New Initiatives in Explaining the Political Economy of Environmentalism
US President George W. Bush’s recent initiative focusing on climate change is a clear indication that even the most reluctant players in the environmental arena are being forced to respond to pressure from within the United States and from its foreign partners. Individual US states, notably California, are pushing the policy envelope by undertaking a host of local initiatives. That pressure will be augmented by European governments, which will also move more quickly to establish emissions targets.
Although the Europeans signed off on the Kyoto Protocol and are disappointed with Washington for not doing the same, they have not begun to meet the targets that they committed to. Germany in particular has real problems in meeting the targets as it is very coal-dependent. Even France, which relies much more on nuclear energy, has not been very good about enforcing its own policies. A key question is when Europe itself will begin to get serious about target commitments.
One thing that may force Europe to get serious is Russia. Now that Gazprom has indicated that it hopes to make up gas shortfalls by burning more coal in the FSU, Europe is faced with the prospect of a massive increase of pollution on its doorstep. The EU may start enforcing targets as a way of pressuring Russia to do so as well.
Within the policy debate, it is important to keep in mind that pollution and green house gas (GHG) emissions are not the same thing. The Chinese are very worried about pollution. Recent popular protests blocking the construction of a new petrochemical plant in Xiamen point to growing public pressure on the state to curb pollution. While less concerned with coordinated GHG emission reductions, the Chinese may be able to cut pollution by switching to cleaner coal without actually arresting total GHG growth. Indeed, if the Chinese do cut back on GHGs it will be because they are desperate to encourage energy efficiency and reverse urban pollution. They are already looking, as many others soon will be, to Japan for new ideas on this front because of its technological lead in the area of conservation.
At the same time, the Europeans and the Americans have their own political reasons for wanting to pressure the Russians and the Chinese to adopt climate change controls. But when it comes to India the West has just the opposite incentive structure: the West wants India to grow as fast as possible, to offset the Chinese "threat." Therefore India may never really be central to climate-change negotiations.
PFC Energy’s Markets and Country Strategies Group has launched an extensive initiative aimed at tracking and analyzing the political economy of environmentalism. Our focus is on the key players in this debate, their interests and the realities they face, as well as how the global and local regulatory framework will evolve. The department is uniquely qualified in building on its work on global political economy and regulatory developments to understand the structural shifts that will shape the environmental debate. This work will be essential for company planners, government policy makers and traders interested in carbon trading.
Key Conclusions:
New environmental policies are being pushed at the state level in the US.
While the Bush Administration has resisted climate change legislation or regulations, these state level initiatives, combined with pressure from the Europeans, has prompted some changes in policies.
However, Europe has lagged in implementation. Nonetheless, one thing that may force Europe to get serious is Russia.
Internal pressures are driving the Chinese to tackle domestic pollution. They are less concerned with global warming.
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Yahya Sadowski is a Director in the Markets and Country Strategies practice, which houses PFC Energy's expertise in country risk and petroleum sector policy. For further information on this article contact Enews_ysadowski@pfcenergy.com.