Discussion Paper No.16

Climate Change Negotiations：
Challenges and Opportunities for OPEC
Linda Yanti Sulistiawati, Ph.D.
March, 2018

Nagoya University
Center for Asian Legal Exchange

Center for Asian Legal Exchange (CALE)

Nagoya University, Japan

Climate Change Negotiations： Challenges and Opportunities for OPEC

Linda Yanti Sulistiawati, Ph.D.

Indonesia

Contents

Abstract

1.

Background .................................................................................................................................... 1
1.1

The Context for OPEC in Climate Change Negotiation .................................................................. 3

1.2

Research Question ........................................................................................................................... 6

1.3

Methods ........................................................................................................................................... 6

2.

Theoretical Background ................................................................................................................ 6
2.1

States, and Intergovernmental Organization .................................................................................... 6

2.2

Variables of the research: Organizations, Institutions, and Determinant of Change ....................... 7

3.

Analysis ......................................................................................................................................... 11
3.1

Challenges of OPEC in Climate Change Negotiations .................................................................. 11

3.1.1

Paris Agreement’s Purpose ............................................................................................... 11

3.1.2

Raising ambition in the short term ...................................................................................... 9

4.

Energy and Environmental Policies ........................................................................................... 15

5.

Uncertainties................................................................................................................................. 17
5.1

Opportunities for OPEC in Climate Change Negotiations ............................................................ 17

5.1.1

Comparative advantages of Oil ......................................................................................... 18

5.1.2
Common but Differentiated Responsibilities and Respective Capabilities in light ofdifferent National Circumstances ....................................................................................................... 20
5.2

Carbon Trading .............................................................................................................................. 22

6.

Mitigation effort: Carbon Capture Storage (CCS) ................................................................... 23

7.

How does OPEC strategize to cope with Climate Change Negotiation................................... 24

8.

Conclusion .................................................................................................................................... 26

9.

Reference ...................................................................................................................................... 28

CLIMATE CHANGE NEGOTIATIONS:CHALLENGES AND OPPORTUNITIES FOR OPEC
by: Linda Yanti Sulistiawati1

Abstract:

Climate change negotiations have been going on for over 25 years. 195 States sign its
newest instrument, the Paris Agreement with the main purpose curbing the world’s
temperature under 2 degree Celsius. In order to achieve the main purpose of theAgreement, it is clear that the ultimate activity is to reduce the use of fossil fuels,
including oil. OPEC (Organization of Petroleum Exporting Countries) who aims tostabilize export, production, and price of petroleum in the world, has to encounter thisobstacle because most of its member countries are signatories of the Agreement. This
research analyzes challenges and opportunities for OPEC in the Climate Change
Negotiations as well as possibilities presented to survive given the situation. Using
theories from Oran Young’s institutional dynamics, this research puts the world’s oilmarket as the ‘institution’, OPEC as the ‘organization’, and Climate change
negotiations as the ‘determinant of change’. Although it seems that OPEC does nothave the upper hand in the climate change negotiation regime, there are means that
OPEC can take to survive. One of it is to allow the element of change in theorganization.

1 Lecturer of law in Universitas Gadjah Mada, Indonesia. Currently a Visiting Research Professor at theCenter for Asian Legal Research (CALE), Nagoya University, Nagoya, Japan (March‐May 2017).

1.

Background

Climate change negotiation (CCN) started to take place in 1992, when the Earth
Summit decided to formalize the United Nations Framework Conference on Climate
Change (UNFCCC)2. The UNFCCC then worked hard with its member countries todevelop an agreement that gives direction and ‘sanction’ to curb GHG emission. In
1997, the Kyoto Protocol (KP) was born. To enter into force, however, the KP had a‘double threshold’ where 55 countries have to sign/ratify it, and, the quotas of countries,
which sign/ratify the KP, is accounted for 55% of the world’s GHG emission. Finally,in 2005, KP entered into force with it signature mark, separating the member countries(MCs) into two categories: developed countries in Annex 1, and developing countries
in Annex 2. The annex 1 countries then, have specific quotas for them to abide during
the reign of KP.

Although seemed to be powerful and binding for MCs, KP was a little problematic.
Annex 1 countries feel that although they understood the principle of ‘Common but
differentiated responsibilities’ really well, the sense of equity was missing in KP.
Annex 2 countries were not mentioned to curb their Green House Gases (GHG)
emissions. It finally fell short in accommodating the needs of its MCs when it expiredin 2012.

The year of 2012, in the UNFCCC meeting in Doha, some parties tried to protect theinterest of KP to keep evolving with its strict standards. But as it didn’t avail, thenegotiation went to understanding each other needs under the Ad-hock Working Groupof Durban Platform for Enhanced Action (ADP), where parties decided that they wantsomething more workable, tangible, and binding agreement to work and curb GHG and
halt the incline of the world’s temperature, together under UNFCCC, with a deadline:
2015.

Through the hard work of ADP, in 2015 parties of UNFCCC decided to enact the Paris
Agreement, in Paris3. This Agreement is viewed in comparison to KP as a more equal,

2 Pandey, Chandra Lal, The Limits of Climate Change Agreements: From Past to Present, International Journalof Climate Change Strategies and Management, Vol.6 No.4, 2014, pp. 376‐390.
3 Paris Agreement, https://treaties.un.org/doc/Publication/CN/2016/CN.735.2016‐Eng.pdf, viewed
3/12/2016.

1

flexible, clear, although still strict and legally binding to its parties4 . Some of its’signature highlights are:(1) the purpose of curbing the world’s temperature by 2C and striving to 1.5C. byitself, this purpose is clear and non-negotiable. But when we see that thisAgreement relies on NDCs (Nationally Determined Contributions) to achieve
its purpose, (albeit with the help of technology transfer, financing, utilizing
carbon sinks, …), the fact that NDCs are not clearly demarcated per countries
by the Agreement itself, makes it hard for the Agreement to reach its goals.
Moreover, the transition from INDCs to NDC is not clearly written in theAgreement.
(2) There’s no more annexed countries in the Agreement. Rather than grouping
countries into developed and developing countries, the Agreement looks at theParties with a more detailed view, such as LDC (Least Developing Countries),
SIDC(Small Island Developing Countries), low income countries,… categories
of countries are being expressed and acknowledged in the agreement. This is a
step forward from KP, which only grouped countries into 2 groups, but, on theother hand, the Agreement also does not clearly circumscribe obligations ofthese each countries categories.
(3) Instead of just listing, the principle of Common but differentiated responsibility(CBDR), the Agreement decided to insert several phrases for CBDR, which is
CBDR under Respective Capabilities (RC) in light of different national
circumstances. This means, that although CBDR, the powerful principal ofInternational Environmental Law of equity based on historical responsibilities,
is shifted with ‘respective capabilities and in light of different national
circumstances’ which gives highlight for higher income developing countries
who have more ability to restrain themselves from developing activities.
(4) This agreement is legally binding, but in fact, there is no sanctions mentioned
in the agreement. What if the purpose of the Agreement cannot be reached?
What will it do? There is no further deliberation in the Agreement for these
possible occurrences.

4 Id.

2

1.1

The Context for OPEC in Climate Change Negotiation

OPEC, the Organization of Petroleum Exporting Countries is an intergovernmental
Organization5. According to the OPEC’s Statute, the organization aims to stabilize
export, production, and price of petroleum in the world. OPEC has 13 member
countries, namely: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, Qatar, UEA,
Indonesia, Algiers, Nigeria, Ecuador, Gabon, and Angola6.
The United Nations categorizes the members of OPEC as developing countries7, andthese members are gifted by abundant resources of oil of which they depend their
growth of their economics and development upon.

All member countries of OPEC are signatories to the UNFCCC. This means, efforts
being encouraged by the UNFCCC are also determinations by the OPEC Member
Countries. In terms of the Paris Agreement, most of member countries of OPEC havealready sign the Agreement 8 with the exception of Iraq-who is not a party to theAgreement. The MCs signatories are: Iran, Indonesia (ratified by 3/11/2016), Saudi
Arabia (signed and ratified by 3/11/2016) ,Kuwait, Venezuela, Qatar, UEA (ratified by
21/09/2016), Algiers (ratified by 21/10/2016), Nigeria, Ecuador, Gabon (ratified by
2/11/2016), and Angola.

These past few years, starting from 2014 onwards, the oil price has gone tremendously
unstable due to the ‘perfect storm’9 in the oil and gas world. There are three main causesof the perfect storm, firstly, the uncertainty of the world’s economy, due to theeconomic crisis in parts of the world, which in turn obstructed to the oil price to go
plummeting; secondly, the increase of alternative oil production, including the massive
production from shale oil in the US, which considerably increased the supply of oil;thirdly, the climate change negotiations, whose main concern is to curb the green house

5 OPEC Statute : http://www.opec.org/opec_web/en/publications/345.htm, viewed 3/12/2016
6 www.opec.org, viewed 30/11/16, 8:50PM, Indonesia suspended its membership per 30

November 2016.
7 http://unfccc.int/paris_agreement/items/9444.php , viewed 30/11/16, 8:50PM
8 http://unfccc.int/paris_agreement/items/9444.php viewed 30/12/2016 9:30PM.
9 Legacy, Cassandra, Oil is Facing the Perfect storm, http://oilprice.com/Energy/Crude‐Oil/Oil‐Is‐
Facing‐The‐Perfect‐Storm.html viewed 30/12/16, 8:52PM.

3

gases emissions to a level of which is 2degree lower than the industrial age, which inturn lead to the diminution use of fossil fuels and more heavy on renewable energy.

On the other hand, based on the research of the World’s Oil Outlook (2016), the world’s
energy demand for fossil fuels is still strong, at least for the next two decades, asmentioned in the table below:

World’s Primary Energy Demand by Fuel Type

120.0

mboe/d

100.0

85.1

90.7

96.7

99.8

Oil

80.0

Coal

60.0

Gas

40.0

Nuclear

20.0

Hydro

0.0

Biomass
Other renewables

2014 2020 2030 2040
Source: WOO (2016)

Hence, in terms of climate change negotiations, OPEC is in between two pressured
situations: (1) maintaining the interests of its member countries, in this case, producing
and exporting oil to cover their development needs; and (2) maintaining sustainable
development principles, as mentioned not only in the Paris Agreement, UNFCCC but
also Sustainable Development Goals by the United Nations.

Since then, several countries have joined OPEC: Qatar (1961), Indonesia (1962)—
suspended its membership January 2009, reactivated it in January 2016, but suspended
it again in November 2016, Libya (1962), United Arab Emirates (1967), Algeria (1969),
Nigeria (1971), Ecuador (1973)—suspended it membership in December 1992,
reactivated it on October 2007, Angola (2007), and Gabon (19975)—terminated its
membership in January 1995, rejoined in July 2016.

4

OPEC’s headquarter wasestablished in Geneva, Switzerland (1960-1965), then moved to Vienna on September
1, 196510.

OPEC’s objective is to coordinate and unify petroleum policy among Member
Countries, in order to secure fair and stable prices for petroleum procedures; an efficient,economic and regular supply of petroleum to consuming nations; and a fair return on
capital to those investing in the industry11. OPEC Secretariat is the executive organ of
the organization, located in and functioned as its headquarters in Vienna.

When OPEC was established in 1960, the international oil market was dominated bythe ‘Seven Sisters’ multinational companies, former Soviet Union (FSU), and othercentrally planned economies (CPEs) 12 . In 1968, OPEC adopted the “Declaratory
Statement of Petroleum Policy in Member Countries’, emphasized the inalienable rightof all countries to exercise permanent sovereignty over their natural resources in theinterest of their national development13. OPEC's share of world production was only
28% in 1960. By 1970, this figure would rise to 41%14. The next decade, 1980, world’s
oil price weakened and crashed in 1986, responding to a big oil glut and consumer shift
away from tis hydrocarbon.

Prices moved less dramatically than in the 1970s and 1980s, and timely OPEC action
reduced the market impact of Middle East hostilities in 1990–91 15 . But excessive
volatility and general price weakness dominated the decade, and the South-East Asian
economic downturn and mild Northern Hemisphere winter of 1998–99 saw prices backat 1986 levels. However, a solid recovery followed in a more integrated oil market,
which was adjusting to the post-Soviet world, greater regionalism, globalization, thecommunications revolution and other high-tech trends16.

10 http://www.opec.org/opec_web/en/about_us/24.htm last viewed 27 March 2017, 12.17pm.
11 OPEC Statute Article 2, paragraph A, B and C.

http://www.opec.org/opec_web/flipbook/OPEC%20Statute/OPEC%20Statute/assets/basic‐
html/index.html#page7
12 History of OPEC, www.opec.org , last viewed 4 April 2017, 14.04pm.
13 Id.
14 David L. Russeau, History of Opec,
http://www.ssc.upenn.edu/polisci/psci260/OPECweb/OPECHIST.HTM
15 History of OPEC, www.opec.org , last viewed 4 April 2017, 14.04pm.
16 Id.

5

1.2

Research Question

Based on the above deliberation, this research tries to analyze the challenges andopportunities for OPEC in the future Climate Change Negotiations. The researchquestions are:(A) What are the challenges and opportunities for OPEC in Climate Change
Negotiations?
(B) How does OPEC strategize to cope with Climate Change Negotiations?

Results of the analysis of this research would give insights to readers of Climate Change
Negotiations and how OPEC as an intergovernmental organization can strategize itself
in Climate Change Negotiations.

1.3

Methods

This paper uses normative and literature method, where all the data analyzed derived
from various journal articles, media information: newspapers and websites, as well as
published books. Deductive and inductive analysis will be drawn based on the type ofthe data, and only qualitative analysis will be used in this research.

2.

Theoretical BackgroundAs we discussed in the earlier section, the variables for this research are States, asParties or member countries, the Intergovernmental Organization—in this case OPEC,
and Climate Change Negotiations in this case the newest instrument in CCN: Paris
Agreement as an International Agreement. Additionally, in order to survive the pressureof CCN, OPEC needs to go through an institutional change. These sections discus
theories and inter relations between on these variables.

2.1

States, and Intergovernmental Organization

A State, according to the Montevideo Convention 1933, is a person of international law
should possess the following qualifications: a ) a permanent population; b ) a defined6

territory; c ) government; and d) capacity to enter into relations with the other states17.
The political existence of the state is independent of recognition by the other states.
Even before recognition the state has the right to defend its integrity and independence,
to provide for its conservation and prosperity, and consequently to organize itself as itsees fit, to legislate upon its interests, administer its services, and to define thejurisdiction and competence of its courts18. The exercise of these rights has no otherlimitation than the exercise of the rights of other states according to international law19.

Intergovernmental organization, or international governmental organization (IGO)
is an organization composed primarily of sovereign states (referred to as member
states) 20 . Intergovernmental organizations are an important aspect of public
international law. IGOs are established by treaty that acts as a charter creating the group.
Treaties are formed when lawful representatives (governments) of several states go
through a ratification process, providing the IGO with an international legal personality.

The IGO in this discussion is the Organization of the Petroleum Exporting Countries(OPEC), created as a permanent intergovernmental organization in conformity with the
Resolutions of the Conference of the Representatives of the Governments of Iran, Iraq,
Kuwait, Saudi Arabia and Venezuela, held in Baghdad from September 10 to 14, 196021.

2.2

Variables of the research: Organizations, Institutions, and Determinant of

ChangeThe new institutionalism draws a clear distinction between institutions, treated as acluster of rights, rules and decision making procedures that give rise to social practices,and organizations, construed as material entities that t typically have personnel, offices,
equipment, financial resources, and often legal personality22.

17 Montevideo Convention, Article 1, 1933, can be read in:

http://avalon.law.yale.edu/20th_century/intam03.asp last viewed 6 April 2017, 11.59pm.
18 id, Article 2.
19 Id, Article 3.
20 Vienna Convention on the Law of Treaties between States and International Organizations or between

International Organizations, 1986, Article 2, paragraph (i).

21 OPEC Statute, Article 1.

22 Oran Young, International Cooperation: Building Regimes for Natural Resources and the Environment,

INTERNATIONAL ORGANIZATION 43 (3): 349‐75, Douglas North, C, 1990, Institutions, Institutional Change andEconomic Performance. Cambridge: Cambridge University Press.

7Young gave an example of the relationship between institutions and organizations. For
shorthand purposes, institutions are rules of the game, and organizations are players inthese institutions23.

Like all institutions, environmental and resource regimes—assemblages of rights, rules
and decision-making procedures that influence the course of human-environment
interactions—are dynamics 24 . They are dynamic because they are influenced bychange(s) 25 . Some changes are developmental in character, which enhances theeffectiveness of governance systems, some are responses to external events involving
the biophysical, socioeconomic or technological settings in which regimes operate26.
The sources change can be internal, external or both27.

Young, in his ‘Institutional Dynamics: Emerging Patterns in International
Environmental Governance’ explored the determinants of patterns of change. He calls
the determinants as the endogenous-exogenous factors. Endogenous factors are thosehaving to do with attributes of the regimes, such as the locus of the regime on a hardlaw-soft law continuum; the nature of the relevant decision rule(s); provisions formonitoring, reporting and verification; funding mechanism; procedures for amending a
regime’s assemblage of rights, rules and decision making procedures; and so forth28.
Exogenous factors include conditions pertaining to the character of the overarching
political setting; the nature of the prevailing economic system; the rise of new actors,
technological innovations and the emergence of altered or entirely new discourses; aswell as significant changes in broader biophysical systems 29 . The categorization ofthese factors are not limited, there is always possibility that one or more previously
unidentified factors will emerge and play an important role in individual cases30.

23 Id.
24 Young, ORAN R. YOUNG, INSTITUTIONAL DYNAMICS: EMERGENT PATTERNS IN INTERNATIONAL ENVIRONMENTAL

GOVERNANCE 1‐5,( MIT Press, 2010).
25 Young, supra, pg 1‐5.
26 Young, supra, pg 1‐5.
27 Young, supra, pg. 6.

28 Young, supra, pg.14.

29 Young, supra, pg. 14.

30 Young, supra, pg. 14.

8

In this current research, our ‘institution’ is ‘the world’s market of oil’, the ‘organization’in question is OPEC (although British Petroleum, Exxon Mobile, Royal Dutch Shellcan also be example of ‘Organizations’ but in this case we focus on OPEC), and an‘important determinant’ for change is the climate change negotiations, as an exogenous
factor in the world’s market for oil institution.

Why does the world’s market for oil constitute an institution?
The world’s market for oil is an institution because it has a cluster of rights for the
producers and consumers of the world’s oil, it embodies rules and regulations on the
production, consumption, trade of oil, and it has procedures of decision-making thatgive rise to social practices. Oil producer countries would evolve their national
regulations based on its dependency on the world’s oil market. The world’s oil market
not only influence economies of oil producer countries, but also the economy of theworld. The dependency of the current industrial world on oil, has strengthen theinfluence of the world’s market of oil as a world level institution.

Intertwined between OPEC and its Member countries is complicated by an international
efforts, called the climate change negotiation. On the one hand, OPEC needs to defend
the interest of the IGO and its Member countries, but on the other hand, OPEC has an
obligation to the international world and its Member countries to also foster the climatechange negotiations.

This was hegemony was overviewed Gramsci, “as the hegemony entails not only aunison of economic and political aims, but also intellectual and moral unity. . . thedominant group is coordinated concretely with the general interests of the subordinate
groups, and the life of the State is conceived of as a continuous process of formationand superseding of unstable equilibria between the interests of the fundamental groups
and those of the subordinate groups - equilibria in which the interests of the dominantgroup prevail, but only up to a certain point.…”31

This is true in terms of the hegemony of climate change negotiations for OPEC and its

31 As mentioned in: David L. Levy and Daniel Legan, A Neo‐Gramscian Approach to Corporate Political

Strategy: Conflict and Accommodation in the Climate Change Negotiations, JOURNAL OF MANAGEMENT STUDIES
40:4June 2003.

9member countries. Since all of OPEC member countries are Parties of the UNFCCC
and most of its member countries are signatories of the Paris Agreement, the shiftingchange of power between the environment and the fossil fuel (as an industry) becamevery apparent.

The current instrument in place for the climate change negotiations is the Paris
Agreement, agreed by Parties of UNFCCC in Paris, 2015. The oil industry's initial
response to this pressure was aggressive and unsurprising. However, as an international
agreement which has been agreed by Parties, just like its’ predecessor, the Kyoto
Protocol, Paris Agreement also started to take its stride.

Oran Young explains this dilemmatic situation, especially within the realm ofinternational institutions. He stated, “We capture the outcomes of international
negotiations better when we see them as resulting from institutional bargaining rather
than from interactions among rational utility-maximizing states or exclusively fromhegemonic pressures 32 .” So with in this research, I will argue that OPEC, as anintergovernmental institution/organization, has a better chance in delivering results inclimate change negotiations rather than leaving its member countries without any
facilitation from OPEC.

Young argues that the typology of international institutions serving as utility modifiers,
enhancers of cooperation, bestowers of authority, and facilitators of learning, role
definers, and agents of domestic realignments encompasses the range of theoreticalperspectives on the how of institutional influence33.

In support of Young’s theory, I would argue that OPEC could cope within the climatechange negotiations regime with adapting Young’s theory on typology of international
institution. In the climate change negotiation regime, OPEC has be able to serve asutility modifiers, enhancers of cooperation, bestowers of authority, facilitators oflearning, role definers, and agents of domestic realignments (in MC’s NDCs).

32 As mentioned in Ronald B. Mitchell, Oran Young and International Institution, INTERNATIONALENVIRONMENTAL AGREEMENTS: POLITICS, LAW AND ECONOMICS 13, March 2013.
33 Id.

10

In this case, even though the Paris Agreement, as an international agreement and key
instrument of the climate change negotiations seems to be a very hard challenge for
OPEC, but as an institution/intergovernmental organization, OPEC can still serve its
member countries not only protecting their interests, but also doing good for theinternational community with abiding goals of curbing GHG’s emission.

3.

Analysis

This section discusses the challenges and opportunities for OPEC in the fora of Climate
Change Negotiation. Although it seemed that OPEC does not have the upper hand in
the negotiation process due to the ‘severe’ challenges, there are some very apparent andbeneficial opportunities for OPEC arising from the negotiation process itself. Breaking
down the details of each challenges, this section gives a thorough elaboration of theopportunities OPEC can gain, once it understood current and future situations.

3.1

Challenges of OPEC in Climate Change Negotiations

・Paris Agreement's
As discussed in the previous section, Paris Agreement is the current climate change
negotiation’s instrument in place, for all members of UNFCCC. This paper will discuss
several sides of Paris Agreement, which are tremendous challenges for OPEC member
countries. They are: the Agreement’s main purpose, the Agreement’s long termemission goal, and the Agreement’s raising ambition in short term.

3.1.1

Paris Agreement’s Purpose

The main purpose of the Agreement, is mentioned in Article 2(1)(a). It states:
Holding the increase in the global average temperature to well below 2 °C
above pre-industrial levels and to pursue efforts to limit the temperature
increase to 1.5 °C above pre-industrial levels, recognizing that this would
significantly reduce the risks and impacts of climate change;

11

There is of course, a big concern for OPEC since 87% of all human-produced carbon
dioxide emissions come from the burning of fossil fuels like coal, natural gas andoil.34.

Source: Le Quéré, C. et al. (2012). The global carbon budget 1959‐2011.

There is an estimate that the Middle East will lose about 35 percent of its oil export
revenue by 2050 if the atmospheric concentration of C02 is to be stabilized at 450 ppm,
(van Vuuren et al. (2003))35.

Briefly summarized, studies suggest that policies and measures aimed at reducing C02
emissions will reduce the consumption of oil, which in turn would force the producer
price for oil down. If a C02 tax or a cap and trade system is used, this will impose costs
for both the oil consuming and extracting parties, but entail a transfer of rents from theextracting countries to the consuming countries, see e.g. Amundsen and Bergman(2005)36.

This is of course, a very big challenge for OPEC, if the MCs have to start reducing
their oil production, and on top of that loosing their GDPs, these are doomsday for theOrganization.

34 Le Quéré, C.,et al. "The global carbon budget 1959–2011." Earth System Science Data Discussions 5, no. 2(2012): 1107-1157.
35 Daniel J.A. Johansson, et.al, OPEC Strategies and Oil Rent in a Climate Conscious World, 2013.
36 Ibid.

12

・A long-term emissions goal
The Paris Agreement may be most remembered for its long-term goal to phase out
greenhouse gas emissions, which suggests a turning point in the use of fossil fuels.

There are many articles in the Agreement, which substantially adding ambition to along term emission reduction. For example, Article 4 which specifically discusses‘National Determined Contribution’ or NDC, each of the paragraph underlines how the
NDC needs to be successive and progressing (para 2 and 3), and in Article 4 paragraph
1.

These articles underline the importance positioning emission reduction as a long term
global achievement by member countries of UNFCCC.

Why is then long-termemission goal needs to be addressed by OPEC member countries? By determining thelong-term emission goal, member countries are also making long term planning in termsof fossil fuel production and/or consumption.

It will be almost certain that member countries are going to decrease fossil fuel related
activities, which will also mean OPEC needs to be able to represent the time line ofpossible conventional activities of fossil fuel may exist and alternative activities related
to fossil fuel. OPEC needs to diversify its production to unconventional energy sources,
if the organization were to survive this long-term emissions goal.

3.1.2

Raising ambition in the short term

Almost all countries (189 to date, out of 195 countries in all) have pledged to takeclimate action after 2020, either in 2025 or 2030. This effort is highlighted in the Paris
Agreement, in its Article 4, para 3, the Agreement clearly states: “Each Party's
successive nationally determined contribution will represent a progression beyond theParty's the current nationally determined contribution and reflect its highest possible
ambition, reflecting its common but differentiated responsibilities and respective
capabilities ,in the light of different national circumstances.’

Prior to the enactment of Paris Agreement, countries have already publicly outlined
what post-2020 climate actions they intended to take under the new international13

agreement, known as their Intended Nationally Determined Contributions (INDCs).
The climate actions communicated in these INDCs largely determine whether the world
achieves the long-term goals of the Paris Agreement: to hold the increase in global
average temperature to well below 2°C, to pursue efforts to limit the increase to 1.5°C,
and to achieve net zero emissions in the second half of this century37.

INDCs was designed to pair national policy setting — in which countries determine
their contributions in the context of their national priorities, circumstances andcapabilities — with a global framework under the Paris Agreement that drives
collective action toward a zero-carbon, climate-resilient future38. INDC is a tool forgovernments to link feedback between national and international decision-making on
climate change.
INDCs are also the primary means for governments to communicate internationally thesteps they will take to address climate change in their own countries. INDCs comprisedof each country’s ambition for reducing emissions, taking into account its domestic
circumstances and capabilities.
In the Paris Agreement 2015, the word ‘intended’ in INDCs were dropped, and INDC
is converted into NDC (Nationally Determined Contribution). According to Article 4paragraph 2 of the Paris Agreement, each Party shall prepare, communicate andmaintain successive nationally determined contributions (NDCs) that it intends toachieve. Parties shall pursue domestic mitigation measures, with the aim of achieving
the objectives of such contributions.

Table-1. INDCs / First NDCs
Developed Countries
USEU (28 Member States)
RussiaJapan

Key features of the INDC
Reduce GHG emissions by 26–28% below its 2005 level in 2025 and makebest efforts to reduce its emissions by 28%
At least 40% domestic reduction in GHG emissions by 2030 compared to 1990
Limiting anthropogenic GHGs to 70–75% of 1990 levels by 2030 might be along-term indicator, subject to the maximum possible account of absorbing
capacity of forests
Japan’s INDC towards post-2020 GHG emission reductions is at the level of areduction of 26% by fiscal year (FY) 2030 compared to FY 2013 (25.4%
reduction compared to FY 2005) (approximately 1.042 billion t-CO2eq as 2030
emissions)

37 http://www.wri.org/indc‐definition
38 Ibid.

14

Developing Countries
China

India
Indonesia*
Saudi Arabia

Algeria

Nigeria

Gabon

Key features of the INDC
Peak CO2emissions around 2030 and make best efforts to peak early
Lower CO2emissions per unit of GDP by 60–65% from the 2005 level
Increase the share of non-fossil fuels in primary energy consumption to around20%
Increase the forest stock volume by around 4.5 billion cubic metres on the2005 level
Reduce the emissions intensity of its GDP by 33–35% by 2030 from the 2005
level
Reduce GHG emission 26% against its’ BAU by 2020, independently, and 41%
with international support.
Best-case scenario of Saudi Arabia would achieve significant annual mitigation
co-benefits estimated to be up to 130 million tons of CO2eq by 2030. The
measures focus on harnessing the mitigation potential in a way that prevents“lock in” of high-GHG infrastructure. This best-case scenario includes
economic diversification from oil and its derivatives export revenues.
Reduction of greenhouse gases emissions by 7% to 22%, by 2030, compared
to a business as usual -BAU- scenario, conditional on external support in termsof finance, technology development and transfer, and capacity building. The
7% GHG reduction will be achieved with national means.
- Contribution based on a mixed results-and-action approach, unconditionaland conditional according to the reference Business as Usual (BaU) scenario. Results approach: % reduction of emissions, 2020-30. - Action approach:
Strategic Framework for Sustainable Land Management (SF-SLM) actions,
2015-29 (Nigerans Feed Nigerans Initiative (I3N) focus)
At least 50% reduction in emissions compared to the Development in 2025

Source: http://www4.unfccc.int/ndcregistry/Pages/Home.aspx; Shaded countries are OPEC member countries.
*: Former member country

OPEC needs to conduct possible research and interpretation of the possible ways ofemission reduction with alternative energy.

For example, if the substitution byalternative energy is dedicated to electricity generation rather than transportation, mostof the reduction will be on gas and coal, rather than oil. But, if transportation is alsohigh on the priority list, then oil production and consumption will also be hampered.
OPEC can still be benefiting from this climate regime in a short term, but in a longer
term, OPEC needs to bring more options to its member countries.

4.

Energy and Environmental Policies

Energy and environmental policies are policies that are nationally enacted by countries
to forward their energy and environmental situations. With the emerging climatechange negotiations, most countries are striving towards fuel efficiency improvement,
and alternative fuel vehicles. There are two focuses of energy and environmental
policies, the upstream policy focus, and the downstream policy focus.
15

In the upstream side, exploitation of natural resources had enabled increased access toand production of these resources (namely oil, gas, minerals, etc), but on the other handalso creates vulnerability of the environment, especially the environmental risks in the
production phase of the resources39. For example, environmental impacts arising fromshale gas production: methane and ground water pollution gained recognition throughmedia or even published scientific studies. This awareness is then, influences thedownstream side of energy and environmental policies.

Policies in the downstream has shifted to the introduction of CO2 limitation andemerging stricter standard on fuel (sulphur content, octane/cetane, sustainable criteria
on biofuels, etc). Some countries, including giants like China and India, increased theuse of energy-saving and environmentally friendly methods in production andconsumption and promoting technological innovations that will reduce the use ofenergy per unit of output (reduce energy intensity or increase energy efficiency) or
reduce pollution per unit of output40.

This is illustrated by the World Outlook on Oil (2016) in several recent decisions taken
by policymakers in major consuming countries. In the US, the Renewable FuelStandards (RFS) Programme for the calendar years 2014, 2015 and 2016, published in
December 2015, sets out 18.11 billion gallons as the minimum amount of renewable
fuel to be consumed during 201641. This is a significant jump from the 16.93 billion
gallons target
for 2015.

In the transportation sector, the European Commission initiative to apply the WorldHarmonized Light Duty Vehicle Test Procedure in its territory from 2017 is generatingsome debate about the implications for automakers, which fear the policy may set
unrealistic targets42. The EU will be the pioneer on the implementation of this test
procedure, and its results may influence other prominent consuming countries.
39 WOO, 2016.

40 Chow, Gregory, China’s Energy and Environmental Problems and Policies, CEPS Working Paper

No. 152 August 2007, https://www.princeton.edu/ceps/workingpapers/152chow.pdf
41 WOO, supra note.
42 Ibid.

16

5.

Uncertainties

Uncertainties are the hardest challenge for OPEC in terms of climate change
negotiations. Among others, they are the uncertain prices of oil and other fossil fuelenergy, economic growth influenced by technological advancements, unprecedented
events (UK’s ‘Brexit’ decision, terror attack, wars, and the like).

In the mid-2014 oil prices started to decline as excess output. The OPEC Reference
Basket (ORB) fell from above $100/b in the first half of 2014 to its recent lowest levelof $22.48/b in January this year43. Low oil prices present significant challenges anduncertainties. The price environment of the past two years has led to significant
reductions in investments across the oil industry44.

Unprecedented events are creating uncertainty in the economy, which will then take atroll to the oil and gas industry, and climate change negotiations. The ‘Brexit’ forexample, when The people of Britain voted for a British exit (hence: Brexit) from the
EU in a historic referendum on Thursday June 23, 2016. The outcome promptedjubilant celebrations among Eurosceptics around the Continent and sent shockwaves
through the global economy45.

Technological advancement some expected, some unforeseen, may also shift
production and consumption in the world’s oil industry. WOO (2016) stated thattechnological progress led to the rapid rise of tight oil, a resource that arguably
continues to exceed expectations. Other energy alternatives are also thriving, newinventions of alternative fuels may also tip the mounting emission of green house gases.

5.1

Opportunities for OPEC in Climate Change Negotiations

Despite of the many challenges for OPEC in Climate change negotiations, there arealso apparent opportunities presented. This section discus the opportunities for OPEC

43 WOO 2016.
44 Ibid.
45 http://www.express.co.uk/news/politics/645667/Brexit‐EU‐European‐Union‐Referendum‐David‐

Cameron‐Economic‐Impact‐UK‐EU‐exit‐leave17

in Climate Change negotiations, among others: comparative advantages of oil versus
other energy alternatives, carbon trading, common but differentiated responsibility
based on respective capabilities and national circumstances, and carbon capture storage.

5.1.1

Comparative advantages of Oil

There are more than a few comparative advantages of oil in terms of climate change
negotiations. Some however, have an expiry date, as we will learn in this section.

First, oil has an extensive history in the industrial world.
Fossil fuel, specifically oil, has been used for hundreds of years in the humanhistory.

On August 28, 1859, George Bissell and Edwin L. Drake made the firstsuccessful use of a drilling rig on a well drilled especially to produce oil, at a site on
Oil Creek near Titusville, Pennsylvania. This is when the story of oil production begun.
It is hard for other sources of energy to compete with the extensive history and progressin oil production and consumption.

Second, we can not exploit oil much more than we already did. As stated in the previous
research by Grubb, 2001;Azar et al., 2003: “proven oil reserves and estimatedultimately recoverable reserves of conventional oil are smaller than the maximum
allowable cumulative emissions over the century even when meeting low atmosphericstabilization targets.”46

Third, scenarios of peak oil demand during 2020-2045, presents a time frame of aroundtwo decades for the oil industry to continue to expand. As indicated by Van de Graffand Verburggen in their ‘The Oil Endgame: Strategies of Oil Exporters in a CarbonConstrained World’, several international institutions (IEA and OPEC) and oil majors(BP, Shell, and Exxon Mobil) have strengthened the argument that oil market willcontinue to expand over the next 25 years, driven in large part by economic andpopulation growth47.

46 Grubb (2001), Azar, et al (2003). For example: the proven reserves of conventional oil amount to about 140
Gt C, while the estimated ultimately recoverable reserves left to be extracted are about twice as large. In orderto stabilize the concentration of C02 in the atmosphere at 450 ppm, we may emit roughly 500 Gt C over the
next 100 years.
47 Van de Graff and Verburggen (2015), ‘The Oil Endgame: Strategies of Oil Exporters in a Carbon‐
Constrained World’, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2640488 , last viewed 29 March
2017, 12.40pm.

18

They contrasted and compared the projected change on average per year in oil demand
under different scenarios:
Table 2. Projected change on average per year in oil demand under different
scenarios
Institution
Scenario/source
Projection period
CAGR
IEA
Current Policies – WEO 20142013-2040
0,96%
BP
Energy Outlook 2035
2013-2035
0,82%
ExxonMobil
Outlook for Energy – A View to 2010-2040
0,80%
2040
OPEC
Reference Case – World Oil 2010-2040
0,70%
Outlook 2014
IEA
New Policies – WEO 20142013-2040
0,53%
Shell
Oceans Scenario
2010-2060
0,30%
Shell
Mountains Scenario
2010-2060-0,53%IEA
450 Scenario – WEO 20142013-2040-0,83%IEA
2DS Scenario – ETP 20152012-2050-1,22%
Notes: CAGR = Compound Annual Growth Rate. WEO = World Energy Outlook. ETP =Energy Technology Perspectives
Sources: IEA (2014c; 2015), BP (2015a), ExxonMobil (2015), OPEC (2014b), Shell (2013) as shown in Van deGraff and Verburggen (2015), ‘The Oil Endgame: Strategies of Oil Exporters in a Carbon-Constrained World’,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2640488

The table compares the projection periods of ‘oil demand peaks’ which is important for
OPEC MCs. This means that currently as of 2017, MCs have roughly two decades toindulged oil production. However, the scenarios are based on two assumptions: (1)rational economics (increased efficiency and fuel switching, for example, due to highoil prices) and government policies to mitigate the environmental and financial costs ofoil consumption (e.q. climate change, air pollution, fuel subsidies)48.

Fourth, oil production is still cheaper than production cost of any other energy
alternatives. Adelman, 1986; IEA, 2005; Brandt & Farrell, 2007, underlined: mostconventional oil is inexpensive to extract (extraction costs in the Middle East amountto a few dollars per barrel), and that oil is superior in terms fuel production, which is
crucial for the transportation sector, with few real contenders, most - if not all - of theestimated ultimately recoverable reserve still likely eventually be used even if we opt
for stabilization levels that many would consider very stringent, i.e., about 400 ppm
C02 in the atmosphere. Conventional oil is still superior in terms of liquid fuelproduction, at least for the next decade or two, because the fact that the extraction of
48 Id.

19

conventional oil is still cheaper than other other alternative liquid substitutes(Johansson, Azar, Lindgren and Persson,2013).

Fifth, oil has lower net carbon energy ration then any other liquid substitutes. All of
the alternative liquid substitute, except biomass-based fuels and natural gas, are higher
in net carbon energy ratio (Brandt & Farrell, 2007). This implies that the production
cost of these fuels, when carbon emissions are priced, would be more affected by the
carbon price than would the cost of fuels from conventional oil (Manne & Rutherford
1994). If the OPEC member states behave strategically, they should be able to utilize
this aspect so as to increase their rent. In the case of biomass-based fuels, the global
supply potential is limited, and it has competing uses in other energy sectors (heat andelectricity production) when C02 concentration is stabilized at low levels costeffectively (Azar et al., 2003).

5.1.2

Common but Differentiated Responsibilities and Respective Capabilities inlight of different National Circumstances
Differentiation between developing and developed state parties is by far the hardest fornations to address. The compromise of the Parties to led to a common ground ofdifferentiated responsibilities based development stages, ranging from least developing
countries, small island developing countries, to larger income developing countries(such as China, Saudi Arabia, Singapore, and Qatar).
This encapsulates the developed countries’ new slogan ‘in the light of different national
circumstances’, which was added to the principle of ‘common but differentiatedresponsibilities and respective capabilities’; a new principle which has become thethread that sows together the Paris Agreement’s fabric of mitigation, adaptation,
support, implementation and compliance. The Paris Agreement has sifted thedifferentiation between the rich and the poor, from a rigid one in Kyoto Protocol, intoa more flexible sharing of responsibilities (Article 2.2). The Agreement gives
responsibilities to Parties to ambitiously reaching the goals of the Agreement (Art.2:
Purpose, and Art 3: ‘All Parties are to undertake and communicate ambitious efforts’).
This “modified” principle is pivotal to the Paris Agreement for several reasons.
First, this principle acknowledges a differentiation of responsibilities between Parties.
20

Developed state Parties, having already produced emission since the pre-industrial era
are responsible for greater emissions reduction than developing countries. Developing
countries, needing room to grow and sustain their needs, have less restrictive measures
to curb their emission, but they are still encouraged to fulfill their nationally determined
contributions in reducing emission.
Second, developing countries, perhaps the hardest hit victims of climate change, will
have the support of the developed countries in activities such as mitigation, adaptation,and technology support, in order for them to survive challenges of climate change. The
Paris Agreement underlines the leadership of the developed countries, to giving supportand mobilizing climate finance and support for developing countries.
Third, the Agreement acknowledges that there are different national circumstances
between states, which mean a differentiation in the development level of developing
states, and hence further distinguishing responsibilities.
Fourth, the Agreement also encourages ‘other Parties … to provide or continue toprovide such support voluntarily’ (Article 9(2)) to underline further developmental
circumstances. The dichotomy of developed and developing countries no longer holdtrue, acknowledging other parties who are able and willing to voluntarily give support
for efforts taken under this Agreement.
Fifth, in the spirit of differentiation, the Paris Agreement managed to articulate difficult
issues in climate change’s mitigation, adaptation, and support, breaking them into
manageable steps in the bundles of rights and obligations contained.
As discussed above, most of OPEC member countries are signatories to the Paris
Agreement. As an international organization, OPEC has to show its good intention to
an international agreement signed by all its member countries, but, on the other hand,
OPEC also has to keep the balance of any international agreement purposes with its
own purpose and obligation towards its member countries.

21

5.2

Carbon Trading

There are two principal market-based instruments to address climate mitigation and theunderlying issue of externalities: (1) carbon taxes, and (2)carbon emissions trading, thelatter also referred to as cap-and-trade or allowance trading. A carbon tax is a priceinstrument and is typically levied on the carbon content of fuel inputs, creating an
incentive either to switch to lower-carbon inputs or to use inputs more efficiently49.

A carbon trade is an exchange of credits between nations designed to reduce emissionsof carbon dioxide 50 . The carbon trade allows countries that have higher carbon
emissions to purchase the right to release more carbon dioxide into the atmosphere fromcountries that have lower carbon emissions51. If a polluter (country) produce lower thanits emissions cap, it might generate a carbon credit, which it can then sell to anotherpolluter country struggling to meet its cap. This approach may encourages countries
and regions to link existing national and regional carbon markets. Accounting of tradein carbon credits between capped schemes should be relatively straightforward.

Notwithstanding some earlier activities, it was only with the Kyoto Protocol, signed in
1997 by 37 industrialized countries and the European Community, carbon trading reallybecame an economic force to take into account. Carbon trading occurs on compliancemarkets and voluntary markets. This is then continued by Paris Agreement. The Paris
Agreement indicated that countries can choose to “cooperate” in meeting their nationalemissions targets, by trading emissions rights (Articles 6.2 and 6.3).

More than 90 of the submitted INDCs include proposals for emission trading systems(ETSs), carbon taxes and other carbon pricing initiatives52. 4 Parties stating in their
INDCs that they are planning or considering the use of domestic or international market
mechanisms c account for 61 percent of global GHG emissions53. Most of these Parties
request financial and technological support through international carbon markets.

49 Other price‐based approaches include fees and subsidies. Marco Kerste, Jarst Weda , Nicole Rosenboom,

Carbon Trading, SEO ECONOMISCH ONDERZOEK, Amsterdam 2010.
50 http://www.investopedia.com/terms/c/carbontrade.asp last viewed 31 March 2017, 13.22pm
51 Id.
52https://openknowledge.worldbank.org/bitstream/handle/10986/24288/CarbonPricingWatch2016.pdf?sequence=4&isAllowed=y , last viewed 31 March 2017, 15.50pm.
53 Id.

22

Among the Parties planning or considering the use of market mechanisms are three ofthe world’s five largest emitters54.

OPEC needs to be aware of these developments, and if possible to also facilitating andassisting its MCs in this effort.

6.

Mitigation effort: Carbon Capture Storage (CCS)

Another mitigation effort that is increasingly important is the Carbon Capture andStorage. Carbon Capture and Storage (CCS) is a technology that can capture up to 90%of the carbon dioxide (CO2) emissions produced from the use of fossil fuels inelectricity generation and industrial processes, preventing the carbon dioxide fromentering the atmosphere55. Furthermore, the use of CCS with renewable biomass is oneof the few carbon abatement technologies that can be used in a 'carbon-negative' mode
– actually taking carbon dioxide out of the atmosphere56.
Carbon capture and storage (CCS) technologies are expected to play a significant partin the global climate response57. The ability of CCS to reduce emissions from fossil
fuel use in power generation and industrial processes – including from existing facilities– will be crucial to limiting future temperature increases to "well below 2°C," as laidout in the Agreement. CCS technology will also be needed to deliver "negativeemissions" in the second half of the century if these ambitious goals are to be achieved58.
Experts believe that CCS is a step toward reducing CO2 emission with capturing theCO2 generated during combustion and store it in a suitable place. Research shown that
CCS has the potential to reduce the future worlds’ emission from energy up to 20%59.

There is of course, a discourse on CCS, of whether or not it will work as good as it isadvertised. And if it is shown as successfully as these research have shown us, it is

54 Id.
55 http://www.ccsassociation.org/what‐is‐ccs/ last viewed 3 April, 2017, 12.47pm.
56 Id.
57 Id.
58 Id.

59 WOO, 2016.

23

important for OPEC to investigate on how this method will be applicable in OPEC
countries. In terms of the budget needed, applicable venue, etc. 20% reduction of theworlds’ energy emission is a big piece of the emission, and for sure OPEC countries
will need to have this reduction in terms of their oil production.

7.

How does OPEC strategize to cope with Climate Change Negotiation

To answer the second research question on how OPEC should strategize to cope withclimate change negotiations, first, we need to utilize facts that we have gathered toanswer the first research questions. With the many challenges and opportunities ofclimate change negotiations for OPEC and OPEC MCs, there is a need to better define
the roles of OPEC in the climate change negotiation. Second, we use Young’s typology
of institution to redefine strategies needed by OPEC.
institution’s typology isYoung determined thatto serve as utility modifiers, enhancers of cooperation,

bestowers of authority, facilitators of learning, role definers, and agents of domestic
realignments .

First, it is apparent that the current regime for climate change negotiations is Paris
Agreement, an agreement that is legally binding for its Parties. OPEC MCs are all
Parties to the Agreement. OPEC needs to make sure that all its’ MCs understood theirrights and obligation in the Agreement, including their NDCs. This is inline with
Young’s typlology of institution, which underlines that an institution among other has
to serve as facilitators of learning and utility modifiers. Oil is the utility agreed bymember countries to be used and also restricted, OPEC needs to inform, provide
analysis, disseminate, and explain the pros and cons of this utility for member countries’interests, individually, and as a group. Keep in mind that each member countries havealready determined their NDCs, but these NDCs are renewable in an annual basis,
which is tremendously important for OPEC and its MCs to plan.

Second, with the many challenges of CCN on OPEC, there is a need to better define theroles of OPEC in the CCN, OPEC cannot stand on the sidelines anymore in CCN. Thisis also inline with Young’s theory, which states that institution needs to be a ‘role24

definers’. In relation to this, OPEC can breakdown its roles in the climate change
negotiations as follows:(1) Facilitator of learning:A) OPEC can provide data for its MCs in relation to CCN. It does not haveto engage in many researches outside its domain, but OPEC can gather
information from reliable sources and make them available for MCs.
These data can derive from IPCC, IEA, e-Journals, or other scientific
databases available.
B) OPEC can be a facilitator for the climate change negotiations for its MCs.
Not only providing the data, but also ready with analysis needed
accustomed for its MCs. For example, in regard of the comparativeadvantages of oil which has time frame of 2 decades, OPEC needs to havea plan and strategy ready for its MCs on how to utilize oil production
within those 2 decades. The same goes to for example carbon trading and
CCS, in depth research and analysis need to be done by OPEC in order toprovide its MCs with sufficient information.
(2) Enhancer of Cooperation and agent of domestic realignment:A) OPEC has to be able to become the ‘hub’ between MCs and respective
international organizations, not only UNFCCC and the UN, but also WTO,
WB, and IMF.
B) Within OPEC MCs, cooperation needs to also be strengthened, in terms ofachieving individual NDCs and maintaining interests as oil producers.

Third, once OPEC decided its role/s in the climate change negotiations, OPEC thenhas to define its strategies to deliver MCs aspirations and interests in the negotiations.
OPEC needs to provide possible steps, guidelines, plans, all documents needed for
its MCs for the negotiations. OPEC has to find a balance between sustainable
development in climate change negotiations, with the need to develop economic
growth in its MCs.

Fourth, OPEC has to be the leader of climate change negotiations. Since one andforemost important for OPEC and its member countries is the existence productionof petroleum, which is a very big chunk in fossil fuel, the main ingredient of CO2
emission, people would think that OPEC should oppose to climate change25

negotiations. As we discussed in the ‘opportunity’ section above, with climatechange negotiations, OPEC in fact, are gaining momentum. This is the time for
OPEC to involve, take charge, and lead the negotiations to protect interest of its MCs
and to move forward to a better climate.

Fifth, Change is required.

OPEC need to be able to provide possibilities ofdiversification of its product, rather than just concentrating on conventional oil.
Other energy alternatives are promising possibilities for OPEC to explore. Thisessential factor has to be accounted for when forming OPEC’s Climate Change
Negotiations’ Strategy.

8.

Conclusion

It is apparent that climate change negotiations have became more and more
influential with the Paris Agreement. 195 countries have signed it, most of whom
are already ratified the agreement. Out of 12 OPEC member countries, 11 of themare Parties to the Agreement.

Clearly that there are more challenges than opportunities for OPEC within the
climate change negotiations. From the ‘purpose’ of the Paris Agreement: curbing
the world’s temperature under 2 degree Celsius, long term emission goal, raisingambition in a short term, Nationally Determined Contribution (NDC), and a bigquestion of uncertainties, all of them pose very high rate of difficulties for OPEC tocope.

On the other hand, however, there are also opportunities within the climate change
negotiations. For example, comparative advantages of conventional oil: the long
history of oil, cheaper in production, cleaner in terms of carbon emissions, smaller
amount available than maximum allowable emission, and the fact that peaking of oil
is estimated to be achieved within two decades from 2017; has presented more
opportunities for OPEC countries to plan their growth within the two decades. They
can start several efforts that are assumed to be useful in reducing carbon emissions,26

such as ‘carbon trading’ and ‘carbon capture and storage’, they can also start crafting
plans for possible alternative for conventional oil.

If OPEC has all of these challenges and opportunities, how can it cope with climatechange negotiations? Based on Young’s theory, this research found that OPEC needs
to define its roles. OPEC need to make sure that all its’ MCs understood their rights
and obligation in the Agreement, including their NDCs; OPEC can be a data provider
for its member countries, a facilitator, a hub between MCs with other internationalorganization. OPEC has to find a balance between sustainable development inclimate change negotiations, with the need to develop economic growth in its MCs.

OPEC needs to start leading the climate change negotiation, and not stand on theside lines anymore. OPEC has to prove that even though petroleum is its main focus,
climate change negotiation fora also provide OPEC with tangible opportunities togrow. Aside from that, OPEC needs to also begin strategizing alternatives forconventional oil as its focus, as the world is watching and hoping that OPEC can
strive through climate change negotiations.

27

9.

Reference

International Agreements, Conventions, and Statutes:
Paris Agreement,
https://treaties.un.org/doc/Publication/CN/2016/CN.735.2016-Eng.pdf
OPEC Statute : http://www.opec.org/opec_web/en/publications/345.htm
Montevideo Convention, Article 1, 1933, can be read in:
http://avalon.law.yale.edu/20th_century/intam03.asp
Vienna Convention on the Law of Treaties between States and International
Organizations or between International Organizations, 1986, Article 2, paragraph (i).

Books, Journal Articles:
Hollo, et.al, Eds, Climate Change and the Law, Ius Gentium, Comparative Perspectives
on Law and Justice, Vol.21, Springer, Dordrecht, 2013.
Salszman and Thompson Jr, Environmental Law and Policy, Third Edition, Thomson
Reuters, New York, 2010.
Young, et.al, Eds, Institutions and Environmental Change, Principal Findings,
Applications, and Research Frontiers, MIT Press, Cambridge, 2008.
Young, International Cooperation: Building Regimes for Natural Resources and theEnvironment, International Organization 43 (3)Young, Oran R. Young, Institutional Dynamics: Emergent Patterns in International
Environmental Governance 1-5,( MIT Press, 2010)
Pandey, Chandra Lal, The Limits of Climate Change Agreements: From Past to Present,International Journal of Climate Change Strategies and Management, Vol.6 No.4, 2014.
North, Douglas, 1990, Institutions, Institutional Change and Economic Performance.
Cambridge: Cambridge University Press.
Roland, Gérard, Understanding Institutional Change: Fast Moving and Slow-Moving
Institutions, available at: http://eml.berkeley.edu/~groland/pubs/gr3.pdf
David L. Levy and Daniel Legan, A Neo-Gramscian Approach to Corporate Political
28

Strategy: Conflict and Accommodation in the Climate Change Negotiations, Journalof Management Studies 40:4June 2003.
Johansson Daniel, J.A., et.al, OPEC Strategies and Oil Rent in a Climate Conscious
World, 2013

Working Papers:
Chow, Gregory, China’s Energy and Environmental Problems and Policies, CEPS
Working Paper No. 152 August 2007,https://www.princeton.edu/ceps/workingpapers/152chow.pdf

Van de Graff and Verburggen (2015), ‘The Oil Endgame: Strategies of Oil Exporters
in a Carbon-Constrained World’,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2640488

Webpages:
http://www.wri.org/indc-definitionwww.opec.org
http://unfccc.int/paris_agreement/items/9444.php
http://oilprice.com/Energy/Crude-Oil/Oil-Is-Facing-The-Perfect-Storm.html
http://www.ssc.upenn.edu/polisci/psci260/OPECweb/OPECHIST.HTM
http://www.investopedia.com/terms/c/carbontrade.asp
https://openknowledge.worldbank.org/bitstream/handle/10986/24288/CarbonPricing
Watch2016.pdf?sequence=4&isAllowed=y ,http://www.express.co.uk/news/politics/645667/Brexit-EU-European-UnionReferendum-David-Cameron-Economic-Impact-UK-EU-exit-leave
http://www.ccsassociation.org/what-is-ccs/
http://www.iea.org/publications/freepublications/publication/20-years-of-carboncapture-and-storage.html,
29

Linda Yanti Sulistiawati, Ph.D.
Linda Yanti Sulistiawati, SH, MSc, PhD, is a lecturer of Law in Universitas
Gadjah Mada (UGM) since 2004. Linda has received several awards, such asAwards recipient of AfS student exchange program (1992-1993), StuNED
Scholarship Award 2001-2003 and Fulbright Presidential PhD Award 20102013. She is currently focusing on classic and contemporary international
environmental issues, such as Climate Change, REDD+, land issues andcustomary/adat issues. She has represented Indonesia in several events, suchas in the UNFCCC’s (United Nations Framework Convention on Climate
Change) Paris Agreement negotiations in Paris 2015,as one of Indonesia’s
negotiators, and in the IPCC’s (Intergovernmental Panel on Climate Change)
AR6 scoping meeting as an expert reviewer in Ethiopia, 2017.
Her book is published in 2014, with the title of ’REDD+ Issues Influence inIndonesia Regulatory Process, Case Studies: REDD+ Task Force and
UNREDD Indonesia’. Her current research is on Land Rights, Traditions andWelfare Creation, Study Case of East Indonesia (2013-2014), Identificationand Mapping of Alternative Land Conflict Resolution and Capacity
Development for Local Government and Adat Leaders in Manggarai Regency
of East Nusa Tenggara Province (2015-2016). So far, in 2017, Linda wrote
two major articles: ‘OPEC and Climate Change Negotiations’ Challenges andOpportunities’, and ‘Legal Pluralism in Eastern Indonesia’s Adat based Land
Conflict Resolution’. She is also very active in presenting her research andattending seminars and workshops all over the world. Linda is married withtwo children (10 and 8 yo), and likes to spend her time travelling with herfamily, practicing yoga and reading books.

CALE Discussion Paper No.16
Climate Change Negotiations： Challenges and Opportunities for OPEC

AuthorLinda Yanti Sulistiawati, Ph.D.

Published byCenter for Asian Legal Exchange (CALE)
Nagoya University464-8601 Furo-cho, Chikusa-ku, Nagoya, JAPAN
Tel: +81 (0)52-789-2325
Fax: +81 (0)52-789-4902
http://cale.law.nagoya-u.ac.jp/

Issue date

March, 2018

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