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The Diplomacy of Decarbonization

The transformation of the energy paradigm on a global scale reveals the inadequacy of international institutions.

by Giulio Sapelli
07 February 2020
14 min read
byGiulio Sapelli
07 February 2020
14 min read

Historically the energy sector, both as an industry and as individual companies, follows and often imposes gradual shifts in the weighing of the importance of global confrontations and conflicts over power. Today we are facing a world characterized by new areas of production and consumption, especially in Asia with its rapid demographic and technological expansion. Asia is joining the historically established center that includes the democracies of the West, the OECD and the relatively small group of OPEC producers and Russia. Transnational energy relations are now fragmented to an unprecedented extent, and inevitably governance models are subject to major transformation. Moreover, countries are now taking on an identity without a “national interest” and are increasingly hybridized by those who evade the rules of liberal democracy. For example, the international agreements on decarbonization should replace both the market and the state, a singular contradiction that opens up significant economic and philosophical issues.

Humanity is being called upon to act according to models of behavioral biopolitics that take on complex interstate dimensions, taking shape as ideological landscapes in a way that has never been seen before. The conditioning of consciences goes hand in hand with countries’ constant denial of a “national interest,” until now the essence of their raison d’être. Mainly as a result of political transformations in the US, this has conversely gradually affirmed, with both difficulty and force, an opposed movement resistant to the financialization of politics and the economy and opposed to its denationalizing effects.

A new world order

The intercountry agreements of multilateral cooperation regarding “national interest” and freedom of enterprise are increasing as demonstrated by representatives of the various international technocracies on energy transition, primarily on decarbonization, but at the same time the rejection of models of multilateral cooperation is becoming increasingly manifest. It is thus difficult to enforce any model and implementation process through guidelines, rules and behaviors. The root lies in the chaotic  world that is emerging in international relations. After the collapse of the USSR, a vacuum in the regulation of relations of power has remained unfilled because no general agreement has replaced the power architecture of the Cold War. This happened due to the lack of a treaty that could rebuild the system of world international relations. The treaty was not signed because of the insanity of the unilateral power of the US. The whole world is now paying the price.

The needed hegemony is becoming less and less possible, despite it being exactly what is essential to stabilize the world, to regulate its relational mechanisms with a new “entente cordiale.” This hegemonic will reappeared with unexpected vigor with the election of Donald Trump, a testament to the aforementioned cultural transformation. Thus came about the cultural, political and diplomatic dislocation of North American power that is ongoing, but is already decisive and advocated by the segment of the powerful elite who are now in charge, if insecurely and unstably, in the US. In the meantime, China continues to increase its newfound maritime, demographic and technological power in the world arena, upsetting relations between countries that have never settled since the collapse of the USSR. The same was true of the Balkan and Mesopotamian wars, with the Mediterranean once again the object of contention for the return of Russia to more temperate climes. This is the fractal, the fundamental fault, for our energy issues, too. World history has witnessed many such a process of re-establishment: the Peloponnesian War between Sparta and Athens, the Thirty Years' War, the Napoleonic Wars and World Wars I and II were all the result of the rise of revisionist maritime powers, from Persia then from Athens, to Germany and Japan, and now to China. It is very clear that we are now witnessing the emergence of China, accompanied by the highly dangerous division between the US on one side and France and Germany on the other.

Access to new resources

As we can see, the problem of decarbonization is immersed in a major confrontation of world powers and is a web of themes and problems that, as it unfurls, requires us to look at the world and its power from a point of view other than that artificially constructed by the narrative, by the now dominant ideological landscape. However, to affirm itself as a worldwide method of creating stability, diplomacy requires countries with a “national interest.” This is what is missing today and continues to feed into increasing risk. Heteroregulation is replacing self-regulation, just when “corporate social responsibility” has become a buzzword and companies’ and pressure groups’ self-regulated behaviors are being invoked. In Shakespearian terms, folly rules the world.

It is in this scenario that the international technocratic processes proposed by multilateral agreements regarding the world energy sector are considered. The industry consists of organizational populations of companies and relations between these companies and countries, until, as in the case of the National Oil Companies (NOCs), they become state-owned enterprises and thus clusters of “national interest” embodied in the form of a state-owned enterprise. The processes of energy transition and decarbonization have been driven, primarily but not exclusively, by the global fight against climate change. The transformation of the energy paradigm on a global scale requires a redefinition of the balance of power between producer countries and consumer countries and the emergence of new areas of geopolitical and strategic interest. New natural resources such as lithium, cobalt and rare earths will need to be accessed, causing confrontation between global players and local elites to secure control by redefining the rules of the security of supply. Although the heart of the world’s fossil fuels will remain in Arabia and Mesopotamia for centuries (US shale oil and shale gas is nothing but a transient illusion), the sources required to build the vectors of so-called renewable energies will go to parts of the world not considered today and will require forces to contain the power of opponents different from those we now see.

The gradual obsolescence of fossil fuels will never result in their disappearance. In fact, the need for them will increase exponentially in order to construct the infrastructure required for the so-called renewable energies that cannot become our main sources. They are instead vectors, requiring an increasing volume of fossil fuels, no matter what the dominant narrative is saying. However, the political and social pressures of collective movements, led by the lobbyists for state subsidies to fund economically non-self-sustainable renewable vectors and the resulting industries and services, will undoubtedly have consequences on political stability besides affecting the economies of the major producing countries (see the fundamental work by Massimo Nicolazzi, a manager in the oil and gas sector). 

 

How much coal still matters

Many fossil fuel-producing countries, heavily dependent on oil revenues, will feel threatened in terms of their system of national and international alliances under the authoritarian polyarchy of which they form the majority. On the other hand, the inexorable development of state-of-the-art technologies will create new interests and geopolitical power conflicts related to the retrieval of raw materials and competition on and for networks with consequences that we can already see in the current confrontation over these issues between the US and China. The situation in sub-Saharan Africa will be decisive. Millions have no access to essential energy services; factors such as technological primacy together with the expansion of trade will therefore become key elements in the energy policy of the medium-size and major powers, provided that the assumptions of the dominant world policies of limited neoliberal rationality fall, with consequent shrinkage in domestic markets. In this context, to reiterate, the current governance mechanisms of the energy sector are essentially based on the duality between a compact group of consumer countries gathered under the aegis of the IEA, and the OPEC-producing countries and some of its extensions, for example ROPEC and, if with a more limited impact, the GECF (Gas Exporting Countries Forum). And these mechanisms are proving inadequate to address the changes necessary to meet the challenges of the energy transition.

We are faced with clear evidence of the inadequacy of current international institutional infrastructure in the energy sector. It is vital to challenge  a narrative construction incorrectly based on the assumption that decarbonization is the main route by which the CO2 emitted into the Earth's atmosphere can be reduced, an analysis that fails to take into account that all energy sources allow for the reproduction of the world's economic and social systems. Coal is an essential element that also guarantees that thermodynamic balance by which energy allows for the social reproduction of the capitalist system and the monopolistic capitalist systems of Asian countries (China, North Korea and Vietnam). These countries coexist with varying degrees of interconnection with the world capitalist system operating in other regions of the world, including the demographic giant that is India. Decreasing the percentage of coal and CO2 produced worldwide is not only a complex effort but is more of a Herculean task than ever. Incessant and continuous disturbing simplifications must be put aside; for example, the notion that global percentage quotas resulting in non-entropic energy circularity will automatically lead to CO2 reductions or that the energy generation processes required for the manufacture of renewable infrastructure will not themselves require carbon fuels. The world must be led to overcome the belief that conventional industry, based on both fossil fuels and mining, cannot result in even greater CO2 savings than those achievable through the advent of non-fossil fuel-based energy sources. Progress will therefore require a profound transformation of the entire methodology of production on a multifactorial worldwide scale.

Beyond capitalism

Entrusting this process to international hetero-regulation is unthinkable. It can only be implemented via enterprise self-regulation to avoid divestment in sources that are increasingly indispensable to changes in world demographics, none other than long-standing and unavoidable fossil fuels. Profound change is required in the production processes that use and produce these fuels for any form of energy, manufacturing or services: nothing else. Having said that, the issue of regulation must still be put to debate. For the first time in world history, in fact, such a huge transformation has been achieved through a series of international agreements. This implies a transformation in practices and even in the very concept of “national interest.” In this regard, Anne Marie Slaughter brought attention to this point in her seminal works on the transformation of international relations and the constitutional profiles resulting from these transformations, increasingly removing broad spaces of compulsivity from the democratic process. These processes have already taken place with unexpected force, especially since the collapse of the Soviet Union and the emergence of an increasingly centralized and self-regulated neo-financial capitalism. Moreover, there is no doubt that an imaginary and symbolic landscape— built in years of soft power by the power groups consisting of the industries and movements favorable to so-called renewable sources—today determines a large part of the economic policy decisions in the rapidly changing capitalist system.  This landscape frees  elites to make priority choices over how the system governs economic and social policy that are different from the choices made in the past. As Ulrick Beck put it, even if politics disappears from the technocratic self-referential process of the oligarchs described clearly by Professor Slaughter, politics reappears when least expected, for example in the international hetero-regulatory decisions of the climate accords, none other than forms of governance brought about by economic policy processes.  The distinctive root of these political forms lies in their constantly crossing the border between state and market, preforming both technical procedure and ideology, one or another of the elements of state-market relations, this based on the mighty weight exercised by international relations, which have settled into this symbolic and social interweaving of the new transnational power. How can we define this new landscape? How can we classify it in the context of the great transformations of the relationship between companies, state and society, which has always had too much effect on market positions and the will of the ruling classes? A diffuse system of beliefs and symbolic reflections has been created and now must be both ideologically disseminated and realized in forms of fixed capital stock, an approach rarely used to date. This is how movement of capital and the production of goods by means of goods operates and is typical of the dominant economic system across the world, except in China, Vietnam and North Korea. These countries now have the bureaucratic and military dictatorship regimes of state monopolistic capitalism, along with an increase in the now widespread but politically impotent capitalist middle classes. Since China’s accession to the WTO, they are closely related with the globalized financial capitalism that now dominates. This belief system constitutes a new international secularization and is being diffused by the very diverse beliefs that stem from the absence of the sacred in personal relationships. This is a massively significant anthropological and axial transformation but also relates to issues raised by decarbonization.

 

L'autore: Giulio Sapelli

Giulio Sapelli, full professor of Economic History at the University of Milan and editor of Il Messaggero, is one of the most original and authoritative voices among Italian economists.