Sustainability, Globalization, and the Energy Sector Europe in a Global Perspective

• DOI: 10.1177/1070496513516466
• Author: Christophe Cassen,Meriem Hamdi-Chérif,Henri-David Waisman,Jean-Charles Hourcade
• Date: 01 March 2014
• Published date: 01 March 2014
• Subject Matter: Articles

Article

Sustainability,

Globalization, and the

Energy Sector Europe

in a Global Perspective

Henri-David Waisman

1,2

, Christophe Cassen

1

,

Meriem Hamdi-Che

´rif

1,3

, and

Jean-Charles Hourcade

1

Abstract

In this article, we analyze the socioeconomic effects of energy sustainability chal-

lenges raised by oil depletion and climate change at the European and global levels.

We assess macroeconomic impacts at different period markers from 2010 to 2100

and under different visions of the future of globalization. Fragmented capital markets

affect the pace and direction of change and induce additional economic losses in the

long term. Regionalized good markets have a positive effect in the long term because

less intense international trade moderates the effects of fossil fuel constraints. A

sustainable energy future will require implementing policies and measures that are

able to (a) provide correct incentives for long-term investments by resorting to

other signals than current market prices, (b) incorporate sectoral measures that

act complementarily to pricing scheme measures for sectors confronted with

biased agents’ behaviors or strong inertias, and (c) foster globalization patterns

that are consistent with energy sustainability objectives. The challenge consists in

articulating the objectives and the instruments of these different policy and measures

triggering the transition toward a sustainable future.

Journal of Environment &

Development

2014, Vol. 23(1) 101–132

!The Author(s) 2014

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DOI: 10.1177/1070496513516466

jed.sagepub.com

1

CIRED Centre International de Recherche sur l’Environnement et le De

´veloppement, Paris, France

2

SMASH—Socie

´te

´de Mathe

´matiques Applique

´s aux Sciences Humaines

3

ENPC—Ecole des Ponts ParisTech, Cite

´Descartes, Champs-sur-Marne, France

Corresponding Author:

Christophe Cassen, CIRED Centre International de Recherche sur l’Environnement et le

De

´veloppement, 45 bis avenue de la Belle Gabrielle, 94736 Nogent-sur-Marne Cedex, France.

Email: cassen@centre-cired.fr

Keywords

energy, resources, climate change, globalization, sustainability, CGE modeling

The emergence of global environmental issues on the political agenda goes

back to the Stockholm Conference in 1972 in an attempt to provide a political

answer to the alarm by the Club of Rome about the “Limits to Growth” in a

context of a f‌inite ecosystem (Meadows, Meadows, Randers, & Behrens, 1972).

Against this background, the political interest was focused essentially on issues

raised by the exhaustion of nonrenewable resources, especially fossil energies,

in line with the emergence of geopolitical tensions about oil, as illustrated by

Richard Nixon’s State of the Union address in 1970. Despite debates about the

Malthusian nature of the approach supporting the analysis of the Club of

Rome, the Stockholm Conference recognized the legitimacy of concerns

about the interface between growth, environment, and resources. The concept

of ecodevelopment introduced in 1972 by Maurice Strong to stress the need to

adopt development patterns respecting natural ecosystems was an attempt to

go one step further. Although initially linked predominantly to local problems,

this notion was rapidly extended to global challenges (Sachs, 1980). The inter-

est in the trade-of‌fs between economic, social, and environmental dimensions

across generations evolved in the late 1980s with both the emergence of climate

change on the political agenda and the concept of sustainable development

def‌ined in the 1987 Brundtland Report “Our Common Future” (World

Commission on Environment and Development, 1987). Sustainable develop-

ment has become a key concept in international governance since the Earth

Summit of Rio de Janeiro (1992). It is evidently not accidental that this inter-

est in sustainability issues reappeared at the same time with renewed con-

cerns about geopolitical conf‌licts for the access to cheap oil and gas

(Schlessinger, 1989).

However, 20 years after the Earth Summit, the recent Rio + 20 conference

has conf‌irmed the dif‌f‌iculty to lay out a coherent roadmap forward for address-

ing global challenges in the framework of sustainable development (Cle

´menc¸ on,

2012b). In particular, two major division lines drive the debate about environ-

mental sustainability issues. On one hand, dif‌ferent approaches have been pro-

posed to formalize more explicitly the concept of sustainability. This has resulted

in the emergence of two polar visions, weak versus strong forms of sustainabil-

ity. The former assumes substitutability of human-made and natural capital,

whereas the latter considers that a minimum level of natural capital must be

preserved, acknowledging the specif‌icities of natural capital (Pearce & Atkinson,

1993). On the other hand, the opposition between promarket liberals and anti-

market social greens about the compatibility between sustainability, free mar-

kets, and trade liberalization has remained a major source of controversies

102 Journal of Environment & Development 23(1)

(Clapp & Dauvergne, 2005; Harris & Wise, 2001). In particular, the Rio process

since 1992 has failed to achieve a comprehensive way between free market, trade

liberalization, and governmental regulation (Cle

´menc¸ on, 2012a). This failure

emphasizes the necessity to explore more in depth the link between sustainability

and globalization processes.

This article considers energy as a nodal point of the relations between sus-

tainability and globalization processes. We focus on global environmental con-

straints related to the energy sector and, more specif‌ically, on the twofold

sustainability challenge caused by oil depletion and climate change. The socio-

economic ef‌fects of these limitations are analyzed both at the global and

European levels, in relation to the energy security concerns of a major oil-

importing region and the transition from a carbon-intensive to a low-carbon

economy. Beyond the agreed-upon role of green measures to foster competitive-

ness of the European economy in the short term,

1

we analyze the long-term

challenges posed to Europe by oil dependency and climate change in the context

of socioeconomic and political globalization (Brown, 2008).

2

The interplay between economic trajectories, globalization processes, and

environmental issues has been investigated in the literature following

Copeland and Taylor (1994, 1995), who consider global environmental con-

straints (“transboundary pollution” in their words) and focus on the role of

trade costs on pollution. Their approach provides useful insights on the envir-

onmental consequences of economic growth and international trade (Copeland

& Taylor, 2004) but suf‌fers from important limitations to policy analysis of

sustainability and trade. First, their two-sector formulation dif‌ferentiates pollu-

tive and nonpollutive goods but fails to capture the complexity of trade inter-

actions between varieties of goods. Second, their static approach fails to capture

the dynamic processes that are central for the analysis of sustainable trajectories.

Finally, their approach pertains to a weak vision of sustainability, where the

environment is considered as a form of a natural capital, partially substitutable

with human-made capital.

In this article, we adopt the computable general equilibrium (CGE) model

IMACLIM-R, which provides a multisectoral, dynamic modeling approach for

thinking the link between growth, globalization, and energy constraints given

the limited availability of fossil resources and carbon mitigation policies. This

framework captures four crucial determinants of the interplay between the

energy sector, sustainability objectives, and globalization processes: (a) nonmar-

ginal deviations with respect to current socioeconomic trends produce room for

deep technical change over the course of the century

3

; (b) beyond technological

improvements, the integration of lifestyles, consumption patterns, and prefer-

ences in driving the material content of economic activity is captured (Mitchell,

2012); (c) limitations in the f‌lexibility of technicoeconomic adjustments during

transition processes af‌fect the adaptability of the economy to sustainability con-

straints because of market imperfections, technical inertias, and imperfect

Waisman et al. 103