The Paris climate talks, which are concluding this week, represent an extremely ambitious effort to forge international collective action over energy use. About 770 miles to the east in another lovely European capital, another ambitious effort to create international collective action over energy use came to an end last week. At its meeting in Vienna, OPEC—the Organization of the Petroleum Exporting Countries—confronted its declining ability to influence oil prices due to the sharp rise in production from nonmembers like the United States.
In a surprising move, OPEC’s members didn’t settle on their usual response to a fall in prices: cutting their own production to tighten the world’s supply and send prices back up. In fact, by leaving without even placing an upper limit on production, OPEC’s leaders gave approval to member countries to pump however much crude they wish. Not surprisingly, in the wake of the decision, oil prices have fallen to levels not seen since February 2009. On Wednesday, a barrel of West Texas Crude could be had for about $37.
The action in Vienna should give us pause about the potential for a lasting, major breakthrough on emissions in Paris, because it reaffirmed a simple rule of the global economy: The individual desperation of individual countries will always trump their commitment to collective action—even if they know that collective action is vital for their long-term survival.
First, let’s consider OPEC. The cartel’s oil-dependent members know they can't survive over the long term if they can’t work together to adjust oil production in response to market conditions. That’s why they call it a cartel. But at the same time, the individual countries and regimes that make up OPEC have a serious problem. Most of them are nondemocratic petrostates that have come to rely on oil for disproportionate shares of national revenues. And their regimes’ legitimacy rests largely on the ability to funnel oil cash into their national economies. They’ve simply got to make their nut this year—regardless of the damage it might cause to the oil industry in years to come. (The International Monetary Fund estimates that Saudi Arabia is running a $107 billion budget deficit, equal to about 14 percent of its gross national product.) And the main thing they have to sell is oil. So as individuals, OPEC members are logically reacting to really low market prices by, well, pumping more oil. The more desperate they become for cash and the more the price of oil falls, the more oil they will need to pump. OPEC’s members have chosen to pump more separately rather than to pump less together.
There’s a similar dynamic at work with emissions. China, India, and other developing economies know they can’t survive over the long term if they don’t do something about emissions and pollution. It’s not because they can’t take the scorn of the global bien-pensant. It’s because the current ways in which they power their transportation and industrial systems are reducing the quality of life, killing people, and making it impossible for their citizens to go about their business. The urban elites of China and India must breathe the same filthy air as the peasants do. (India is home to 13 of the 20 cities on the planet with the worst air quality.) It will be difficult for these large countries to attract investment, encourage smart people to stay, and keep people alive and healthy if they don’t do something about pollution over time. That’s a big spur to join in collective action to do something about emissions.
At the same time, however, these countries know they will have difficulty making it in the short term unless they continue to engage in much, much more of the behavior that produces emissions and pollution. China and India have a combined population of about 2.6 billion. But hundreds of millions of those countries’ citizens are effectively living in the late 19th or early 20th century, without access to modern heating, power, sewage, or mobility. In 2012, only 78.7 percent of India’s population had access to electricity. China reports universal electricity access, but its citizens lead lives that are much less energy-intensive than their counterparts in the developed world. Given that both countries don’t have natural gas, the only way to deliver power and mobility quickly is to burn a lot more coal and put a lot more gasoline into vehicles. In 2012, China and India got 76 percent and 71 percent of their electricity from coal, respectively.
The elected leaders of India and the unelected leaders of China can only hold onto power and legitimacy to the extent that they deliver rapid economic growth, development, and the basics of 20th-century life, which are energy-intensive, polluting, and emissions-heavy. China, even growing at a supposed 7 percent, has difficulty keeping a lid on social pressures; 3 percent is unthinkably slow. A mere reduction in the growth rate in those countries will retard development, lock in disadvantages vis-à-vis the West, and contribute to political instability. Faced with a choice of holding down emissions or committing above all else to economic development, the world’s two most populous countries will frequently choose the latter. They will choose to emit more separately rather than emit less together.
Regardless of whatever commitments come out of Paris, however, there is always the possibility that the crisis of pollution will at last spur short-sighted leaders to take aggressive unilateral action on emissions. It already is, in fact; on Wednesday, for example, China’s government said it would immediately start offering bonuses to coal-fired electricity plants that meet stricter emissions and pollution-control standards. And that—not a purportedly binding set of global commitments—is the real hope for quick action against climate change in large emerging markets.