Gored by a Cornucopia: The Risks to Climate Change From Laws and Policies that Incentivize Competitive but Divergent Energy Innovations

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Abstract

This study examines the potential effects of poorly coordinated energy laws and policies; in particular, it examines the potential for existing laws and international conventions to drive the emergence of green paradox events that would increase greenhouse gas emissions and ergo increase the risk of anthropogenic climate change.

This model examines the consequences of awkwardly combined policies that encourage diverse forms of innovation in energy sources. It examines the consequences of green energy laws to encourage the development of new and lower cost alternative or renewable low carbon energy resources. It reviews international agreements to support research and development related to fossil fuels. It examines the law and policies that support energy innovation in the name of energy security. It examines the potential for free trade laws to encourage the development and trade in primary products, including fossil fuels. It considers the potential for multiple markets to develop innovations to deliver larger volumes of energy supplies. It evaluates the economic consequences of additional competitive energy supplies and finds that fossil fuel consumption might increase.

The study avoids normative analysis of what climate change response would be advisable and instead presents positive analysis that if reductions in greenhouse gas emissions were a target to be achieved that the current combination of energy law agendas might well frustrate attainment of that target by policy makers.

The argument proceeds in several steps. First, an analysis is drawn on the UN’s Framework Convention for Climate Change (UNFCCC) and its associated agreements such as the Kyoto Protocol. Analysis is presented that such international conventions to limit the risks of anthropogenic climate change do drive innovation in new and renewable energy supplies. Such innovations are intended to provide increases volumes of energy supplies at affordable prices in order to displace carbon-emitting energy supplies and thus prevent anthropogenic sources of climate risk. But the key conclusion is that these legal efforts would increase energy supplies if successful.

The second step will be to examine the role of energy security laws, i.e., those laws that support the secure supply of energy resources against adverse conditions. Such targets might include securing petroleum volumes or energy alternative such as nuclear energy. Some of those motives might be to protect energy prices from market forces or they might be motivate by desires to support militarized forces. The laws of the United States will be used as an example. First, the role of the federal government’s civilian Department of Energy to support energy innovations will be presented; it will be shown that it supports research and development in both fossil fuels and alternative energy resources. Next, the role of the Department of Defense in sponsoring energy innovation will be examined; similarly it will be shown that the Department is engaged in supporting both fossil fuels and alternatives. Finally, the role of U.S. tax policy to incentivize innovation in energy technologies will be presented. The tax code will be shown to reveal broad supports for both fossil fuel and alternative energy industries.

The third step of the analysis is the inspection of certain international agreements that sustain or encourage the development of fossil fuels, including petroleum, coal, and natural gas. The Energy Charter Treaty is examined; its policies to support and encourage the sustained development of fossil fuels are detailed. Similarly, the Statute and Solemn Declarations of the Organization of Petroleum Exporting Countries are studied to determine their legal commitments to develop fossil fuel innovations and supplies. It will be found that OPEC’s commitments include sustained research and development plans and a firm set of obligations to ensure that petroleum remain in future supply, affordable to the consumer against other fuel sources, and that petroleum is protected against discrimination in the market-place.

The fourth step will consider the role of various international trade conventions to support market conditions and free competition conditions. The WTO/GATT system of agreements will be examined to reveal their support of open trade and of competitive market conditions. To the extent that energy supplies will be available and exportable, it will be shown that for those states engaged in such international trade arrangements, the energy supplies will both be marketable in transboundary settings and be faced with price competition in un-protected markets.

The fifth step integrates the previous four findings into a finding of a potential green paradox event: the combined results of multiple legal policies to encourage energy innovations could result in increased energy supplies that would price compete, potentially resulting in increased greenhouse gas emissions, ergo, a kind of a green paradox.

A sixth step evaluates what steps might be taken to de-bug the scenario, as it were. First, a sketch is provided of potential means to better align the international agreements and laws. Second, an examination of specific qualities of innovations might provide a solution to operate within the nexus of the existing laws; i.e., what types of innovations could be favored that might enable the in-place legal circumstances to functions without giving rise to a green paradox event.

Finally, a summary of the results and a conclusion is provided.
Original languageEnglish
Pages (from-to)433-481
Number of pages48
JournalLouisiana State University (LSU) Journal of Energy Law and Resources
Volume3
Issue number2
Publication statusPublished - 31 Dec 2014

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