Rafael Leal-Arcas

Climate Change and International Trade

This book is unique in that it uses trade as a tool to move the climate agenda forward, by presenting the following two new approaches to climate change mitigation: 1) a bottom-up approach to climate change and 2) using regional trade agreements (RTAs) to promote climate change mitigation.The book proposes a bottom-up approach to climate change negotiations by using the evolution of multilateral trade agreements as a model for reaching a global climate treaty. Given the difficulties of reaching a global climate change agreement, the book argues that a more effective (and presumably fairer) way to tackle climate change today is by bringing together the major greenhouse gas (GHG) emitters, irrespective of their GDP. The Kyoto Protocol’s stipulation that only Annex I countries reduce their GHG emissions does not reflect today’s or tomorrow’s climate change reality. Major developing countries that are major GHG emitters should also be asked to reduce their GHG emissions, if the aim is to solve the climate issue. This is an example of the bottom-up approach proposed in this book. Why? Seen prospectively, climate change is a developing-countries problem, since they have already surpassed the industrialized world in total GHG emissions, and will account for more than 75 per cent of emissions growth in the next 25 years.Moreover, the book explores potential lessons which can be drawn from bottom-up diplomacy in international trade, using critical mass agreements. In doing so, it draws lessons from the international trading system and explores the possibilities of applying the GATT/WTO model to a post-Kyoto climate deal.The book also presents the innovative approach of creating RTAs with strong climate change chapters, thus embedding climate goals within bilateral/trilateral/plurilateral trade agreements, given their proliferation — especially bilateral — in the international trading system. Involving major GHG emitters through RTAs and economic partnership agreements, with climate chapters attached, can be an effective avenue towards reducing GHG emissions, and could therefore facilitate the ultimate goal of creating an effective global climate regime. This is something governments should explore. Current and future RTAs could be used as discussion platforms of climate-related trade issues. Such RTAs could be broad in scope so as to cover, for instance, investment and environmental technology transfer.In addition, the book explores new climate-related issues and their implications for international trade law: geoengineering and climate migration — two heretofore unexplored territories. Furthermore, the book analyzes the inclusion of aviation in the EU Emissions Trading Scheme (ETS) and the potential expansion of the EU ETS to the shipping industry.

The BRICS and Climate Change

The Kyoto Protocol places the responsibility of reducing greenhouse gas (GHG) emissions only with developed countries (i.e., Annex I countries) as if they were the only countries guilty of causing climate change, when in fact the whole world is collectively responsible for this. In the early 1990s, developed countries decided to “take the lead in combating climate change.” Twenty years later, the climate change situation has changed. Instead of asking only Annex I countries to reduce GHG emissions, it is argued in this paper that a more effective (and presumably fairer) way to tackle climate change today is by bringing on board the major GHG emitters, irrespective of their GDP, and asking them to reduce their GHG emissions in an equitable manner without ignoring the historic responsibilities on the part of developed countries. Why? Because the Kyoto Protocol’s stipulation that only Annex I countries reduce their GHG emissions does not reflect today’s or tomorrow’s climate change reality, nor is it acting fast enough to reduce GHG emissions at the agreed levels. Given the transnational nature of climate change, the current situation is similar to a diagnosis of cancer with metastasis. It is therefore not enough to ask only Annex I countries to reduce their GHG emissions if the aim is to solve the climate change issue. This means the BRICS countries (Brazil, Russia, India, China, and South Africa) are part of the solution to climate change mitigation. Climate change will have a significant impact on the BRICS. Conversely, the expected impact of the BRICS on climate change is considerable. The size and rate of growth of the BRICS’s economies, of their energy demand, of their energy imports (for instance, in the case of China and India), and of their atmospheric emissions of various types make these countries essential major partners in any regional or global discussions relating to climate change or the production and consumption of energy.

International Energy Governance

The legal aspects at the junction of interstate energy cooperation have become increasingly important in a world that is hungry for energy security. This book focuses on selected legal issues relating to international energy governance. International law as it stands today is not well equipped to handle international energy governance issues fully. This legal deficiency affects energy security negatively. If the currently fragmented and multi-layered international energy governance regime were streamlined for greater legal cohesiveness and international political and economic cooperation, it would promote energy security. Some chapters of the book take a broader view on interstate energy cooperation, such as energy transit, energy market liberalization and energy investment. Others focus on specific areas of such cooperation, such as trade and energy; trade, environment and energy; and energy exploration and maritime delimitation disputes. The book also presents an analysis of European Union energy governance and renewable energy.

International Trade and Investment Law

This timely book examines international trade and investment law at various levels of governance, including unilateral, bilateral, regional, and multilateral arrangements.

The Creation of a European Energy Union

Energy security is one of the main problems that humanity faces today and the European Union (EU) has to rely on energy-rich countries for its energy needs. The European Innovation Union, the Energy Community, and the Europe 2020 initiative address energy security as a priority, but policies seem to be reactive instead of addressing energy security in its complexity. This problem can be solved with appropriate legal tools. Energy governance has links with several policies: trade, investment, environmental protection, energy transit, energy security, finance, et cetera. Of these policies, energy trade has a high impact for European energy security policy. Currently, the international community does not address trade in energy as a cohesive entity and its governance is fragmented. The paper explores the institutional legal framework for the creation of a European energy union, whose aim is to achieve affordable, secure and sustainable energy. This energy union is based on five pillars, which are analyzed: security, solidarity and trust; the completion of a competitive internal market; moderation of demand; the decarbonization of the EU energy mix (i.e., greater use of renewable energy); and technologies. The EU is the first region in the world to set up the ambitious target of decarbonizing its economy by 2050. The paper then looks at the energy union in the context of the rule of law. All of this could be reproduced in other regions of the world and eventually create a new international energy order. This requires a fresh and comprehensive approach to legal instruments.

The European Union and its energy security challenges: engagement through and with networks

Energy security remains a vital issue for the European Union (EU), even more so in the wake of the events that unfolded in early 2014 in Ukraine. The EUs already fragile position in the international energy arena in terms of security of supply appears to be more uncertain than ever after its umpteenth fallout with its historic energy supplier, Russia. This situation is untenable and calls for swift and decisive action to adequately tackle the issue once and for all. The article looks at the creation of a single EU energy market through the integration of energy networks in the EU. This article then examines various ways to diversify its energy supply, whether through increasing the import of liquefied natural gas or through its relations with the Eurasian Union. It then explores the International Energy Charter as an example of the EUs engagement with transnational policy networks. It concludes that from energy transit, to technology transfer, to investment protection, energy and trade present interplays across various fields. Improvements can be made to the EU trading system to ensure greater energy security and more efficient energy markets.

Multilateral, Regional and Bilateral Energy Trade Governance

The current international energy trade governance system is fragmented and multi-layered. Streamlining it for greater legal cohesiveness and international political and economic cooperation would promote global energy security. The current article explores three levels of energy trade governance: multilateral, regional and bilateral. Most energy-rich countries are part of the multilateral trading system, which is institutionalized by the World Trade Organization (WTO). The article analyzes the multilateral energy trade governance system by focusing on the WTO and energy transportation issues. Regionally, the article focuses on five major regional agreements and their energy-related aspects and examines the various causes that explain the proliferation of regional trade agreements, their compatibility with WTO law, and then provides several examples of regional energy trade governance throughout the world. When it comes to bilateral energy trade governance, this article only addresses the European Union’s (EU) bilateral energy trade relations. The article explores ways in which gaps could be filled and overlaps eliminated whilst remaining true to the high-level normative framework, concentrating on those measures that would enhance EU energy security.

How Will the EU Approach the BRIC Countries? Future Trade Challenges

This paper examines the bilateral trade relations between the European Union (EU) and the BRIC countries. The paper argues that Brazil is an efficient agricultural producer with strong interest in EU agricultural liberalization. India is interested in more access to the EU service market since India is an efficient service supplier in sectors such as IT and software, engineering, and call-centers. Another key issue where India has a great interest is in the so-called Mode 4 of the General Agreement on Trade in Services (GATS), i.e., temporary migration. As for China, the paper argues that there are many differences and difficulties between the EU and China in the trade field: the protection of intellectual property rights, counterfeiting and product piracy, China’s delay in complying with World Trade Organization rules, China’s competitive advantage from poor social and environmental standards, or unfair subsidies to favoured national industries. In Russia’s case, it is argued that Brussels should seek to diversify its energy supplies in order to overcome the EU’s dependency on Russia. The research method used has been an interdisciplinary qualitative approach to the analysis of law, international political economy, and international relations, thereby moving away from the textual-formalistic reading of law. The paper concludes that the EU is definitely an attractive partner for the BRIC countries as it provides much in its trade relations. In fact, the EU is Brazil’s, Russia’s, India’s, and China’s largest trading partner. Our results show that there is some, although limited, room for trade policy concessions at the multilateral level: with Brazil, in the case of agriculture and the Doha Round; and with India, the resistance with Mode 4 of the GATS. China and Russia, however, are in some areas more assertive than Brazil and India. In Russias case, it is due to a reviving economy and booming prices in oil and gas. The EU is not in a stronger position vis-a-vis China due to the large Chinese market and China’s growing economic and political power. So EU partnerships with China and Russia are more difficult than with Brazil and India.

A Bottom-Up Approach for Climate Change: The Trade Experience

This article argues that the Kyoto Protocol to the 1992 Framework Convention on Climate Change was doomed to face difficulties ab initio. Moving the climate change agenda forward multilaterally among the 195 parties to the United Nations Framework Convention on Climate Change (UNFCCC) is proving to be a serious challenge. The lack of progress in UNFCCC negotiations in recent years, especially the failure to obtain an international agreement on emissions limitations targets and timetables by all major developed and developing country emitters, has led many to question whether the UNFCCC is, in fact, the best and most effective forum for mobilizing a global response to climate change. The current approach to negotiating a comprehensive, universal, and legally binding global agreement on climate change is unlikely to succeed. The article concludes that no breakthroughs will take place regarding a global climate change agreement until there is more political maturity on the side of the U.S., and until rapidly emerging economies such as China and India indicate that they are ready to play their part in tackling the climate change challenge, since they are part of the solution. Large emitters of GHG need to be involved for negotiations to come to a conclusion. Much progress is still needed until we reach an international agreement that covers all the world’s countries and that is strong enough to tackle climate change effectively and is equitable enough to gain the sympathy of all countries.

Prosumers: New Actors in EU Energy Security

This chapter critically analyses the new challenges and opportunities that prosumers, as new energy actors, bring to achieving energy security goals in the context of the European Union (EU). Following trends in the EU towards new levels of cooperation in energy governance, decentralisation, and the emergence of a ‘gig’ economy, the energy sector is currently undergoing a large-scale transition. One of its core aspects is the progressive top-down diffusion of potential, competences, and leverage across the energy value chain from states and corporate actors towards prosumers. While this trend creates ample potential for facilitating and improving the EU’s security of supply, as well as fulfilling its climate change targets, several caveats exist. These caveats are not confined within energy security prerogatives; they also extend to the critical management of digital security, which the digitalisation of energy services brings to the fore. Private and public finance should be effectively attracted and directed to infrastructure schemes that will enable a transition from the traditional centralised power network to the decentralised nexus of smart grids. Technology will play a crucial role in facilitating the role of prosumers in the new market in the making.