Carbon Emissions Regulation Clear Winner for International Relations of the United States

As a followup to ncristea's initial post about the Obama Administration's decision to declare carbon emissions "dangerous pollutants" via the Environmental Protection Agency, it would be interesting to think up the policy implications that follow.

According to BusinessGreen:

The decision, which also covered five other gases, ruled that climate change poses an "enormous problem" in both "magnitude and probability", and that the " greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act".

"This finding confirms that greenhouse gas pollution is a serious problem now and for future generations," said EPA Administrator Lisa P. Jackson in a statement.

The ruling, known as an "endangerment finding", now enters a 60-day public review period, following which the EPA will be able to use the existing Clean Air Act to impose limits on heavy polluters of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

The Obama administration has repeatedly signalled that it would prefer to regulate greenhouse gas emissions through a new climate bill based on a nationwide carbon cap-and-trade scheme – a position the EPA supports.

Beyond all stimulus funding and controversies about opening up drilling in offshore areas or in the Alaska National Wildlife Reserve, this is aiming to be the biggest change in U.S. energy policy domestically and internationally. Besides for the domestic effects on U.S. manufacturing and the housing sector (by incurring previously outsourced externalities, polluting industries and companies will see costs rise in terms of cleaning up their act or by changing their business models; this will also be a boon to industries and companies ahead of the curve or who can take advantage of future regulations by identifying and exploiting new business opportunities), this will have clear international implications.

The international effect is that of bringing the United States in line with Kyoto Protocols:

The Kyoto Protocol establishes legally binding commitments for the reduction of four greenhouse gases (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride), and two groups of gases (hydrofluorocarbons and perfluorocarbons) produced by "Annex I" (industrialized) nations. ... Kyoto includes defined "flexible mechanisms" such as Emissions Trading, the Clean Development Mechanism and Joint Implementation to allow Annex I economies to meet their greenhouse gas (GHG) emission limitations by purchasing GHG emission reductions credits from elsewhere, through financial exchanges, projects that reduce emissions in non-Annex I economies, from other Annex I countries, or from Annex I countries with excess allowances.

President Bush pulled the United States from the Kyoto Protocols (though it was signed during the administration of President Clinton, it was never ratified by the U.S. Senate) as an impediment to the U.S. economy. As every other country in the world has signed and ratified the Kyoto Protocols, the decision considerably reduced the credibility and soft power of the United States on environmental and most every other issue. 

In foreign affairs, there are three ways to get other countries to do what you (as a country) want: coerce them, bribe them, or inspire them. The last one is "soft power" and what is being generated by President Obama and this decision. If the United States gets behind something that others wanted from the outset, then the United States can use that momentum to get its way on other issues. 

If you think this is made up, think of the failure the U.S. had in convincing such international heavyweights as Angola, Chile, Guinea, and Cameroon to support U.N. approval for the invasion of Iraq in 2003. I'm not saying there is a causal link between Kyoto and Iraq, but the United States had clearly thumbed its nose at the international community just two years previous on something very important, and found out that other countries were much harder to persuade on an issue very dear to the United States.

We can discuss the technical and engineering requirements, as well as economic and commerical implications of moving towards harmonization with Kyoto Protocols, but in terms of international relations, this decision is a clear winner. 

Georgia and Russia: Intersection of Energy and Foreign Policies

During the Fall 2008 semester, I was part of a group that analyzed US policy options in responding to Russia's invasion of Georgia.  The team members are listed at the end of this post by way of attribution. 

The net-net of the analysis yielded very few reasons for the US to get more involved in what is essentially a regional conflict involving ethnic histories stretching back hundreds of years.

However, we found one fact that led us to recommend that the US maintain a low profile presence in the area: as of mid-2006, Georgia is now home to the only non-Russian pipeline that can get oil or natural gas out of the areas east of the Caspian sea.  This is more than mildly irritating to the Russians.

Here is a link to a map for those not familiar with the area:

www.utexas.edu/maps/commonwealth/caspian_pipelines_2002.pdf

The pipeline is the Baku-Tbilisi-Ceyhan, and it runs through Azerbaijan, Georgia, and Turkey (in order to not run through Iran).  It is a large capacity pipe, capable of transporting up to 1.1 million barrels per day (Dr. Webber, the maps don't use any of the standard units you showed us on Thursday!).

All other routes to get that oil out transit through Russia.  We have seen two situations in the past few weeks demonstrating how willing Russia is to use that logistics dominance to control behaviors of other countries.

We found that British Petroleum is the largest investor, owning a 30% stake in both the pipeline and the reserves in the largest fields under the Caspian.  U.S. oil interests in total were less than 25%.  The rest was held by a variety of countries, with Europe in total having a nearly 2/3 stake in the pipeline and the Caspian region's oil fields.

Our conclusion was that while the US has an interest, we do not possess the largest interest. Therefore, our role should be one of awareness and indirect support.  We trained 2,000 Georgian troops on how to protect the BTC pipeline in 2002-2004.  That is the type of assistance our analysis found we should continue, but not expand.

I found it interesting to see the direct and real-time interaction between our energy policy and our foreign policy.  They constantly interact and impact each other.

We also found it to be yet another reason that alternative energy and other methods to reduce our need for oil coming from unstable regions such as this one needs to be a high priority item for the Obama administration.

Credit and thanks to my team mates on this project: 

Jessie Neufeld (Law)

Kevin Gong (LBJ)

Joe Harvey (MBA)

COL John Kilgallon (Fellow)

Jonathan Witham (MBA)

Becky Taylor (LBJ)