Oil matters: economic and environmental prospects hinge on global cooperation.

FOR DECADES, THE BATTLE LINES OVER OIL, the world markets and the environment have been clearly drawn. But recently there has been an unprecedented shift in the conversation surrounding-energy issues. Scientists and politicians have finally managed to rouse an undecided public to a climate crisis that may be "inconvenient", but is increasingly and disturbingly "true". Meanwhile, economists worldwide are attempting to dispel apocalyptic predictions about the global oil supply. The international community finds itself in the difficult position of gauging energy truths on a daily basis. How would a polar ice cap melt affect the subarctic world? What do exorbitant gas prices really mean? While oil talk is messy, its bottom line is clear: today's energy problems are global ones and require global solutions.

To this end, the United Nations has led the way in coordinating a unified international energy effort. Moreover, it has taken innovative steps to draw human voices into a debate that, for all its urgency, can seem daunting and inaccessible to those that it affects most: consumers and workers the world over.

Three UN treaty bodies met in May 2006 to address the economic and environmental impact of energy usage. The fourteenth session of the UN Commission on Sustainable Development heard from groups as varied as trade union leaders, indigenous representatives and technology specialists as it discussed a long-term international energy strategy. A week later, the UN Permanent Forum on Indigenous Issues held a regional meeting on the Arctic, where representatives of the Arctic Council spoke passionately about the changes occurring in their homelands. Finally, the UN Framework Convention on Climate Change (UNFCCC) met in Bonn, Germany, during the 24th session of subsidiary bodies to tackle the issue of a post-Kyoto Protocol strategy for the first time. The Protocol's initial commitment period, ratified by 163 States in an attempt to lower global energy emissions, expires in 2012.

Keeping fossil fuels available, realistically priced and environmentally friendly goes beyond what Governments alone are able to do. However, energy debates have nonetheless been plagued by regional strife, and cooperation is often elusive. The question of energy-specific regulations has been a contentious one for countries with high or rapidly rising industry levels, such as the United States, China and India. In 2001, the United States formally withdrew from the Protocol, citing the need for more country-specific guidelines. China has likewise refused to sign, worrying that the treaty does not take into account its energy needs as a rapidly developing nation and asserting that as the world's most populated State its emissions should be measured per capita. Both China and India contend that they will persist in requiring substantial energy supplies as they continue to develop.

Leading UN environmental bodies like the UNFCCC acknowledge that such divisions between industrialized and developing countries are a problem. Working under the principle of industrialized response, the Kyoto Protocol and other environmental agreements urge that industrialized nations lead the way in emissions reduction, while developing nations have only semi-voluntary participation standards. UNFCCC, however, has seen the conflict as an opportunity to launch radically progressive environmental and economic programmes, according to Hennig Wuester, Special Assistant to the UNFCCC Executive Secretary.

The Clean Development Mechanism (CDM) of the Protocol, for example, offers industrialized nations the chance to invest in the energy clean-up of developing nations and use this as credit towards their own emissions targets. Such projects create a cohesive global goal from what was once a series of detached regional problems. Indications are that these unifying incentives are working, said Mr. Wuester. The UNFCCC Secretariat estimates that CDM will reduce worldwide emissions by over 1 billion tonnes by the end of 2012--a success that will prove to be a great promoter of international cooperation. "It's a sign that the institutional set-up that's in place is quite powerful", he said, adding that Kyoto's critics will be hard-pressed to argue against such a vast statistic.

But in everyday economic terms, a strong case exists for curbing fuel usage even more deeply across the planet. Desmond Lachman, a fellow at the American Enterprise Institute for Public Policy, explained that short-sighted energy strategies in parts of the developing world leave the entire global economy vulnerable to price hikes. To promote industry, some Governments "suppress" oil prices by keeping domestic gas prices artificially low, even when the international price rises, he said. Encouraged by low prices, the industry and consumers in developing countries consume oil liberally, but the rest of the global community must account for this suppression by picking up the slack in oil costs, Mr. Lachman added. Combined with concerns about the political stability of the world's big oil producers, the results are drastic hikes in prices and the common, though not entirely well-founded, concern that we are scraping the bottom of the proverbial barrel.

"There is no question that you're dealing with a limited amount of oil", admitted Mr. Lachman, who echoed, however, much of the media's recent discussion that there's "little chance that we'll run out soon". George Kowalski, Executive Director of the UN Economic Commission for Europe (ECE), agreed. The Commission estimates that at today's prices and with current technology, conventional oil reserves could meet the cumulative global demand for the next forty years. A more urgent question, he said, is how to get to the estimated 65 to 75 per cent of the world's hydrocarbon reserves that are out of reach of producers and distributors. These more unconventional sources of oil--such as shale and coal, both of which must be specially mined and converted into oil--require financial investments for several years before they can turn a profit. And because politics and business have already led to such a tight fuel market, many countries are unwilling to make these long-term investments.

Another option for cleaner, more cost-effective fuel--and one that also requires significant research investments--is the much discussed biofuels, which are viable ethanol created from products like corn or sugar cane. A recent report by the Worldwatch Institute revealed that biofuel production has doubled since 2001. Although oil still accounts for over 96 per cent of fuel used in transportation worldwide, countries like Brazil--with 40 per cent of its transportation already running on sugar-cane biofuel--and the United States have begun investing heavily in cleaner energy solutions. However, looking forward to the development of such radical energy sources and to alternative oil supplies, Mr. Lachman said that international standards would make sense. More nations need to invest more capital in these areas because, despite the concerns of individual nations and regions, the energy economy is fundamentally a global issue. "I think there is a clear case here for international coordination", he said. The UN multilateral framework could be a positive model for cooperative international ventures in the future.

More urgent, perhaps, than the economic frenzy surrounding oil are the environmental effects of this much desired, but increasingly scarce, fossil fuel. Wasteful, unchecked consumption by industry and consumers, especially due to suppressed oil prices, is the leading cause of climate change--a process that threatens the very basic foundation of our environment. Over time, energy emissions, now almost universally acknowledged to be warming the planet, threaten to alter global weather patterns beyond recognition. Droughts, crop failures and famines could follow as continents struggle to adjust.

While these images are dire predictions for most, some communities are already dealing with the reality of climate change. Sheila Watt-Cloutier, Chair of the Inuit Circumpolar Conference and Special Rapporteur at the UN regional meeting on the Arctic, shared her people's experience of losing natural resources on which they have always relied. Their hardships are not isolated. Representatives of northern peoples from seven nations and several indigenous groups echoed her concerns. The Arctic Council reported success in past environ-mental efforts, including proactive clean-up solutions, that have begun to teach northern villages to monitor, test and contain pollution in their own backyards. However, the melting caused by greenhouse gas emissions, it said, is too big a problem to be handled locally. Ms. Watt-Cloutier stressed the need for all nations to make sacrifices in order to lower emissions even beyond the demands of the Kyoto Protocol. Without deep and coordinated reductions, she warned, the subarctic world will likely feel the effects of global warming as well. "The Arctic is the mercury in the global environmental barometer", she said. "Climate change has worldwide consequences."

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Through solutions like CDM, the UNFCCC parties are already tackling arctic hardships and hope to stave off further climate change. At the Bonn meeting, members continued to monitor cuts in greenhouse gas emissions and launched new initiatives, such as the "Dialogue on Long-Term Cooperative Action", a project designed to adapt the world to climate change through innovative technology and open-door international participation. An agenda for specific talks has been set, beginning in November 2006 in Nairobi, Kenya.

Economics and the environment are integrally connected at the juncture of oil. With so many varied interests at stake, the topic can be complex and daunting, but it is also a chance for meaningful international participation. This should not be forgotten as the issue continues to take on a wider global significance. Future cooperation on energy's economic front is sure to reflect environmental concerns, especially as UN leaders continue to promote the two perspectives as twin challenges to be faced.