State John Kerry and China State Councilor Yang Jiechi formed the US-China Climate Change Working Group which served as the foundation for negotiations which proved climate diplomacy can work and is not zero-sum as differences between the nations still persist such as cybercrime and territorial issues in the South China Sea.

U.N. Climate Talks

There is hope the agreement encourages other major players to step up and throttles some momentum in the U.N. led climate talks to formulate a global binding climate change treaty. The process has been very slow moving over the past years with a major stumbling block being the amount of action necessary for the developed world vs. the developing world — the principle of common but differentiated responsibilities and respective capabilities, in light of different national circumstances. The developing world’s position historically has been that it is responsible for an insignificant amount of carbon emissions, thus they should not be held to the same potential reduction targets.

The next session is scheduled for December in Lima, but the ultimate goal of the globally encompassing, strong treaty has been set for the U.N. talks in Paris during 2015. The talks in Lima can definitely go a long way to increasing the foundation set from years of prior negotiations and the Kyoto Protocol.

President Obama echoed these sentiments saying, “We hope to encourage all major economies to be ambitious — all countries, developing and developed — to work across some of the old divides, so we can conclude a strong global climate agreement next year.” The global agreement will be structured to recognize the scientific view that “the increase in global temperature should be below 2 degrees Celsius” (3.6 degrees Fahrenheit).

An Alternative to Challenging Energy Markets

Reaching such targets will be meet with increasing non-fossil energy sources which will also increase energy security for nations across the globe – many of these nations are much to susceptible to the continually proven volatile international energy markets.

The price of oil has been dropping to recent new lows but that will make it more damaging for consumers, especially in less developed nations, when prices do increase. The upcoming OPEC meeting November 27 will be interesting to watch to see if the cartel decides to prop up prices by decreasing its production ceiling. Mohammed Suroor al-Sabban, who until last year was chief adviser to the Saudi Arabia’s petroleum ministry, said the oil group’s talks will be “the toughest OPEC meeting ever as some OPEC ministers had not anticipated prices would drop to this level, and so quickly.” He said he expected OPEC members to stick with the current output ceiling at 30 million barrels per day.

The new (unconventional) oil plays in the United States are more expensive to produce – unlike (conventional), for example, Saudi Arabia – so the margins are much lower when prices drop. Estimates have shown prices need to be over $60-$70 for new oil in the U.S. to be economic, while in Saudi Arabia the price can go to $30. The cost of benchmark West Texas Intermediate (WTI) for December delivery has been plunging for eight weeks dropped to $74.42 a barrel on Thursday but to demonstrate the potential volatility, Brent (another benchmark) for January delivery rose two percent Friday, the most since Sept. 3 and after Thursday’s four percent loss.

U.S. China Agreement Brings Domestic Reaction

Of course in the domestic climate of U.S. politics, the agreement was met with hesitancy and consternation. However, these agreements do not need congressional action and, thus, can surely spark further tense relations before even reaching immigration action. To be new Senate Majority Leader Mitch McConnell (R-KY) stated “this unrealistic plan, that the President would dump on his successor, would ensure higher utility rates and far fewer jobs.”

The new EPA regulations proposed in June for power plants to reduce carbon pollution 30 percent below 2005 levels by 2030 will be a directly correlated hotbed issue.

In regards to energy policy, the House has been steadfast in passing legislation approving the Keystone XL Pipeline and a few days after the climate announcement, a Keystone bill was approved. Ironically, oil developers in North Dakota are saying Keystone is now a waste of time, due to their bounty.

Others impressed

Many in Europe continually had been disappointed by lack of leadership of the U.S. and stubbornness of China. U.N. Secretary General Ban Ki-moon summed up the agreement saying, “China and the United States have demonstrated the leadership the world expects of them.”

 

Author

Joe Gurowsky
Joe Gurowsky

Joe Gurowsky focuses on energy, environment, geopolitics, trade, international development and climate related issues. Recently, he worked in Kenya, Ethiopia and Tanzania regarding different energy related programs . Joe has also traveled to Costa Rica, Ghana, the UAE, Germany and Alberta, Canada for aspects of energy and environmental policy.

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